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State Leaders Vow To Fix Oversight, Extend Real Estate Tax

Amanda Falcone and Christopher Keating

May 07, 2010

State Senate leaders and Gov. M. Jodi Rell are vowing to approve an extension of the real estate conveyance tax, a measure that was left stranded late Wednesday in the hectic last minutes of the legislative session.

The bill to keep the tax at current rates for two more years was never added to the Senate's final consent calendar, and the proposal died.

"I couldn't believe it," said House Republican leader Lawrence Cafero of Norwalk. "I think they forgot."

The House had already passed the bill, and it got to the Senate in plenty of time, he said.

Without an extension, the tax rates, much to the delight of real estate agents, would drop July 1 to lower levels under a "sunset" provision in the law.

The Connecticut Conference of Municipalities, which represents most of the state's 169 cities and towns, was shocked by the Senate's failure to act on the bill. The municipalities rely on the current tax rate for about $25 million a year, said James Finley, the organization's executive director and CEO.

"Unless this inaction is reversed in special session, towns and cities will have to cut back services further and consider additional employee layoffs," he said.

Senate Majority Leader Martin Looney, D- New Haven, said he anticipates that lawmakers will meet in June to extend the conveyance tax. When asked why the bill was not passed by the Senate during the regular session, Looney said there was no agreement on the bill until very late. Some lawmakers wanted to propose amendments to the bill, which would have meant a lengthy debate, he said, and time expired before the bill could go to a vote.

"I'm sure we will find a way to do it relatively soon," Looney said.

The conveyance tax is a controversial issue that has surfaced regularly at the Capitol since lawmakers decided in 2003 to increase the tax from 0.11 percent of the sale price to 0.25 percent in most cities and towns. For 18 distressed communities, such as Hartford and New Haven, the tax rate was raised from 0.36 percent to 0.5 percent.

Rell told reporters Thursday that she will favor an extension.

"I told the majority party last night — the Democrats — that I would support it," Rell said. "They said they had a bill that they were putting it on. Obviously, they didn't get it done. The towns are looking for that."

The tax has led to a pitched battle through the years between the towns, which say they need the revenue, and real estate agents who say that the increased tax harms the real estate market. Legislators said they have not seen sufficient evidence that the increased tax has harmed real estate sales.

Rell has already signed 23 bills from the session, including the $19 billion state budget compromise that was crafted with the Democrats and strongly opposed by the Republicans.

"This budget reflects the politics of what's possible," Rell said.

In addition to the conveyance tax bill, several other high-profile measures died Wednesday, including one that was proposed after the Kleen Energy blast in Middletown. The explosion killed six people.

The power plant bill would have strengthened safety measures at power plants that use natural gas. It would have made the Department of Public Utility Control responsible for coordinating state safety programs that relate to power plants in Connecticut and would have authorized the department to ensure that natural gas is used safely at a power plant.

It also would have required gas-fired power plants owned by utility companies to abide by the state building code. Neither chamber took up the bill.

The House passed a bill that would have allowed students to opt out of dissection projects if they "conscientiously object" and have written parental permission. The bill would have required students to complete an alternative assignment. The Senate did not vote on the measure.

The Senate also did not vote on a bill that would have increased the state's hotel tax from 12 percent to 15 percent. The bill, approved in the House last month, had too little support to pass in the Senate, said Derek Slap, spokesman for the Senate Democrats.