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Tax Revolt

A task force formed by the mayor in September wants the state to bear some of the responsibility for the city's property tax woes

By DANIEL D'AMBROSIO, Hartford Advocate Staff Writer

December 20, 2007

The task force formed by Mayor Eddie Perez in September to address the city's property tax mess is suggesting the state fork over more cash for lost revenues on tax-exempt properties in the city, such as state-owned buildings.

Perez formed the property tax task force in response to a near-mutiny by the city's small business owners, who were outraged last spring to find out they were carrying the weight for a long-overdue property revaluation that sent values soaring. While homeowners and big business were protected from large tax increases, small business owners were left to bear the brunt of tax hikes up to 100 percent.

"Myself, personally, I cannot see giving any one group a tax break, not without first knowing the tax shift that will occur because somebody has to pay the $520 million [city] budget. That's how we got where we are," said John Tornatore, a small businessman and task force member.

The state's "payments in lieu of taxes," or PILOTS as they are known, are made to all of Connecticut's major cities to help with the shortfall created by tax-exempt properties, but Hartford, as the state capital, takes a particularly large hit from exempt property.

Tornatore points out that 47 percent of the property in Hartford is tax-exempt — that includes churches, state buildings and non-profits, leaving the remaining 53 percent to cover the city tax bill. To make matters worse, the state doesn't fully fund the PILOT program.

"PILOT as it works presently is funded by the state of Connecticut at about 40 percent across the board according to the state's own calculations," Tornatore said. "We say to the state, 'You had a $900 million surplus last year. It's time to look at PILOT and fund it.'"

Tornatore said a better-funded PILOT program could mean as much as $20 million in additional revenue for the city of Hartford.

In addition to the PILOT program, the task force identified several other areas in which the state could help Hartford with its tax dilemma, including restoring payments to cities for tax-exempt low-income housing projects.

"They used to pay 100 percent of that, unrelated to PILOT, but they started the process to eliminate that five years ago," said Tornatore. "We want that back, not just for Hartford but every town."

The task force also has a problem with a deal the utilities got themselves that allows them to depreciate their power lines and buried cables down to zero value, no longer paying personal property tax to host cities. Starting next June, said Tornatore, municipalities won't be able to collect tax from those lines and cables, which adds up to as much as $70 million in lost taxes across the state.

"All we're saying with utility lines is they make money off them," said Tornatore. "It's no different than computers. They should pay taxes."

The task force is planning to have its recommendations for state reforms to Perez before Jan. 1, and then will turn its attention to measures the city could take to improve the property tax situation in Hartford. The plan is to have those to Perez by Jan. 15. Then it will be up to the city, and the state, to take action.

"I think what we've really discovered is there's a lot going on and a lot of people who have to step up to the plate and fix it, not just state legislators," said Tornatore.