In the blink of an eye, most towns in Connecticut will be expecting the next property tax check from property owners. And most people writing those checks will ask themselves, as they do semi-annually, “just what am I paying for?”
Mill rates in Connecticut vary from town to town by more than five hundred percent, so, it is not idle to inquire about value received by taxpayers. I’ve spent a couple years measuring the conventional signals of tax value received. These signals include numerous elements from property values and the durability of those values, to school quality and income clustering. None of those signals provides any more than an anecdotal explanation of why property tax rates should be as place specific as they are.
I then turned to the worldwide trend of urbanization – people moving in ever faster rates to more densely populated areas in order to avail themselves of economic, cultural and social opportunity – and now consider if Connecticut residents might be mirroring that trend at some measurable scale.
First, it is apparent that growth in our cities is significant. The portion of Connecticut’s population living in our five largest cities increased from 17.68 percent in 2010 to 17.83 percent in 2017. During this same period, the state’s population grew just under .3 percent. The populations of some towns increased more than 4 percent, while most towns lost population. The consistent growth of the cities in this context demonstrates that we Nutmeggers are part of the long-term movement toward the opportunities cities offer.
Cities, though, aren’t for everyone. Characteristics of more densely populated areas also include exposure to diversity in views, cultural traditions, and languages. For many people, the economic opportunities in the city are compelling attractions to urban life. Others are willing for forgo those opportunities to achieve other values. Increasingly, those values have included being around people that they perceive as being like them.
Preferring, generally, the company of people we feel are like us – social scientists call it homophily – is a near ubiquitous characteristic of all animals, including the human animal. As a familiar example, I refer to the inevitable and prompt self – separation of the men from the women at nearly every dinner party. A preference for a form of in-group should not be confused with hostility toward some other out-group. That I may occasionally prefer the company of other tax attorneys includes no element of dislike for some other profession. People naturally sort themselves on any number of qualities, without implying exclusion of others. This sorting does become problematic, however, when it segregates us. Inter-group contact raises trust. Segregation lowers it.
What values are there to people who choose not to move to more urban areas? Any number of quality of life, sentimental, and other subjective reasons affect residence decisions.
For a consistent, objective measure, I use the lodestone metric of property taxes. No town meeting or local political campaign can occur without repeated invocation of property tax rates. Using a calculation called correlation, I looked for the characteristics of towns with persistently low tax rates. Age and racial diversity of the population turn out to have significant relationships with these rates.
The median age in Connecticut is 40.6 years, a little older than that of the country overall at 38.1. From 2010 through 2017, the median age in the state went up 1.3 years, while that of the country overall went up 219 days (.6 year). Changes in the median ages of residents of towns in our state varied from increasing nearly 12 years to declining 4.5 years. Plainly, migration within the state is taking place. One of the effects of younger and racially diverse people moving to cities is that the population mixes of the towns they are leaving are becoming older and more racially homogeneous.
When I correlate the median ages of the towns with their property tax rates in 2010, a substantial relationship appears between the median ages of the residents and how low their property taxes are. Over time, that relationship grows more robust, from -.49 to -.55. Higher ages are associated with lower property rates.
In the same way, towns with larger portions of the populations identifying as racially white only (not Hispanic or Latinx) maintain even stronger relationships with lower property taxes. This association also gets more robust over time, inversely growing from -.57 to -.58.
To be sure, correlation is not causation. We cannot say with statistical confidence that having an older, less diverse population causes property taxes to stay low. In the same way, younger, diverse cities cannot attribute higher taxes exclusively to the age and racial mix of their residents.
We do know that the residents of every town decide what they want to pay for and vote accordingly. The implied risk of the current trends is that Connecticut will inadvertently segregate itself by age, race, or other factors. Towns in our state have the local authority to take steps to preserve inclusivity and the influence of every voice, and should deploy that authority for the greater good.
Dan Smolnik is a member of the Hamden Economic Development Commission. He also sits as Vice Chair of the Tax Section of the Connecticut Bar Association and serves on the Internal Revenue Service Taxpayer Advocacy Panel. The views expressed here are exclusively his own.
There is a lot to discuss here. Are lower mill rates correlated to higher property values which result in higher taxes per resident? Do younger people and less affluent move to cities because that is where the smaller and more affordable housing is? Do younger people mean more or less school age children which accounts for about 2/3 of spending? To what extent is it migration in the state or of people moving in and out of the state?
Perhaps one factor affecting the mill rate variation is the services provided by a municipality for its residents – things like trash collection, law enforcement, sewer & water utilities and the like. These services were not touched upon in this piece.
Not sure that a 0.15% change in urban population over seven years is significant. Also, while mill rates vary significantly, the percentage of appraised value against which the mill rate is applied also varies significantly, so the mill rate on its own isn’t a credible indicator of tax rate.
In my observations over the last 4 years I have found a reasonable correlation of appraised home values with the desirability of what a town has to offer. Which makes sense, as higher demand influences market values.
Correct. However different towns/cities use different percentages of appraised home values against which the mill rate is applied.
Hartford uses 35% of the appraised values against which their mill rate is applied. Most, if not all, other towns/cities use 70%, so the seemingly high Hartford mill rate is tempered by the low valuation percentage.
So, a $100,000 single family home in Hartford’s tax bill is – 100,000 x .35 = $35,000 x 74 mill rate = $2,590.
A $100,000 single family home in Avon’s tax bill is 100,000 x .70 = $70,000 x 28.8 mill rate = $2,016
So a $574 difference between Hartford and Avon.
Hi WatsonAL, just to add to the discussion, Hartford has a bifurcated mill rate. Residential properties have a mill rate of 45.8, while commercial properties have a mill rate of 74.29.
So, the difference is reversed — Hartford is now $1,603 for residential real estate and Avon would be $2,016.
Other than the premise people tend to gravitate to areas containing like populations. I cant say, I was able to extract sound, meaningful conclusions from this article
I believe there are too many factors that drive population disparity by age, other than property taxes to draw meaningful conclusion. The relationship with age may be more a factor of staying in place long term, to pay down one’s largest financial obligation, than to assume property taxes and age exhibit a direct correlation. I would think family size and property taxes may exhibit a much tighter correlation, due to the high cost of education in our cities, and state.
CTs decade long stagnant economy reflects stagnant economies in its major cities and surrounding areas where 1/3 our population live. Save Stamford none of our major cities are well poised for hi-tech modern world growth. Plus that our largest State industry are the State and local public Unions serving our 160 + cities and towns – a large number for a small population.
But there are noticeable differences. Danbury spends 30% less per capita than similar sized Norwalk on a per capita basis. And Westport adjoining Norwalk has kept property taxes fixed now for 5 years. Demonstrating that some cities are more competently managed than others.
Not surprising that Greenwich, our wealthiest City, has long been managed by a Professional City Manager. As are over one-half of America’s similarly sized cities. So if Danbury and Westport can get the job done by spending less why not the others ? So far no other CT City has followed Norwalk in electing a former Police Chief as Mayor. Norwalk remains Fairfield County’s most transient City.
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