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Real Estate Bill Expected To Pass

Christopher Keating

June 20, 2010

The state legislature is expected to vote Monday on an extension of the state's real estate transfer tax that generates as much as $25 million per year for cities and towns.

Without an extension, the portion of the conveyance tax payable to cities and towns would expire as of July 1. The issue has prompted a long-running battle between real estate agents and the Connecticut Conference of Municipalities, which represents most cities and towns.

The Realtors, however, have decreased their lobbying efforts at the Capitol after multiple legislators said they didn't think that the increased tax — which amounts to an additional $420 on a $300,000 home — had hurt real estate sales. Lawmakers are also working to eliminate the tax on the sale of foreclosed homes.

The main question now is whether the tax will be extended for two years, as requested by the mayors and first selectmen, or one year, as sought by some legislators.

"It's likely to be one year,'' said Senate Majority Leader Martin Looney, a New Haven Democrat. "Municipalities are counting on that revenue for their budgets on July 1.''

Gian-Carl Casa, a lobbyist for the cities and towns, said the municipalities are "fighting an uphill battle'' in trying to reach a two-year extension.

"It's easiest to get agreement on one year,'' he said.

The issue will be debated in a special session because the state Senate failed to vote on the matter during the final, hectic minutes of the regular legislative session that ended in early May.

The state House of Representatives had already passed the bill, and many lawmakers assumed there would be enough time for a vote in the Senate. Republican Gov. M. Jodi Rell has pledged to sign the extension.

In addition to the unfinished business of the conveyance tax, the House and Senate might attempt to override as many as seven of the 13 bills that Rell vetoed during the regular session.

Discussions and vote counts will be taken through the weekend because the legislature needs a two-thirds vote in both chambers to override a veto. The Democrats, for example, need all 24 members to vote for an override. The final decisions on which bills will be debated will be made after the House Democrats hold a caucus Monday.

One potential override, Democrats said, is on the so-called "ban the box'' bill that would eliminate the check-off box on state employment applications for whether the person had ever been convicted of a crime. Questions about convictions could be asked later in the process after the applicant was deemed qualified for the job.

Another override attempt could come on a bill establishing a special commission to study criminal sentences. Lawmakers might also debate overriding Rell's veto of the creation of three new off-track betting locations in Manchester, New London, and Windham.

Lawmakers are also preparing a catch-all bill that would not only include the conveyance tax but also a series of technical changes involving state spending and bonding. The plan is to obtain consensus from both Republicans and Democrats in both the House and Senate, thus leaving most controversial issues out of the bill.

The conveyance tax has been 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 in order to close a budget gap.

For 18 low-income, distressed communities, such as Hartford and New Haven, the tax rate was raised from 0.36 percent to 0.5 percent. The increased tax was scheduled to disappear under a "sunset'' provision, but it has been extended at least three times by the legislature.

The Realtors have said the tax is a hidden levy that is rarely mentioned until the closing on a real estate sale, and the levy has become particularly onerous at a time of falling real estate prices for many homeowners.