The House of Representatives adopted a bill early Tuesday morning that would phase out Connecticut’s municipal tax on motor vehicles – but it would be several more years before motorists get any relief.
The bill passed 111-28 with bipartisan support and now heads to the Senate. It technically begins the phase-out with the municipal tax assessments prepared in October 2015, which would be used to prepare the motor vehicle tax bills sent out in July 2016.
Based on current rates, no community except Hartford would see relief before 2019, and the car tax wouldn’t be eliminated entirely until 2021.
That’s much later than Gov. Dannel P. Malloy sought in February, when his budget proposal for the next biennium eliminated the tax outright in the 2014-15 fiscal year.
Lawmakers balked at the governor’s plan, because it didn’t replace the more than $600 million in annual revenue the car tax produces for Connecticut’s cities, towns, boroughs and service districts.
The Municipal Opportunities and Regional Efficiencies (MORE) Commission, a panel created by House Speaker J. Brendan Sharkey, D-Hamden, to promote regionalism and greater efficiencies in municipal budgets, crafted a plan to gradually wean communities off car tax receipts.
The bill passed by the House would cap municipal tax rates on motor vehicles at 80 mills — $80 in tax owed for every $1,000 of a vehicle’s assessed value – starting in October 2014.
That cap would drop to 72 mills in October 2015 and then by 12 additional mills each subsequent October.
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 the October 2015 assessment list, or the July 2016 tax bills.
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 for several more years, depending on whether their respective tax rates rise in the near future.
Most other communities wouldn’t see any relief until 2018 or later, also depending on whether their tax rates increase in the next few years.
Property taxes on motor vehicles would be eliminated entirely by 2021.
The bill adopted Tuesday would boost the cost of registering an antique vehicle from $500 to $1,000. The registration fee, originally set to rise to $2,500, was then lowered according to an amendment offered by Rep. Pam Sawyer, R-Bolton.
The bill also would change the definition of an antique vehicle from one that is 20 years old or more to at least 30 years old.
Although relatively small when set against the $600 million raised annually by motor vehicle taxes, the annual proceeds from the antique vehicle registrations changes – about $690,000 — would be provided to municipalities to mitigate the lost car tax receipts.
Rep. Jeff Berger, D-Waterbury, who serves on the MORE Commission, said “the General Assembly will need to find other revenues” to help communities replace lost motor vehicle tax revenues in the next few years.
The bill also adopts several MORE Commission recommendations designed to help cities and towns reduce their budgets over time.
- 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.
“The M.O.R.E. Commission is about lowering costs at the municipal level and reducing the overreliance on regressive property taxes,” Sharkey said afterward. “From phasing out the local car tax, and helping town government and boards of education save money through regional cooperation, municipalities will have more tools to better meet their budget challenges and provide property tax relief to their residents.”
Legislators did drop one controversial MORE Commission recommendation from the final bill: a proposal to end the legal requirement that all communities publish town meeting notices and other public matters in local newspapers.