Rosenthal Leads The Charge To Maintain Conveyance Tax Rate

By John Voket

First Selectman Herb Rosenthal was in Hartford Thursday, February 1, defending a state tax program that has a half-million dollars in implications for Newtown, but could also cost other Connecticut towns and cities more than $40 million annually. Mr Rosenthal led a press conference in his capacity as president of the Connecticut Conference of Municipalities (CCM) to support the permanent adoption or continuation of a conveyance tax that levies a $2.50 premium on every $1,000 in real property transfers.

If the state legislature fails to act to extend the expiration of the interim tax rate, or to permanently adopt the current rate, the conveyance tax will revert to $1.10 on every $1,000. “A coalition of realtors, home builders, and developers have been fighting relentlessly to ensure the rates drop at the expense of local property taxpayers,” Mr Rosenthal said in his prepared remarks.

He was joined at the press conference by fellow municipal leaders from across the state, including First Selectman Ken Flatto of Fairfield, and Mayors Melody Currey and Mark Boughton of East Hartford and Danbury, respectively.

In his comments, Mr Rosenthal called the increased conveyance tax schedule “a win-win proposition for the towns and the state.”

“Without this revenue, we would have to raise property taxes, cut back local services, or both,” Mr Rosenthal said.

He pointed out that in order to blunt the impact of midyear budget cuts to municipalities in the 2002-2003 fiscal year, the General Assembly and the governor raised the local portion of the real estate conveyance tax. But since then, state aid has increased, but funding for some of those municipal aid programs has never been restored to the pre-2003 levels.

Bristling at the notion supported by some developers and real estate professionals that the tax is a bonus for cities and towns, Mr Rosenthal countered that the conveyance funds were never intended to serve as a one-shot revenue.

“It’s revenue that municipalities need, and it was always intended for that purpose,” Mr Rosenthal said. “Cities and towns use that conveyance tax money to replace previously lost or reduced state aid, support fire budgets, hire new police officers and teachers, pay for street lighting, help fund pension and insurance costs, and for many other uses.”

While Newtown’s loss would be slightly more than $500,000 if the conveyance tax rate is rolled back, Norwalk would lose $1.8 million, Stamford would lose $2.7 million, while Bridgeport and Danbury would each lose about $1 million.

According to supplemental documents provided by the CCM, the current rate increases have virtually no impact on the state housing market. In fact, a review of conveyances since 1998 shows that home sales across the state actually increased since the step-up in conveyance tax rates was imposed.

“If the legislature won’t make this rate permanent, we are at least asking them to extend the sunset clause on the rates until 2009,” Mr Rosenthal said.