Conveyance Tax Issue

Will Be On Nov. Ballot

By John Voket

When Newtowners head to the polls November 2, they will find more than a slate of political candidates from which to choose. A referendum question regarding a conveyance tax will appear on Newtown ballots this coming election day.

On September 1, less than 24 hours before the deadline to file for referendum assertion, the Newtown Legislative Council split its own vote on the controversial issue, turning down the first of the two proposed questions in a 6-5 vote, and approving the second by the same one-vote margin.

As a result, voters will be asked to decide whether to begin the political and administrative procedures required to eventually establish a 1.5 percent conveyance tax on real estate transactions to fund open space purchases.

The idea for the tax and subsequent referendum questions were originally proposed by Councilman David Brown, according to Council Chairman William Rodgers.

The questions presented to the council were as follows:

Shall the Town of Newtown dedicate its local conveyance tax proceeds to the acquisition, improvement and maintenance of public land/open space?

Shall the Town of Newtown petition the Legislature of the State of Connecticut to enact legislation that would enable the Town of Newtown to set its own local conveyance tax rate, not exceeding 1.5 percent for the acquisition, improvement, and maintenance of public land/open space.

A legal opinion, which was requested by First Selectman Herb Rosenthal, indicated that the first question is not permitted by state statute. In the opinion, drafted by Town Council David Grogins, he writes, “…the town cannot earmark the money received from a conveyance tax for one particular cause.”

In regard to the second question, he writes, “It is possible to petition the legislature to adopt a statute permitting a municipality to impose its own conveyance tax in addition to that imposed by (Connecticut General statute 12-494).”

As a result of that opinion, Mr Rodgers believes the majority of council members endorsed the second question in order to give the voters final say on the matter. “I know at least one member voted for it to see the issue disposed of,” he said. “Others felt that since Mr Brown had done the work to get the proposal this far, that they should support it. It’s only an advisory question and is nonbinding, so it’s up to the voters now.”

According to Mr Brown, he introduced the idea to impose a conveyance tax for open space in May.

“The idea is not unique, but I’m not certain it is being done in Connecticut right now for this specific purpose,” said Mr Brown.

He explained that Connecticut currently levies a one-quarter of one percent conveyance tax on the contract value of all real estate transfers, and that in the past, the legislature has allowed certain distressed communities to impose an increased conveyance tax to help bolster those communities’ general funds.

“I believe this tax is justified because we are under stress here in Newtown, to try and save some of the pristine lands that are drawing people to move here in the first place,” he said.

Further clarifying the intent of his efforts, Mr Brown said the referendum is designed to measure the public’s support for a tax to accelerate the acquisition, improvement, or maintenance of open space.

“This vote will not raise the tax,” Mr Brown said. “It is a question to gauge the public’s support to request the legislature to consider allowing an increased conveyance tax in Newtown only, not to exceed 1.5 percent.”

Mr Rodgers contended that such a tax would ultimately and financially hurt those who are most in need of every penny of revenue from the sale of their real properties. “Mr Brown is going to try and sell this as a tax on outsiders looking to move into Newtown by saying it’s built into the purchase price,” he said. “But the imposition of this tax would be like a speed trap, extracting revenue from people passing through. It would also impact older residents or those who need every cent of their real estate gains for personal or medical expenses.”

Mr Rodgers likened the proposed tax to arbitrarily increasing real estate commissions for transactions exclusive to Newtown by up to 1.5 percent. His primary concern about the question going on the ballot, he said, was that it either raised false hopes in the minds of open space advocates that the initiative would come to fruition, or that the inclusion of the question gave the false impression that a majority of community leaders backed the proposal.

“In fact, we don’t need an advisory question to support asking for the legislature to consider this tax. The Board of Selectmen or the Legislative Council could propose it,” Mr Rodgers said.