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Sales Tax Would Flow to Regions

Hartford Courant

March 21, 2010

Thus far, Connecticut has largely wasted the fiscal crisis. Some other states have streamlined and reorganized; ours has been unable to eliminate minor boards and commissions.

Another opportunity presents itself.

With cities and towns facing budgetary nightmares, mayors have asked the legislature to create a first-ever regional sales tax. The idea at this point is to raise the 6 percent sales tax to 7 percent and give the added 1 percent to regional organizations that would distribute the money to area towns.

As it happens, a legislative commission studying regional efficiencies will propose a somewhat similar idea, a 3 percent increase in the hotel tax, which will be collected by the state and distributed in equal part to all towns, the host community and regional planning organizations, on a per-capita basis, for regional initiatives.

The first thing to say about both of these proposals is that they don't involve increases in the local property tax. The state's heavy reliance on property taxes encourages poor land use and wasteful competition for new business.

Also, most town leaders understand they can save money via regional efficiencies. When the legislature made $11 million in regional incentive grants available two years ago, the money was quickly snapped up and used for online permitting, a regional animal shelter and other very worthwhile projects.

So why not develop the tax proposals into a regional incentive program? If the money is used in ways that alleviate pressure on local property taxes, and create a regional structure, the state will be better positioned when the economy finally turns its face toward the sun.