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Hartford's Tax Challenge

Revaluation The City Needs To Grow Its Taxable Property

Hartford Courant editorial

December 18, 2011

Hartford has been fiddling with its tax structure for decades, shifting the burden among residential, apartment and commercial taxpayers, trying to find the right formula to bring prosperity back.

For example, in 1989 the city capped tax hikes on residential properties and paid for it with a surcharge on commercial taxpayers. This was supposed to increase homeownership. It didn't in any significant way, but it did encourage many businesses to move to the suburbs.

The city is now in a most difficult position. It bears much of the poverty-related costs of the region -- crime, homelessness, etc. It does so with state aid and property taxes mostly, but doesn't have much taxable property because it's so small and nearly half of the land is non-taxable (government buildings and the like).

The city must attract business to rebuild its tax rolls -- a challenge when you have the highest commercial tax rate in the state at 77.17 mills.

THE SCARY SCENARIO

Can the city turn it around in 2012 and compete with the suburbs? There is no silver-bullet solution -- such as statewide funding of education -- on the horizon. Mayor Pedro Segarra and the new city council have to play the cards they've been dealt.

Step one, as Mr. Segarra is well aware, is to control spending. The city budget went from $422 million to $544 million in the decade ending last year, but this year city leaders held the line and brought the tax rate down by one mill. That trend must continue, and a state law passed at the end of the last legislative session should help.

The cap/surcharge, in retrospect a bad idea, has been phased out for the past five years, and will be gone after this fiscal year. Most cities assess property at 70 percent of fair market value, a number known as the "assessment ratio." But to allow the five-year phase-out of the surcharge, Hartford was allowed to assess residential property at a much lower ratio, now about 26 percent.

Under the new law, if the city collects more taxes than it did the previous year, the residential ratio can increase up to 5 percentage points (until it reaches a maximum of 70 percent). But if the tax levy goes down by a half a percent or more, the ratio stays where it is. This should be an incentive for residents to keep a close eye on council budget talks.

Also, commercial properties, including industrial buildings and especially large office towers, could see tax decreases ranging up to 35 percent or more because of the 2011 revaluation, The Courant recently reported.

LOWER TAXES = MORE BUSINESSES?

Though more of the burden will shift to apartment building owners, city leaders pray they can hang on until the reduction in commercial taxes leads to a surge in business activity. One good sign is that the major new downtown residential buildings are full, and hopefully a few more will be coming. The more feet on the street, the more attractive downtown is to businesses and visitors.

Also, Hartford legislators are crafting a bill that would allow the city council to grant tax breaks to small businesses that either move to the city or expand here.

That's the kind of thing that's needed. The city has lost scores of small businesses in the last several years, businesses that are the pillars of neighborhoods, businesses to which employees could walk to work. The suburbs are well populated with businesses that used to be in Hartford. Hartford needs them back.

Republican Town Chairman Mike McGarry said earlier this year that everything the council does should be aimed at building the grand list of taxable property. It certainly should be the main focus.