First Selectman Calls For Statewide Property Tax Analysis

By John Voket

In nearly three decades of public service in various capacities, First Selectman Herb Rosenthal has heard a lot of complaints from Newtown residents, as well as from citizens across Connecticut, about the ever-increasing burden of property taxes. And now he is in a position to do something about it.

As the newly elected president of the Connecticut Conference of Municipalities, Mr Rosenthal parlayed his extensive experience and knowledge about how Newtown taxpayers are being tapped to underwrite not only important local initiatives, but millions of dollars in unfunded mandates facing the town and school system.

He recently completed a report on the current state of property taxes in Connecticut, which was presented to the state legislature’s Program Review and Investigations Committee. Mr Rosenthal, on behalf of Newtown and all the other communities in the state, is hoping this influential panel will fund a statewide tax incidence analysis so its membership will better understand the combined impacts of the present federal-state-local tax system on individuals, families, and businesses.

Information that would be forthcoming from that study would also allow policymakers to better gauge the impacts of proposed state-local tax changes on these same groups.

“Many other states have availed themselves of this policy development tool,” Mr Rosenthal reported to the committee. “Regardless of where one stands on possible changes to the state-local tax system, shouldn’t we all agree that a baseline of hard data is a prerequisite to fashioning sound public policy?”

The first selectman said the idea for that report came from his work on a statewide task force on property tax reform that he served on several years ago. He also subsequently served with New Haven Mayor and gubernatorial candidate John DeStephano on the Governor’s Blue Ribbon Commission on property tax reform.

“A lot of the information in this report came from my work on those panels as well as from my experience here in Newtown,” Mr Rosenthal told The Bee earlier this week. “Newtown’s return from the state in terms of municipal aid has been flat, and we’ve seen continuous reductions in aid for education, which means we have to depend on escalating property taxes to make up the difference.”

Mr Rosenthal said Connecticut is one of the two highest states in the nation in terms of dependence on property taxes for municipal projects, and is by far the highest in tapping property owners to pay for education-related expenses.

“More than 80 percent of residents here in Newtown and across the state have consistently expressed that they think property taxes are inherently unfair,” Mr Rosenthal said. “There is certainly no correlation between the amount of property tax a person is expected to pay and their ability to pay them.”

The first selectman said that as property taxes slowly creep upwards, the ability for municipalities to pass their local budgets has become more difficult. And in recent weeks, both town finance director Benjamin Spragg and Board of Finance Chairman John Kortze have been publicly warning residents that the town’s failure to pass future budgets could negatively impact the current and highly favorable local bond rating.

“It can also contribute to the reasons why retirees leave certain communities,” Mr Rosenthal said. “And this opens up properties for new families to occupy who may have children going into the school system, which in turn, drives up the education budget more rapidly and creates the need for even more town services.”

Besides the tax incidence study, Mr Rosenthal is also advocating the state consider a “build-out study,” which he said would better illustrate how some communities chase or compete for economic development projects that might not be in the best interests of those communities or their residents.

“Clearly property taxes drive land use issues, and not necessarily for the betterment of these communities,” he said. “We’re finding that quality of life aspects can be reduced when municipalities are forced to accept sometimes inappropriate development projects to offset their residential tax bases. We’re finding more and more incidents of this need for economic development driving poor land use decisionmaking.”

When disproportionately large or inappropriate commercial developments are created, Mr Rosenthal said, it creates a ripple effect encompassing more traffic problems whose infrastructure was never intended to maintain such large-scale projects.

“You get this sprawl, and it’s driven almost exclusively by the current state property tax structures,” Mr Rosenthal said.

In his report, Mr Rosenthal said that too often Connecticut state tax policy ignores the crushing burden of the property tax on businesses, both large and small.

“The time for action is long overdue. Continued inaction threatens the future of Connecticut,” the first selectman wrote.

In his report he further reflects that reforming Connecticut’s state-local tax system will not be easy, especially for the “Land of Steady Habits.” But reform is necessary.

“The key to property tax reform is changing the way local public education is funded,” Mr Rosenthal reported. “Education is the biggest cost item for municipalities. It makes up close to 60 percent of an average municipality’s budget in our state. And the costs of education continue to rise faster that the costs of general municipal government.”