Cities, Nonprofits Push State On Revenues

Hartford—A small bump in the statewide sales tax and other reforms could deliver up to $55 million into New Haven’s coffers — bringing the city a step closer to locating missing revenue it needs from the state government.

That sales tax increase and several other revenue-generating measures were on the agenda at the Capitol on Tuesday. The largest association of cities and towns demanded action at a morning press conference, and their members testified in favor of overhauling the reliance on property tax at a public hearing before the Joint Committee on Finance, Revenue and Bonding.

As legislators squabbled over their own budget deficit, local governments called for the state to hike the sales tax, up the reimbursements for tax-exempt property, and charge higher fees for several registrations and licenses — searching for money wherever they could find it and raising the ire of Connecticut’s nonprofits in the process.

After testifying, New Haven’s top budget director expressed confidence that the money will arrive. ​“In the mayor’s budget, which is before the board now, there’s an expectation that almost $30 million more [than last year] is coming, from one bucket or another. This is where it’s all being worked out,” Joe Clerkin, New Haven’s budget director, told the Independent. ​“We have an expectation we’re getting more.”

But a bipartisan budget deal assembled over several months— scheduled to be voted on Tuesday at a separate hearing of the legislature’s Appropriations Committee— was crumbling. The Finance Committee’s Democratic leadership dashed in and out of the hearing, as a 79-person queue of public testimony kicked off at 11:30 a.m. and continued for hours. Around 3 p.m., the Democrats announced there would be no budget vote that day, and Senate President Pro Tem Martin Looney of New Haven told the Connecticut Mirror that his party would not recommend tax increases in this budget.

Without agreement about how to spend the government’s funds in the Appropriations Committee and with negative signals from the leadership, could the Finance Committee move forward on a sales tax increase?

“I think that’s a conversation we need to have, and we need to determine what the next steps are,” said State Rep. Jason Rojas, an East Hartford Democrat who co-chairs the Finance Committee. ​“I think there’s some sentiment among the co-chairs that we should still report something out of the Finance Committee and do the job that we’re supposed to do. But it’s tricky, because I’m not aware of any situation in which one money committee didn’t report something out.”

Talks with the party leadership about how to proceed are ongoing, Rojas added. A deadline for voting on a budget porposal looms by close of business on Friday.

Cities are anxiously watching the legislature’s moves because they’ve been stiffed by the state in the past. Under the Payment in Lieu of Taxes, or PILOT, program, the state government is supposed to reimburse 77 percent of the lost taxes for colleges and hospitals and 45 percent for other exempt property. For years, the legislature hasn’t fully funded the program: New Haven receives roughly 40 percent for colleges and hospitals and 19 percent for other property, Clerkin estimated.

PILOT’s half-full tank is particularly worrisome to New Haven’s officials, because the share of tax-exempt property is growing. A full 53 percent of the city’s property has been taken off the grand list. If PILOT funds don’t come through, the remaining properties shoulder a heavier burden in their property taxes. ​“It squeezes your ability to raise revenue,” Clerkin said.

The inconsistency of those payments is part of the reason the Connecticut Conference of Municipalities, which represents 163 local governments, suggested the state allow for revenue diversification. Their recommendations, compiled in a January report called ​“Securing the Future,” formed the basis for HB 7322, the tax package that drew the most attention Tuesday.

“We think [property tax is] the single most regressive tax in Connecticut that really stiles our ability currently to be competitive both within the region and across the rest of the country,” said Joe DeLong, CCM’s executive director. He pointed out that the property taxes can be ​“crushing” to homeowners and business-owners, and he argued they dissuade young people from starting families in Connecticut.

Most notably, the bill would raise the sales tax from 6.35 percent up to 6.99 percent and allow cities and town to keep the difference, which could raise $440 million for municipalities. (CCM has vowed to oppose the bill if it does not come with guarantees that proceeds and service-sharing arrangements cannot be touched by collective bargaining agreements.) While higher than Massachusetts’s rate of 6.25 percent, the combined rate would still be lower than every other state in the region, from Pennsylvania to Rhode Island; New Jersey tops out the list, at 10.5 percent. (Read here for Elm City residents’ reaction to a higher sales tax.)

The bill would also alter PILOT’s reimbursements, collapsing the two separate rates into one equalized rate of 55.5 percent. With three colleges and a major hospital, New Haven stands to gain $46.08 million under the proposed system, according to CCM’s calculations.

And in place of disbursing Town Aid Road (TAR) grants, local governments could charge a fee of up to $50 a vehicle. New Haven would lose the $1.25 million it won in grants, but it could levy up to $2.60 million in fees.

One other change galled attendees: rolling back not-for-profits’ exemption from paying sales tax on the goods and services they buy, worth $216.2 million. The homeless shelter Columbus House said it might axe members of its residential staff; Clifford Beers Clinic threatened to lay off two employees; Long Wharf Theater and Yale Repertory threatened to drastically cut back on employees, local printing and advertising, hotel stays and student programs to save $410,000; and Albertus Magnus College said it would reduce financial aid.

The reversal would ​“would take funds from services for people with developmental disabilities and homeless shelters, from people struggling with substance abuse, victims of domestic violence, and arts and cultural programs, among other services,” said Peter DeBiasi, chairman of the CT Community Nonprofit Alliance’s board of directors.

