Walker Bill Could Keep Property Taxable

Hartford—Two groups facing financial pressure — cities and not-for-profits — have found themselves on opposite sides of a state bill that would give New Haven power to limit new property-tax exemptions.

Proposed by New Haven State Rep. Toni Walker, Hartford Rep. Matthew Ritter and New London Rep. Chris Soto, the bill would allow municipalities to vote on whether or not to allow a new purchaser to take a property off the tax rolls. Right now if a not-for-profit entity buys a property that generates taxes, the property comes off the tax rolls.

“This is another way of trying to look at property that is taken off the books in towns like New Haven, New London, and Hartford where the tax base is shrinking, giving local entities more control,” Walker said after the hearing. ​“We’re in a tight fiscal year where we’ve got to give our local municipalities a way to level the mill rates. If you’re going to take property away from our tax base, you’ve got to come before the Board of [Alders]. It’s up to them to make the recommendation. I think it’s time.”

Pressure On Cities

Legislators, lobbyists and members of the public debated the proposal at a Finance, Revenue and Bonding Committee hearing Friday afternoon.

In New Haven, 47 percent of the real estate currently qualifies as tax exempt. The state has a program to reimburse cities for some of the lost revenue (called Payments in lieu of Taxes, or PILOT), but has been funding it at under 40 percent. Cities have been seeking ways to make up more of the lost revenue.

At Friday’s committee hearing, advocates of the bill argued that they can’t afford to let more property slip off the rolls. Already, several of them said, property tax exemption has saddled middle- and low-income taxpayers with too great a burden.

“Allowing the local legislature to determine the tax treatment of new property acquisitions would enable them to prioritize exemptions for uses and operators who most need them, while providing protection to residents facing displacement and rising taxes,” New Haven’s state legislative liaison Mike Harris, wrote in testimony submitted to the committee.

“… As our hospitals, colleges, and clinics expand to serve more and more of the region’s residents, they take more and more of our City’s limited land off of the tax rolls, shifting our increased burden for services onto fewer resident taxpayers, who often make less than their neighbors in surrounding cities,” he added. ​“Meanwhile, the State’s reimbursement system (PILOT) has offered less and less funding replacement each year.

A large New London contingent including Soto also backed the bill at the hearing. Soto focused on families ​“struggling to pay their car taxes, their mortgage taxes.”

New London Mayor Michael Passero noted that 44 percent of the property in his six-square-mile city is tax exempt. He called the bill ​“a modest first step in backing away from the very generous property tax exemption granted to nonprofits at the expense of businesses and families left to carry the burden of municipal services that all properties in the city enjoy.”

“The state’s generosity is nice, but you really should let us decide if we can afford to share in your generosity to the nonprofits in our city,” he said. ​“New London’s businesses and families need tax relief .… This is just an unfair shift.”

Zak Leavy, legislative and political advocate for the AFSCME Council 4 government workers union, argued that as ​“large numbers of wealthy nonprofit hospitals“buy up buildings and take them off the tax rolls in New London, Hartford, and New Haven, citizens struggle to keep up with their own taxes. In his hometown of New London, Yale-New Haven Health Services Corporation last fall took over Laurence + Memorial Hospital.

“This then impacts the municipality’s ability to continue providing the necessary services for the public or face raising property taxes which disproportionately hit lower-income and elderly residents,” he said. ​“This will help empower municipalities and reduce the times when they have to make painful cuts to services or raise property taxes.”

“This bill, tied with greater municipal aid from the state, could go a long way in helping the financial health of municipalities that have an increasing amount of property being brought by large, wealthy hospitals claiming to be nonprofits,” he added.

Pressure On Not-for-Profits

Representatives of colleges and several not-for-profits responded that property tax exemptions enable their institutions to expand into neighborhoods, purchase and maintain property they could not otherwise afford, and maintain financial stability amid uncertain state budget times. They argued that leaving property taxation status up to municipalities opens up the possibility of a hospital and educational institution exodus, an argument that echoed concerns raised at a hearing and vote last month on a minimum wage hike.

That was the case for Jennifer Widness, President of the Connecticut Conference of Independent Colleges (CCIC).

“Nonprofit institutions are offering services for the public that would normally be offered by the state. That is why they have a tax exemption,” said Jennifer Widness, president of the Connecticut Conference of Independent Colleges (CCIC). ​“They receive little to state money to do so, and our tax-exempt status is the little we get for providing these services. To be taxing these private entities at a time of fiscal constraint for the state seems counterintuitive. Higher ed is a perfect example of this … You need us to expand our services and award more degrees.”

Widness pointed to Sacred Heart University, which just purchased the former General Electric campus in Fairfield to grow its computer science programs and build a student innovation center.

“If they were going to be taxed, they never would have purchased that property,” Widness said. Besides, she added, ​“We do give back significantly to our communities” with sizable volunteering programs. Students make a positive economic impact wherever they are, she added — they want to purchase things in the places where they live, and it’s better to keep them living in Connecticut. 

Jeffrey Shaw, director of public policy for the Connecticut Community Nonprofit Alliance, called the bill ​“cataclysmic for the state.” If municipalities start to vote for property taxation for not-for-profits across the state, he predicted, not-for-profits will leave in droves — and jobs and opportunities for community growth will go with them. The alliance represents over 500 organizations.

“This proposal erodes … social contact between community nonprofits and government and fails to recognize the value nonprofits bring to local communities,” he said. ​“This legislation would harm communities in the long run.”

Municipalities, he said, need to recognize what happens when a city’s nonprofit network flourishes and citizens received free benefits like low-cost community healthcare support and shelter for homeless families ​“to keep them stable, safe and productive.” If not-for-profits aren’t able to grow — which, he reasoned, they won’t if they have to pay taxes on properties — local governments might actually see an uptick in emergency room care and joblessness, he predicted. Not-for-profit employees already pay state and local taxes, and bolster the economy by buying everything from food and gas to diapers, he added. 

“Chronic underfunding and midterm reductions, and uncertainty caused by proposals like this bill, are making it increasingly difficult for nonprofits to operate. Nonprofits should be filling their positions and not have to use scarce resources to fight over a foundational component of why it exists in the first place — to fill community needs instead of fall into the hands of government.”

Questions Still Unanswered

Passero cited a church as an example of an institution whose status he’d be challenging the next time it bought property under the bill. Democratic Norwalk Rep. Bruce Morris asked where that factors into Establishment Clause of the Constitution and its separation of church and state. If New London’s local government votes, for instance, that a new church’s property could not be tax-exempt, does that set a precedent for other religious institutions in the city? 

“How will you remove yourself from any sort of religious discrimination?” he asked Passero.

Passero rerturned to the argument that the taxpayers should not have to shoulder the burden of tax-exempt institutions in the town.

Republican State Sen. Toni Boucher argued that if municipalities start changing property taxation for private colleges and hospitals — and small community hospitals may need to expand but not be able to afford to.

Republican Fairfield Rep. Laura Devlin, responding to Passero, argued that ​“I just don’t know if it’s a good thing to have these nonprofits leaving Connecticut.”

Asked about the concerns for not-for-profit organizations, Walker said Saturday afternoon that she stands by the bill.

“It’s is going forward, not going backward,” she said. ​“We have so little taxable property now — we’ve got to talk about it, because it’s going to give residents a higher mill rate [if more property comes off the rolls]. We’ve got to look at it — things have been eliminated and reduced in the budget are things that cities and towns are going to have to replenish. We’ve gotta make sure that nonprofits are supporting the cities that they’re in.”

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