It could take several more years before state officials are ready — if ever — to repeal the municipal tax on vehicles.
But House Speaker J. Brendan Sharkey announced Thursday that legislators will refocus efforts this fall on a crucial first step toward eventual repeal: cutting the cost of city and town government.
Sharkey, a Hamden Democrat, re-launched the Municipal Opportunities & Regional Efficiencies (MORE) Commission during a midday press conference in the Legislative Office Building.
“Potential efficiencies and savings from regionalism are starting to be realized, but MORE’s mission must continue if we are to truly reduce the property tax burden, which is the ultimate goal,” Sharkey said. He said the group would bring new ideas to the 2014 legislative session, which begins in February.
The property tax is the single-most regressive tax levied among state and local governments in Connecticut, the speaker said, adding that it leads to “bad decisions” in cities and towns across the state.
Hoping to minimize the heavy property tax burden on working class families, many communities invest too little in education or allow business development that threatens natural resources or otherwise reduces the local quality of life, he said.
The MORE panel, comprising legislators from both parties, has worked since 2010 with municipal leaders and others to help local governments stretch tax dollars further.
And in 2013, the MORE panel expanded its focus to repealing the car tax as Gov. Dannel P. Malloy recommended repeal as well.
The governor’s proposal, unveiled last February, proved controversial, since Malloy didn’t propose any new state assistance to offset the tax revenue communities would lose. The Connecticut Conference of Municipalities and the legislature’s nonpartisan Office of Fiscal Analysis have both said the car tax is worth about $650 million per year in total to municipalities.
The MORE Commission tried to keep the repeal effort alive by recommending a long-range phase out. Based on current tax rates, no community except Hartford would have seen relief under that plan before 2019, and the car tax wouldn’t have been eliminated entirely until 2021.
Lawmakers balked at implementing it because the MORE panel had identified only $4.9 million in state aid to replace the $650 million communities would lose.
Entering the 2014 re-election year, Malloy and his fellow Democrats in the legislature’s majority have opposed any further state tax hikes, even though a 4 percent deficit in the state’s annual operating fund is projected for the first budget after the election.
That means, at least for now, that the idea of boosting state taxes and using the revenue to raise municipal aid — which in turn could replace car tax receipts — is off the table.
Instead the MORE panel will keep looking for ways to help communities cut costs.
Rep. Tim Larson, D-East Hartford, the commission’s chairman, said finding ways to help communities share or otherwise reduce the cost of serving special education students could make a bid difference.
Regionalizing other school-related programs, municipal planning and health care services also were discussed Thursday.
But are legislators likely to find enough efficiency measures to match the $650 million per year the car tax produces? Sharkey acknowledged it would be difficult.
“It’s a fair point, and one I’ve made myself,” he said. “Currently our overall tax system is broken.”
But Sharkey added that with the economy still recovering from the last recession, the focus for now likely will remain on cutting costs.
Weston First Selectwoman Gayle Weinstein, a Democrat who has worked with the MORE Commission in the past, attended Thursday’s press conference and said regionalization may not always be a popular way to cut costs.
Taxpayers in Weston like the character of their school system and their community and are willing to support it, she said. “But they don’t want their money necessarily being spent on other school districts.”
Rep. Gail Lavielle of Wilton, the only Republican on the MORE Commission to attend Thursday’s press conference, said that while streamlining local government is fine, lawmakers need to take a much harder look at how state government spends money.
Only by cutting the state budget, and then in turn reducing state taxes, can Connecticut jump-start its economy, attract more businesses, and return to a level of prosperity that will allow for repeal of the car tax, she said. “It is a question of expanding the tax base because people’s pockets and businesses’ pockets are not bottomless,” she said.