Tax Shift: Free Towns From Incentive To Sprawl

December 17, 2006
Commentary By HEIDI GREEN

The U.S. population just topped 300 million, and it will be at 400 million in a generation. It's important that we in Connecticut think carefully about where and how we want to grow. Yankee common sense tells us to make the most of existing roads, sewers and water systems, and to protect our scenic shoreline, historic sites and green spaces.

Maintaining these elements of Connecticut life will be a big challenge. To meet it, we have to review a number of policies, starting with our current tax system. It helps drive sprawl.

Our cities and towns rely almost exclusively on the local tax on homes, businesses and vehicles to cover the cost of municipal services, especially schools.

Public education eats up 65 percent of local budgets, and the cost increases 3 to 4 percent a year. This forces our mayors, first selectmen and finance committees to scramble every year to bring in new revenue while holding down other costs, from public works to police.

They find the needed new revenue by the historically unpopular method of raising taxes, or they court new development; big houses on big lots (where the property tax collected will be big enough to offset the cost of any schoolkids who might live in those homes), childless artist and active adult communities, or sprawling retail strips.

They court that development at the expense of forest and farms, air and water quality, the viability of local agriculture, and homes working families can pay for.

Smart development is compact and pedestrian-friendly. It includes a mix of housing, shops, offices and other uses. It capitalizes on the public transportation, sewer and water lines we already have. It relieves the pressure to subdivide farmland and open space by reusing existing sites and filling in between them.

But in Connecticut, many of our fastest-growing towns have very limited public transportation, and no public waste and water systems. We aren't growing smart because our revenue structure forces towns to compete against one another for sprawling new development to pay for local services instead of cooperating with one another to encourage new growth in places where it enhances our quality of life.

Rebalancing the state/local revenue portfolio is a challenge, but not an insurmountable one. If we paid for public education by increasing the progressivity of our income tax and lowering the property tax, that would help us grow smarter. Towns would no longer be compelled to seek development that short-circuits our long-term goals.

Shifting education costs to the state would allow towns to lower the tax that farmers pay on their land. Shifting new development to existing population centers will allow cities to reduce the rates that businesses, elderly and low-income residents pay on their properties.

Growing smarter will give our transit systems the economies of scale needed to maximize their fare box receipts. It will allow us to protect our watersheds and preserve wildlife habitat and recreation areas at a significantly lower cost than purchasing them outright. It will allow us to reduce our reliance on our cars, thus reducing congestion and pollution.

On the household level, switching a share of education costs from the property tax to a more progressive income tax will allow many higher-income residents who itemize their federal tax deductions to get back a bigger share of the taxes they pay. And it will allow low- and fixed-income residents to pay for schools and services based on what they earn, not what their home might be worth in a volatile real estate market.

Gov. M Jodi Rell was elected by a landslide. We encourage her to introduce a smart growth budget in which the state assumes a larger share of education costs. It will get towns out of the taxing rat race and protect our quality of life.

Heidi Green is executive director of 1,000 Friends of Connecticut.