Small-town leaders blasted Gov. Dannel P. Malloy’s car-tax proposal Monday, saying it would lead directly to increases in local property taxes across the state.
In a show of force, 22 local leaders in the Council of Small Towns submitted testimony to the tax-writing finance committee to oppose Malloy’s plan because the towns would not be reimbursed for the lost tax money.
“It’s an unfair mandate, and it is going to cripple people,” said Barbara Gilbert, the town manager of Rocky Hill. “When you look at the small towns, it’s a drastic impact.”
New Canaan first selectman Robert Mallozzi said he did not know any town officials who were pushing for the idea, adding that Malloy favors it without any apparent groundswell of support.
“This is so top-driven it’s unbelievable,” said Mallozzi, adding that he believed the issue was important enough to drive from New Canaan to the Capitol on Monday morning. “It’s not one bit an ask by the municipalities.”
Besides the small towns, the large-city mayors have complained, too. Based on the latest numbers, Hartford would lose $21 million in taxes under the proposal, while Bridgeport would lose $17.4 million. New Haven, where Mayor John DeStefano has opposed the idea, would lose $14.5 million, based on figures from the legislature’s nonpartisan fiscal office.
As such, the 110-member COST and 153-member Connecticut Conference of Municipalities are both opposed to Malloy’s plan.
But Malloy told reporters Monday that he is sticking by his proposal because he believes the car tax is fundamentally flawed.
“They’ve got a tough job to do. I did that job for 14 years as a mayor,” Malloy said of the local municipal officials. “It is one of the most egregious taxes on the books in the state of Connecticut. … It makes no sense. A car is a car is a car. It has exactly the same value, no matter what community it is in. It’s the most hated tax. It’s the most unfair tax. It’s the most middle-class-unfriendly tax we have. It’s time to do something about it. At least we’re having a discussion, and I’m hopeful we’re going to do something about it.”
He added, “You guys need to put this in your stories. No other state taxes the cars the way that we do. No other state does it.”
The legislature’s nonpartisan research office says that at least 18 states impose statewide motor vehicle taxes, but they do it in various ways as far as collecting or redistributing the revenue. The states include Massachusetts, Rhode Island, Maine, and California, among others.
The exact impact on an individual taxpayer would depend on their own personal circumstances. But town leaders said that renters with high-priced cars would be the biggest winners because they would see their car taxes sliced at a time when they do not have a property tax burden because they rent.
“This proposal will cause owners of modest homes and modest cars to pay more of the local tax burden than they do currently,” said Weston first selectman Gayle Weinstein. Noting that her small town would lose $2.37 million in automobile taxes, she said the subsequent tax hike on the average home would be 3.8 percent or $635.
John Elsesser, the town manager of Coventry, said Malloy’s proposal was not well thought out on an important issue.
“It’s time for comprehensive reform, not a piecemeal approach,” he said.
Malloy’s plan would lead to an 8.5 percent tax increase on homes in Coventry, he said. An average home with a market value of $200,000 currently pays $3,769 in property taxes and another $113 in car taxes, he said. The homeowner’s tax would jump to $4,089, but even with the elimination of the car tax, the net tax increase on this particular homeowner would be $207.
A family with two older cars might be paying a relatively small amount in car taxes. But they might be paying a substantial amount in real estate taxes and might have to absorb more of the burden as the property taxes shift from cars to homes, officials said.
Norwalk’s mayor, Richard Moccia, said his city would lose $15 million per year from the car tax, and it would lead to a 10 percent property tax increase for many homeowners. He added that some senior citizens who are paying high property taxes are not driving fancy cars.
“I assure you, they are not driving $40,000 cars,” Moccia told legislators. ”It may be hold harmless for the state of Connecticut, not for the municipalities. … The public is opposed to it, and I have met almost no mayors or first selectmen who said this would work. Please, do not pass the burden to the cities because we are not a special interest group. We are the state of Connecticut. … I opposed Governor Rell’s proposal in 2007 to eliminate the car tax. I have not changed my opinion on this. It’s not political. It’s practical. … It was only guaranteed funded for so many years. That was my concern back then. Would the legislature be able to continue to reimburse all the towns? Could it be sustained?”
He noted that some wealthy renters drive expensive cars and would receive huge benefits if the car tax is eliminated.
Moccia quoted from a newspaper story during the 2010 gubernatorial election campaign when Malloy said, “What I’m going to do is stop shifting the burden to local government.”
Sen. L. Scott Frantz, a Greenwich Republican, said to Moccia, “You’re doing a great job running the city of Norwalk.”
Anthony Candelora, the mayor of North Branford, said the average homeowner would see an increase of $480 per year because of the elimination of the car tax.
“In North Branford, we’ve had businesses moving out – closing shop. One pizza place was there on Friday and closed on Saturday. Gone,” Candelora said. “You can only tax people so much. … They’re basically taking it out of one pocket and putting it into another.”
Jeff Bridges, the town manager of Wethersfield, has worked in two other states – New York and Kansas – that have sales tax options. In Westchester County, New York, for example, the sales tax is higher in the city of Yonkers than in some of the surrounding towns because the state levies a flat sales tax and then other communities can add to it.
“But that’s not Connecticut’s history,” Bridges told legislators after 5:30 p.m. Monday after waiting much of the day to testify. ”The property tax is all we have, and if that string is cut, it impacts everybody.”
As a previous resident of Kansas, Bridges said that his property taxes tripled when he moved to Connecticut and began living in a similar house.
In a separate matter toward the end of the hearing shortly before 7 p.m. Monday night, Joseph Brennan, the chief Capitol lobbyist for the Connecticut Business and Industry Association, said the business community is looking to balance the budget this year without raising taxes.