Connecticut's unpopular local car tax remains unchanged
SUSAN HAIGH
Jun 7, 2013 at 12:01 AM Jun 7, 2013 at 7:18 AM
The state's unpopular tax on vehicles will remain on the books despite efforts this year by some legislators and Gov. Dannel P. Malloy to phase it out.
A multiyear plan proposed by a bipartisan legislative commission failed to get enough support among state senators and ultimately didn't make it into a key budget bill approved during the final hours of the legislative session, which ended Wednesday at midnight.
Earlier in the session, it became clear lawmakers opposed the Democratic governor's proposal to slash the tax as of July 1, exempting the first $20,000 of a vehicle's assessed value from the local property tax. The assessed value is 70 percent of the market value, so that would have meant someone who owns a car with a market value of under $28,571 would pay no property tax.
In both cases, city and town officials voiced concerns about how they were going to make up the lost revenue from the tax, which the Connecticut Conference of Municipalities, or CCM, said generates about $700 million annually. The issue is expected to be resurrected next year, when the lawmakers return to the state Capitol.
"Hopefully between now and then we can come up with a mutually agreeable solution," CCM Executive Director James Finley said Friday. "Right now we're not there."
The car tax is seen as unfair because owners of identical vehicles with the same market value can pay vastly different tax levels based on where the vehicles are located. That's because mill rates — with one mill equal to $1 for every $1,000 of assessed property — differ among the municipalities.
House Speaker Brendan Sharkey, D-Hamden, had asked the commission, which he created to review ways cities and towns can save money, to address the car tax and come up with an alternative to Malloy's idea. Cities and towns strongly opposed Malloy's idea, saying it would shift the tax burden to homeowners and businesses.
The proposal that came out of Sharkey's commission created a ceiling for how much cities and towns can tax vehicles. Over time, that ceiling would drop until the tax was eliminated, presumably by 2020.
Sharkey said he plans to resurrect the idea next year.
"For the life of me, I can't understand why anyone would be against the notion of abolishing the most regressive and hated tax in the state of Connecticut," he said.
Sharkey said because leaders of the state Senate did not participate in his commission on municipal savings, many senators were confused and misinformed about the car tax proposal.
"They didn't understand months of discussion that had been going on leading up to that vote," he said.
Some senators were concerned cities and towns would take financial hits as the tax is phased out. But Sharkey said municipalities would have been reimbursed from an account that would help cover any discrepancy between what municipalities might have received under their mill rates and what the statewide cap would impose. He said that account could be funded with revenue from the hotel tax and rental car surcharge. Revenues also would be generated from state antique license plate registrations.
Finley, who sat on the commission's subcommittee that studied the car tax, said the concept is a good starting point but CCM wants a more comprehensive, fully thought-out plan to ensure cities and towns don't lose out on revenue and become forced to raise already high taxes on homeowners and businesses. He said CCM will keep working with lawmakers on the issue.
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