CCM tries to get a little louder on property tax relief

After watching state aid erode over the past decade, Connecticut municipalities hope to appeal  directly to voters on the issue of property tax relief, stirring the pot just in time for the 2020 election cycle.

The Connecticut Conference of Municipalities announced the creation of a commission Tuesday that will craft a new property tax relief initiative and make its case directly to voters next year.

“The goal is not to simply go to the General Assembly and present something to them as we have in the past, because we know how that works out,” said Joe DeLong, CCM’s executive director.

Not well.

“We believe that the General Assembly, generally, reacts to the desires of its constituency base,” and municipalities hope a “tired, exasperated electorate” can find new ways to motivate lawmakers to act, DeLong said.

Connecticut relies more heavily on property taxes — one of the most regressive levies among the state and local tax systems — than any other state. According to the nonprofit Tax Foundation, the property tax burden, per capita, in Connecticut was $2,927 in the 2016 fiscal year. That’s nearly twice the national average of $1,556 per person.

Connecticut municipalities are responsible, by state law, for providing the bulk of public services in the state, including: education from pre-kindergarten through grade 12; public safety; road maintenance and other public works; wastewater treatment; and various social and recreational services.

Thirty-seven mayors, first selectman, and other leaders have begun working with three principal consulting groups to tackle three questions:

• How best to fund services other than relying heavily on property taxes?
• How to deliver services in the most cost-efficient manner?
• And how state government can effectively stabilize its surging pension and retirement benefit costs?

The latter is crucial, DeLong said, since it’s those retirement costs that have placed so much pressure on state finances over the past decade, which — in turn — has led legislators and governors to place more pressure on cities and towns.

And while Connecticut has refinanced its state employee pension debt twice in the past three years, and its teacher pension debt once, those costs still are expected to rise steadily into at least the mid-2020s.

In addition, some municipal advocates say, the teacher pension restructuring was not complemented by a tightening of retirement benefits.

At first glance, cities and towns fared OK in terms of municipal aid since the last recession ended in January 2010.

Gov. Dannel P. Malloy and the legislature not only spared the nearly $2 billion Education Cost Sharing grant — the single-largest municipal aid program — from cuts during the first years of the recovery, but modestly increased ECS levels.

And, in 2017, legislators adopted a 10-year program to shift more education aid to the poorest school districts while also gradually increasing funds for the entire grant program.

But committing to funds in the future is not the same as delivering them. And much of the other aid pledged to cities and towns has been a story of promises unkept.

Over the past decade, the Payment In Lieu Of Taxes [PILOT] grants have become a shell of what is pledged in statute. PILOT is supposed to reimburse communities for the local property tax revenues they cannot collect because the state exempts land, buildings and other properties owned by the state and by nonprofit colleges and hospitals.

For example, PILOT grants are supposed to replace about 45% of the funds communities lose because they can’t tax state property. Communities currently get about 14% back.

Similarly, the grants once designed to replace 77% of taxes lost on colleges and hospitals provide about 23%.

Many Hartford officials and its legislators said this erosion was the single biggest factor that pushed the city to the brink of insolvency just two years ago.

Non-education aid, in another case, eroded barely after it was approved.

Legislators in 2015 hailed a “historic and transformative” plan to share hundreds of millions of dollars in yearly sales tax receipts with cities and towns, to ease the need for property tax revenues.

Initial projections called for communities to receive about $230 million by 2017, $290 million by 2018 and $350 million in 2019.

What communities actually received was far less: $185 million in 2017 — but only after legislators cut $104 million out of other municipal grant programs. 

By 2018, the revenue-sharing was down to $71 million and by 2019 it had fallen to $37 million.

DeLong said the new panel actually began meeting on Nov. 7 and will continue work through the winter and spring.

CCM then will launch “an intensive grassroots campaign” to inform voters of the commission’s recommendations, the coalition wrote in a statement.

“Nothing is pre-determined here,” DeLong added. For example, the panel could recommend that major financial burdens, such as public education, be shifted from local budgets exclusively onto the state budget.

The CCM Commission’s work will be guided by several consulting groups including: the Center for State and Local Finance at Georgia State University; the Edward Collins Center for Public Management at UMASS – Boston’s McCormack Graduate School of Policy and Global Studies; and Pro Bono Public Pension consulting service in Tuscumbia, Alabama.