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Property Tax: An Environmental Threat

April 22, 2007
Commentary By MARTIN L. MADOR

As we celebrate Earth Day today, it is gratifying to reflect on how the Connecticut Chapter of the Sierra Club, 11,000 members strong, has advocated for many important environmental issues over the years: land use, clean water, recycling, mass transit, open space and farmland preservation and, of course, controlling global warming.

Possibly surprising to some, the Sierra Club has now taken on tax reform. Why? Because it is at heart a critical environmental issue, one of the most important on Sierra's agenda.

Why does the Sierra Club care about taxation? Because property taxes are tremendously destructive to our environment, and to our economy.

Towns are children of the state; they can do only what the state explicitly allows them to do, and that includes raising funds for local government. Virtually the only means towns have of raising revenue is by a tax on real and personal property.

For several centuries, towns have relied on the property tax for operating income. This originated when property ownership was the only practical way to measure ability to pay taxes. However, this notion has long been obsolete. Ability to pay taxes today is far better measured by wealth, especially income.

Nonetheless, the state has forced towns to pay an ever-increasing share of local school costs via property taxes.

This pressures town officials to maximize the taxable value of land. The "highest and best use" of a parcel is its contribution to the town's grand list, not its contribution as a farm, open space or wildlife habitat. The tax system dictates that land used to grow fresh food is nowhere near as valuable as land used to park cars and sell food trucked in from somewhere else. We need access to the natural world for our well-being, yet we gobble up open space at a rate many times the population growth.

Towns waste time and energy competing against each other for development. We degrade the quality of life that is our principal inducement in recruiting corporations and workers. Environmentalists now understand that the fastest route to a clean and safe environment is a healthy economy. The two go hand in hand, and complement each other well. Over-reliance on property taxes does violence to our economy in many ways, so we advocate for its demise.

Because the power to tax flows from the state, taxation is a state issue. Our state tax policy is the combined revenue from income tax, sales tax, property tax and a host of smaller taxes. We need to rebalance the formula, to eliminate the negative secondary effects of being one of the most reliant on property taxes of the 50 states. New Jersey, Massachusetts and other states have successfully weaned themselves. We have not. Yet.

Gov. M. Jodi Rell has crafted somewhat of an agenda, and it is a good one that generally points us in healthy directions. We recognize these efforts, and applaud her for it.

The Democratic legislative leadership has taken good positions on these issues, although not with a unified voice. Unfortunately, this has not led to an appropriate legislative proposal. Much to our appreciation, the Republican legislative leadership, which too often focuses solely on a strong economy, has recently supported important environmental issues.

Actually, Connecticut is now in the fortunate position of having both a governor and legislative leadership that understand the problem and the need for solutions. Neither, however, has proposed a comprehensive plan.

Bits and pieces of the solution are floating around the legislative politisphere; minor income tax increases here, regional cooperation there, state-level planning over there, municipal cooperation over in that corner. The governor's recent plan raises income taxes slightly and sends more money to the towns. It calls for slowing the growth of property taxes, but not reducing them.

We need a plan that raises reliance on the income tax, sends far more money to the towns and forces a reduction in property taxes. These must happen simultaneously; a piecemeal solution simply will not work. Property tax credits do not solve the problem; neither does ending the motor vehicle tax.

The reform we are talking about here must not raise taxes overall. Collection at the state level must increase, and must be offset by a similar reduction at the municipal level. There should be no increase in total taxes collected.

1,000 Friends of Connecticut, founded to promote solutions to sprawl, spent a year preparing a superb comprehensive legislative proposal, which was approved in part but somewhat grudgingly by the planning and development committee as Senate Bill 1215. It is the only comprehensive solution we know of.

The Connecticut Sierra Club considers this bill one of the most important before the General Assembly in 2007 and we are pleased to support it wholeheartedly.

As we celebrate Earth Day today, this issue serves as a reminder of the inadvertent and unforeseen ways in which we degrade our planet, and the imperative to understand and solve complicated and longstanding problems. We look to House and Senate leaders, working with a supportive governor, to rebalance a harmful tax system by passing SB 1215, each piece of it, by the close of business June 6, this year.

Martin L. Mador is legislative and political chairman of the Connecticut Sierra Club.