Property Tax Cap Is Designed

For Political Cover

You can hardly blame Governor M. Jodi Rell for thinking property tax reform is as simple as mandating a cap on local property taxes. After all, state officials have been solving their own taxation problems for as long as we can remember by issuing mandates to the towns… unfunded mandates. Local officials have been begging the state for years for meaningful property tax reform, but the governor’s facile response is particularly irritating to municipal budgetmakers because of its implication that the inexorable rise of local property tax rates merely reflects a lack of local discipline.

Gov Rell’s suggested three percent cap on annual property tax increases may sound great to taxpayers, but the cap has so many holes in it that it will not offer much protection from more substantial tax hikes. The three percent limit can be overridden by a two-thirds vote of the town’s legislative body (the Legislative Council in Newtown’s case) or a simple majority vote of taxpayers. The cap would have played little or no role in Newtown’s recent tumultuous budget cycles. The real purpose of the proposal seems to be to provide political cover to the governor and state legislators who want to appear responsive to calls for property tax reform without making any of the tough decisions required to make some progress on the issue.

Ironically, if the state were to revise some of its mandates or send the towns and cities some money to help pay for them, the property tax limits espoused by the governor would be within easy reach of local governments. But the governor’s office and state legislators have resisted perennial requests by local officials for meaningful changes in the state’s binding arbitration laws, which discourage aggressive union contract negotiations that might benefit taxpayers. The state also persists in underfunding the costs of special education programs it requires, leaving towns and cities to pay more than 60 percent of the costs — costs that increase at a rate of five to six percent a year. The state’s payment-in-lieu-of-taxes (PILOT) program for towns like Newtown that host state properties that are shielded by state law from property tax assessments reimburse towns for just 45 percent of the tax revenue lost. And the last session of the Legislature passed more than 30 new bills with unfunded mandates on towns and cities for everything from planning for the evacuation of pets in emergencies to the auditing of new voting machines.

Perhaps there is a lack of discipline at play in Connecticut’s property tax problem, but let’s not fool ourselves. It is not exclusively a local problem.