Small town leaders Monday came out against Gov. Dannel P. Malloy’s proposed budget that would eliminate their ability to tax motor vehicles.
“We are very concerned,” Richard Smith, the first selectman of Deep River and president of the Council of Small Towns, said during a press conference at the state Capitol complex Monday.
Mayors from the state’s largest cities last month also came out against the governor’s proposed budget.
A long list of small town leaders are planning on testifying before the legislature’s Finance, Revenue and Bonding committee in opposition to the governor’s proposed budget.
Malloy’s proposal would restrict the first $20,000 of a vehicle’s assessed value from being subject to the municipal property tax, meaning owners of cars or trucks with market values of less than that would pay no tax.
The legislature’s nonpartisan Office of Fiscal Analysis estimates the car tax proposal would reduce town tax revenue by $632.8 million a year.
Malloy told reporters that the current vehicle tax is unfair and in desperate need of reform.
“It is one of the most egregious tax on the books,” he said Monday, noting that someone with a car in Fairfield pays less than someone with a car in Hartford. “A car is a car is a car.”
But John Elsesser, the town manager of Coventry, says the proposal would cost his small town $2.2 million. Because towns may not cut debt payments or education funding, this hit would mean a 25 percent reduction in the municipal budget. A 25 percent cut means eliminating the police and public service department, he said.
“This is a tax being put on our communities,” said Barbara Gilbert, the town manager of Rocky Hill. “There’s nowhere else to turn. … It is going to cripple people.”
Jim Finley, the executive director of the Connecticut Conference of Municipalities, which lobbies for the state’s cities, suburbs and small towns, told the finance committee Monday that the governor’s proposal is disastrous.
“This budget proposal will increase taxes… It’s a one-two-punch. It’s a cliff proposal,” he said.
Malloy said he does not doubt that the vehicle tax proposal could lead some communities to turn to higher taxes on housing to fill the gap.
“They have to make a shift away from a [vehicle] tax that is far more burdensome for the middle class of Connecticut than any other tax we have. It’s far more discriminatory than any other tax we have… They have to make change. Change is hard,” he said.
Sen. John Fonfara, the co-chairman of the legislature’s tax-writing committe, during the public hearing Monday seemed to support Malloy’s proposal that could shift the car tax to home and business owners.
“It seems to me it would be a fair redistribution,” the Democrat from Hartford told the leader from Deep River.
A separate proposal that is being considered by legislators would create a statewide tax rate for vehicles to end this town-by-town disparity in what someone pays for the same car.
“Listen, I want to I want this system to be reformed. I think my reform is the best,” Malloy said.