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Playing Property Tax Reform Game

March 28, 2006

Property tax reform in Connecticut is about as likely to happen as President Bush admitting that it was wrong to invade Iraq.

Almost everyone in state government, especially Democrats, claims to want relief from the ever-rising taxes that pay for the ever-rising school spending. But offer them a solution and it gets struck down faster than you can say chicken-livered. Why? There's no real need to confront the issue so long as towns can sprawl their way to tax relief.

The boneyard of reform schemes includes the famed proposal by former Democratic gubernatorial candidate Bill Curry. He wanted the state to pay an average of 50 percent of public school expenses and have towns pass the savings to residents in the form of lower property taxes. Curry proposed to pay for the increased school aid in part with an income tax increase on millionaires and $100 million in spending cuts.

Also on the scrapheap are plans to raise the income tax or the sales tax and have towns use the extra money to cover budget increases; to allow municipalities to impose their own income and sales taxes; to let school boards tax independently; and to establish regional taxes.

Property taxes can't be held down without creating other taxes to absorb the inevitable increases in education and other municipal costs.

Hartford Mayor Eddie Perez has recognized this absurdity. He may have figured out a way to make it benefit him and the city's homeowners who face hellacious tax increases of more than 70 percent if the city enacts an overdue revaluation.

Perez's trick is to propose a tax relief bill so terrifying to state legislators that it shames them into allowing him to delay revaluation year after year just to shut him up.

In 2004, Perez proposed a homestead exemption that excluded 50 percent of a home's assessed value, up to $150,000, from property taxes. In an attempt to get business support, the mayor proposed to do away with the 15 percent surcharge on commercial properties.

When business screamed that - even without the surcharge - it would still be stuck with a disproportionate share of the tax burden, the General Assembly granted Perez a three-year delay in revaluation.

Earlier this month, in need of another delay and a reform plan that hasn't already been trashed, Perez proposed an outlandish scheme. Now he wants to tax residential properties based on the owners' income and whether or not they live in their buildings.

After revaluation, owner-occupants in one-, two- and three-family houses would pay no more than 4 percent of their income in property taxes. The poorer you are, the less you pay. Many residents could end up paying even less than they do now. Absentee landlords, on the other hand, would pay dearly. As with Perez's previous plan, the 15 percent surcharge on commercial properties would be abolished.

At first glance, the Perez hybrid tax proposal looks just plausible enough to stick to the wall. Great minds have actually taken the time to analyze this sucker.

But on closer inspection, flaws begin to emerge. It doesn't eliminate the property tax as the primary source of funding for education. And it's difficult to explain to voters - let alone administer - which can be hazardous to a political career.

It's immensely safer and less thought-provoking for legislators to simply let towns continue to relieve the agony of property taxes by expanding their grand lists with big-box stores and luxury subdivisions. As long as people will pay whatever it takes to live in the splendor of suburban homogeneity, property tax reform is just a gimmick to raise voter anxiety and put state lawmakers on the spot.

That's what the mayor is counting on. No state lawmaker will vote for a scheme that would risk votes. Perez could conceivably run his game on the legislature indefinitely. Eventually, he will have produced so many cockamamie proposals that if the gutless wonders at the Capitol ever do move to ease the property tax burden, he could claim they stole his idea.

For now, they should approve another revaluation delay and move on.

Reprinted with permission of the Hartford Courant. To view other stories on this topic, search the Hartford Courant Archives at http://www.courant.com/archives.
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