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A Turn On Taxes

Property Tax Relief Must Address Issues

May 6, 2007
Commentary By BRENDAN SHARKEY

When comparing the Democrats' budget proposal with the governor's, what stands out is the difference between sound policy and bad policy. Nowhere is this more evident than on the issue of property tax reform.

When the Democrats in the General Assembly set out to address property tax reform this year, we understood that a sound policy would require a combination of short-term relief and long-term reform.

First, the Democrats believe that taxpayers need immediate property tax relief. That's why we proposed doubling the property tax credit on the state income tax to $1,000 and directed $235 million in additional state aid this year to our towns and cities. We raise these additional funds through an overall tax package that delivers a tax reduction to 90 percent of Connecticut taxpayers, including a progressive income tax that remains lower than our surrounding states.

In addition, Democrats understand that additional money alone will not solve the property tax problem. Our current tax system, which forces towns to compete with each other for new tax revenues, leads to inefficient, short-sighted decisions regarding purchasing, land use, housing, economic development and transportation.

To create lasting property tax reform, the Democrats have created a series of new "smart growth" initiatives, such as incentive grants for towns to work across local boundaries to share municipal costs. We passed an innovative new program called HOMEConnecticut that promotes housing solutions for working families with the voluntary cooperation of town zoning authorities. And with the help of state Comptroller Nancy Wyman, we initiated a plan to save on municipal health care costs by having town and board of education employees join the state employees' health care pool.

Yet in contrast to the Democrats' comprehensive property tax proposal, Gov. M. Jodi Rell's approach has been haphazard at best. Initially, the governor called for raising income taxes on every taxpayer across the state, and giving all that new money primarily to local boards of education with only a hope and a prayer that all that money would lead to property tax relief.

After enduring weeks of criticism for her tax-for-education plan (including from her own party), the governor then announced her 3 percent cap on municipal revenues - a proposal that, like her failed car-tax proposal, generated headlines but fell apart under closer scrutiny.

A bipartisan legislative study recently found that in Massachusetts, despite a municipal revenue cap of 2.5 percent a year, property taxes still increased an average of 6.2 percent a year between 2001 and 2004, when state funding decreased. That same study showed that in California, property tax caps enacted in the late 1970s led to dramatic drops in education spending that resulted in California students scoring third from the bottom in national achievement tests from 1990 through 2003.

These experiences show that unless states are willing to back up the loss of local revenue with massive offsetting increases in state funding, caps don't result in positive change - and usually produce negative consequences.

The truth is this: Despite the governor's declaration that "it's time" for property tax reform, she has no real plan to accomplish that goal. Her only smart-growth proposal is to establish a task force to study the issue. She has no proposals for addressing the state's crisis in housing, which the Connecticut Business and Industry Association has identified as one of the most serious threats to Connecticut's economic future. And she has remained mostly silent on health care cost savings and other proposals to make our towns run more efficiently.

Will Rogers once said that "the best way out of a difficulty is through it." Sound policy requires patience, a willingness to embrace complexity and the fortitude to put that policy into action. Bad policy is the result of governing by press release and opinion polls. The Democrats' budget is sound policy, and given the facts, the people of Connecticut always choose sound policy over gimmicks.

State Rep. Brendan Sharkey, D-Hamden, is an assistant deputy speaker.