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Landmark Tax Relief Bill Passes

By Matt Ritter
State Representative, 1st District (Hartford/Bloomfield)

June 23-30, 2011

Last week, the Connecticut General Assembly passed one of the most important pieces of legislation in Hartford's history.  As many residents know, if legislation was not passed to address the City's tax structure the vast majority of residents would have seen tax increases of approximately 125% beginning on July 1, 2012.  Let me repeat: 125%. Thankfully, after months of negotiations between the Hartford delegation, City officials and Metro Hartford Alliance, a deal was reached that will hopefully lead Hartford and its residents and businesses down a path of stability and lower taxes. 

To summarize, the legislation accomplishes two things.  First, it tempers the effects of revaluation which will become effective on October 1, 2011 and will impact tax bills beginning on July 1, 2012.  City estimates show that absent a legislative fix, residential properties were likely to see a large increase in taxes due to revaluation as a result of the high vacancy rate in commercial properties across the City.   This substantial decrease in the value of commercial properties would have lead to a higher tax bill for residents.  However, the bill that passed the legislature limits the amount that residential properties can increase as a class as a result of revaluation to approximately 3.5%.

The second aspect of the bill focuses on how the City moves forward after the revaluation is implemented.  The bill enables the City to continue with its differential assessment of properties.  In other towns in the state, all properties are assessed at 70% of their fair market value.  However, Hartford has a different assessment ratio for residential, apartment and commercial properties and this bill enables the City to continue to assess properties at a different ratio.  Without this differential assessment, residential properties would have skyrocketed on July 1, 2012.

In exchange for permitting the City to continue with its differential assessment of properties, the negotiations produced an agreement which ties how much the assessment rate for residential properties will increase annually to how much money is collected in taxes by the City.  For example, if the City can keep taxes within or below the rate of inflation, residential properties will see annual increases of between 0% - 4.00% .  However, if the City cannot keep taxes within the rate of inflation, residents will see larger annual increases.  Ultimately, the decision is up to the City Council and Mayor to ensure that taxes are not increased at substantially high levels.  (Note:  taxes collected should not be confused with City spending.  For example, if the City receives more money from the state or federal government, City spending could increase while the tax levy could remain the same or even decrease).

Importantly, this legislation also recognizes that City residents must be allowed to vote against large tax increases.  Thus, the bill permits a small group of residents to petition a budget to referendum that would lead to substantially higher taxes.  Therefore, the residents will ultimately have the final say about how much they will pay in taxes.

This bill is not perfect.  No single constituency group got everything it wanted but doing nothing was not an option.  It was a pleasure working with my colleagues in the legislature to draft a bill which should move the City forward in a responsible way as long as the City Council and Mayor take control of how much they raise taxes every year.