Connecticut Voices for Children proposed instead adding services, like legal representation, interior design, tennis lessons, pet grooming or limousine rides, to the state sales tax.

Republicans savored the opportunity to slam their Democratic colleagues. ​“For years, we’ve heard the refrain in this building, ​‘Tax the rich, they’re not paying their fair share.’ It seems we’ve entered into a new realm of debate: Tax the organizations that are there to serve the poor,” said State Sen. Len Suzio, a Republican representing Cheshire and Meriden.

Even New Haven officials, who came to support the package, said they were queasy about taxing charities. ​“It’s a two-edged sword: We don’t not want [the universities, hospitals and state land],” Clerkin said. ​“It’s a part of who we are.” He added, ​“It’s hard to square that.”

Rojas took the blame, saying that the two Democratic co-chairs came up with the idea after a close reading of CCM’s report, which referenced charging colleges and hospitals for whatever the state didn’t fork over. ​“Obviously, nobody wants to take ownership of that one,” he said. After the outcry, ​“there’s some pretty significant concerns” about moving forward with that provision, Rojas said. The chances that the tax on nonprofits sees the floor? ​“Unlikely,” he said.

Of course, that was the story with most of the day. In an evenly divided legislature posturing for the next election, it wasn’t clear any revenue-raising bills would be making it out of the committee.

Following is a status report on bills of particular interest to New Haven before the state legislature this session:

The 2017 Agenda

Bill #	Status	Summary	Sponsors
SB11/ HB5539	Committee Denied	Would legalize, tax recreational use of marijuana.	Candelaria Dillon Lemar Walker Porter et al
SB 17	Committee Approved	Would make certain undocumented immigrant students (DREAMers) eligible for state college financial aid.	Looney
HB 5434	Committee Approved	Would have CT join with other states to elect the President based on popular, rather than Electoral College, vote.	Winfield, Porter Albis Elliott D’Agostino et al.
HB 5458, HB 6058	Committee Approved	Would establish electronic tolls on state highways.	Genga
HB 5575/HB 7126	Passed Senate	Would regulate companies such as Uber and Lyft.	Scanlon
HB 5589	Passed House	Would expand disclosure requirements for contributions to campaign funds.	Dillon Lemar D’Agostino Elliott et al.
HB 5591	Passed House	Would require equal pay for employees doing comparable work.	Dillon Walker Lemar Albis D’Agostino Elliott et al.
HB 5703	Committee Denied	Would have CT enter into an agreement with other states to limit ​“poaching” of each other’s businesses.	Lemar
HJ 13/HJr 95	Passed House	Would amend the state constitution to permit early voting.	Lemar
HJ 16	In Commitee	Would amend the state constitution to permit absentee voting for all voters.	Lemar
SB 1/HB 6212	Committee Approved	Would require employers to provide paid family and medical leave for their employees.	Looney
SB 2	Committee Approved	Would make the education funding formula more equitable.	Duff
SB 8	Committee Denied	Would allow municipalities to adopt a 0.5% sales tax.	Looney
SB 10/HB 5743	Passed Senate	Would strengthen hate crime laws.	Winfield
SB 13/HB 6208/HB 6456	Committee Approved	Would increase the minimum wage.	Looney Winfield et al. Albis Candelaria D’Agostino Elliott Lemar Paolillo Porter Walker
SB 137	Committee Denied	Would expand birth-to-three and provide universal pre-school, among other things.	Gerratana
SJ 5/HJ 1	Passed House	Would amend the state constitution to create a ​“lock-box” for transportation funding.	Duff
HB 5588	Committee Denied	Would limit certain bond allocations.	Dillon Lemar Albis Walker Elliott et al.
HB 5912HB 6127	Committee Denied	Would establish a 1‑cent/ounce tax on sugared beverages.	Lemar Elliott et al.
HB 6554	Committee Denied	Would tax carried interest as ordinary income.	Porter Albis Lemar Elliott Winfield Candelaria Dillon D’Agostino et al.
HB 5831	Committee Denied	Would provide bonding for transitional housing for NH female ex- offenders.	Porter Candelaria Lemar Winfield Looney Paolillo
SB 631	Committee Denied	Would provide bonding to make structural improvements to the Shubert Theatre.	Winfield Looney Walker Porter Lemar Candelaria Paolillo
HB 6863	Committee Denied	Would authorize bonds for renovating the Barbell Club as a youth/ community center.	Canelaria Porter Paolillo Lemar Winfield
SB 649	Committee Approved	Would allow local building officials to impose fines for building w/o a permit.	Looney Winfield Walker Candelaria Lemar Porter Paolillo Et al.
SB 590/591	Committee Denied	Would limit police ccoperation w/Immigration and Customs Enforcement (590); establish an immigrant’s bill of rights	Winfield
SB 20	Committee Denied	Would require affordability to be considered in reviewing proposed health insurance rate hikes.	Looney
HB 6352	Committee Approved	Would establish a deposit system for car tires.	Ritter Gresko McCrory
HB 6901	Committee Denied	Would impose a surtax on large employers that pay an average wage less than $15/hour.	Elliott
HB 7278	Passed Senate	Would convey various parcels to New Haven, among other things.	Gov’t Administration and Elections