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Rell To Renew Tax-Cap Proposal

By CHRISTOPHER KEATING, Capitol Bureau Chief

December 20, 2007

Reviving an idea that was rejected by Democrats more than six months ago, Republican Gov. M. Jodi Rell said Wednesday that she will reintroduce her plan to cap property taxes in cities and towns.

In a year-end interview, Rell said she will return to the proposal, which would require cities and towns to limit property tax increases annually to no more than 3 percent. Municipalities would be permitted to raise taxes above that level if the voters approve it in a referendum.

"The property tax cap will be back, which will help cities and towns," Rell said.

Rell rejected assertions by Democratic lawmakers that they did not have enough time during the last legislative session to properly analyze a complex plan that would have a major impact on all 169 cities and towns.

Although the last session started in January, Rell did not reveal her property tax proposal until March 28, spurring complaints from Democratic leaders about having too much on their plate to digest all at once.

"Don't tell me they didn't have enough time when they can propose a bill on the first of June and vote on it by the middle of June," Rell said Wednesday.

Critics say that a statutory cap could throw municipal finances into chaos, usurping local control over spending and perhaps threatening municipal services in communities across the state. Big-city leaders, such as Hartford Mayor Eddie Perez and New Haven Mayor John DeStefano, opposed the plan.

Democrats were immediately skeptical Wednesday when told of Rell's latest statements.

"First of all, a one-size-fits-all plan does not work," said Rep. Cameron Staples, a New Haven Democrat who is co-chairman of the tax-writing finance committee. "A 3 percent limitation for Hartford is not the same as a 3 percent limitation for Bolton. ... A cap is essentially setting communities up to fail."

If health care costs are increasing by 10 percent annually and energy costs are jumping by 6 percent to 8 percent, meeting the 3 percent cap would be impossible for some communities, he said.

"I think they won't be able to do it — just like the state can't control its health care costs," Staples said. "We can't live within our spending cap. So how do we expect towns to live within a spending cap?"

Staples is co-chairman of a task force on property taxes — with Rell's deputy budget director, Michael Cicchetti — that is expected to issue a report before the legislative session begins Feb. 6.

Rell is seeking the committee's opinion, and the final details of her plan will not be written until she reviews the committee's work, said Christopher Cooper, Rell's spokesman.

Overall, 43 states have some limits on property taxes or spending, and 29 limit property tax increases.

Senate Majority Leader Martin Looney, a New Haven Democrat, said the plan would make sense only if there were a massive infusion of state money to help cities and towns. If pension, health care and energy costs explode, mayors would be forced to sharply cut the other parts of the budget to reach an overall increase of 3 percent or 4 percent, he said.

"It is often a very different thing in theory than in practice," Looney said. "The crunch falls on municipal employees and supplies, and safety equipment and police and fire overtime. It's sort of a punitive and arbitrary thing, and not realistic."

Rell's original proposal would allow any community to ignore the 3 percent cap if two-thirds of the city or town council approved a referendum and a majority of voters approved a larger tax increase.

Besides the local override by voters, Rell's plan would allow other exceptions to permit towns to raise taxes at a higher rate. Those include emergencies, such as massive fires, hurricanes or other catastrophes. In addition, massive expenses, such as a new sewer plant, would be exempted from the total.

Senate President Pro Tem Donald Williams said one problem is that richer towns could afford to burst through the cap, but poorer towns could not.

"You can't have real property tax reform by waving a wand in the form of an arbitrary cap," Williams said. "People want property tax reform, but it's got to be real. It can't be arbitrary and have a punishing effect on poorer towns."