Rep. Matt Ritter (D-Hartford) addresses the media just before the close of the 2019 legislative session.
Municipal leaders in Connecticut are intimately familiar with the state’s own PILOT program, which reimburses cities and towns, at least partially, for state-owned and other tax-exempt properties.
The program, which is part of the overall state aid cities and towns receive, has become the subject of much griping over the years as state lawmakers have significantly underfunded it.
By law, the state is supposed to reimburse municipalities 45 percent of lost tax revenues from state-owned property and 77 percent of lost revenues from properties owned by colleges and hospitals.
However, local officials have learned that the state’s PILOT program is also voluntary, in a sense, with lawmakers able to override it when finances are tight.
This is the fourth story in a series examining various ways Hartford might reduce its high property tax rates. Here are the first, second, and third.
In Hartford, where 59 percent of assessed real estate is tax exempt due to government or nonprofit ownership, the impact of that shortchanging has been outsized. In fiscal 2018, the city received $30 million in state PILOT payments, about $60 million short of what it was supposed to get.
While the state doesn’t publicize, or in some years even appear to track what’s technically owed vs. what it pays, Hartford’s assessor, John Philip, has kept records.
From 2011 to 2018, Hartford was shorted by more than $376 million in state PILOT payments, according to his math.
When viewed in context of Hartford’s recent debt bailout, the state is now effectively reimbursing Hartford on the back end for years of PILOT program underfunding.
What if the state had just paid Hartford the full PILOT amounts over the years? Would the city still have been driven to the brink of bankruptcy?
Democratic House Majority Leader Matt Ritter, who was previously Hartford city councilor for three years, said it’s tough to know.
“Maybe the city would have been fine with all that PILOT,” Ritter said. “I don’t know what they would have done with that money.”
Hartford isn’t alone, he added. The state has underreimbused municipalities across the board.
And Hartford isn’t the only city with significant untaxable property. The exempt portion of New Haven’s grand list is very similar, largely thanks to Yale-owned properties.
However, according to Mark Fitch, an investigative reporter for the free-market think tank Yankee Institute, Yale is also a key economic driver and difference maker between the two cities, which have a similar geographic footprint, though New Haven’s grand list is more valuable, it has a higher homeownership rate and the region it anchors is doing better retaining population.
“New Haven’s got plenty of problems, but because they have that major asset there, they’re kind of able to squeak by,” Fitch said. “Of course [Yale] is going to be a major asset for the city.”
State Rep. Jason Rojas, an East Hartford Democrat who co-chairs the powerful Finance, Revenue and Bonding Committee, noted the state-level PILOT program is a rarity in the U.S. For example, Massachusetts doesn’t have a similar program.
“No, [the state] hasn’t always fulfilled its [PILOT] obligation, but it’s certainly doing more than many others are doing,” Rojas said.
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