Speaker’s panel backs car tax repeal — some day

A legislative task force has endorsed the repeal of Connecticut’s car tax, but — like another group before them – doesn’t recommend relief for most taxpayers to begin before 2018.

The Municipal Opportunities and Regional Efficiencies Commission created by House Speaker J. Brendan Sharkey, D-Hamden, also proposed a common statewide school calendar, new “master” regional planning agencies, and an end to the requirement that communities publish public notices in local newspapers.

Sharkey and other leaders predicted the MORE Commission’s recommendations would provide steady, cost-lowering efficiencies across cities and towns for years to come.

“The problem” with repealing car taxes now, “is towns and cities need some sense of consistency,” Sharkey told reporters during a mid-morning Capitol press conference.

Several lawmakers balked at Gov. Dannel P. Malloy’s original proposed last February to end municipal property taxes on motor vehicles starting with the 2014-15 fiscal year. That’s because the tax brings nearly $700 million annually to local coffers -– an amount equal to nearly one-quarter of all major state grant programs to cities and towns. And the governor’s plan would not have replaced the overwhelming bulk of tax revenues communities would lose.

Municipal leaders argued it would spur local tax hikes across Connecticut.

The  Legislature’s Finance, Revenue and Bonding Committee voted in late April to endorse the repeal effort. But that panel also recommended delaying implementation until 2018.

Several members said they voted to endorse repeal out of respect for the governor, but couldn’t support a plan that didn’t replace most of the revenues communities would lose.

Sharkey had said afterward that he was hopeful the MORE Commission -– a bipartisan legislative study group working on ways to make local government more efficient –- could find a way to ease car tax burdens sooner.

At first glance, the MORE panel appears to make changes in the car tax much sooner.

It would cap municipal tax rates on motor vehicles at 80 mills — $80 in taxes owed for every $1,000 of a vehicle’s assessed value – starting July 1, 2014.

That cap would drop to 72 mills in mid-2015, and then by 10 additional mills each subsequent July until the tax effectively is repealed.

But no community has a property tax rate even close to 80 mills right now.

Only one city or town, Hartford, has a property tax rate above 72 mills, meaning no car tax relief would arrive before 2016.

And only three other communities — Bridgeport, East Hartford and Waterbury -– have rates in excess of 40 mills. Residents in two others, Manchester and New Haven, face an effective rate over 40 mills when town or city and local service district taxes are combined. Residents in these five communities likely wouldn’t see any relief until 2018.

And the rest of the state would follow after that, with the bulk of car tax revenue disappearing between 2019 and 2020.

“We don’t want to shock towns with the lost revenue,” Sharkey said, adding that this approach would give them the best chance to prepare.

The MORE panel did recommend putting a new 3 percent surcharge on car rentals, and changing the rules on the licensing of antique cars -– measures designed to raise an extra $3 million a year to help replace the car tax revenue communities ultimately would lose.

To help communities ultimately get by with far less in local tax dollars, the MORE panel hopes to help cities and towns learn to spend less.

  • Requiring all school districts to follow a common school calendar should make it easier for them to purchase various goods and services -– such as bus transportation — collectively and more cheaply.
  • Connecting all communities to a statewide fiber-optic infrastructure to improve high-speed networking.
  • Forming five master planning organizations by unifying the state’s 14 regional councils of government.
  • Ending a requirement that all communities publish town meeting notices and other public matters in local newspapers.

The MORE Commission also recommended that the Legislature order a studies into laws that set construction labor wage standards for public capital projects, as well as into the state and local tax network.

“This was a bipartisan effort and I was very impressed with the hard work,” said Rep. Tim Larson, D-East Hartford, chairman of the MORE Commission. “ … We got some very strong recommendations and the items left for study involve some really complex issues that need further review.”

Democratic State Sen. Stephen T. Cassano, former longtime Manchester mayor and a longtime advocate for regional cooperation, said the master planning organizations could be a crucial tool in helping more cities and towns secure federal transportation funding.

But the chief lobbying agency for cities and towns, the Connecticut Conference of Municipalities, said the MORE Commission shouldn’t have taken a stand on the car tax before a tax study is performed.

“As with any legislative proposals, details and data are critical,” CCM Executive Director James Finley said.  “To this end, CCM re-emphasizes the need for tax incidence analyses to precede any changes to our state-local revenue system, particularly proposals to phase-out the property tax on motor vehicles. To ‘fly data blind’ in pursuit of this initiative would be a disservice to the hard work of the commission.”

Finley added that “CCM looks forward to working with legislators and leaders on both of sides of the aisle during the final weeks of the session to enact proposals to strengthen the state-local partnership.”     

The lobbyist for the Connecticut Daily Newspapers Association, Chris Van DeHoef, said posting public notices on a municipal Web site is insufficient.

Not all households have access to the Internet, or are familiar with municipal Web sites, he said.

“Public notices need to be on town Web sites, of course, but they also need to be in newspapers,” he said. “These things need to be in more places, not less.”