Governor's proposal would hit towns hard
By Denise Coffey - Staff Writer
Regional - posted Mon., Feb. 25, 2013
Gov. Dannel Malloy's budget proposal for 2014 includes a motor vehicle tax exemption for vehicles assessed at less than $20,000. Motor vehicles are subject to local property tax under current state law. Motor vehicles are assessed at 70 percent of their average retail value.
Finance directors, tax collectors and assessors across the state are looking at the impact such a change would have on municipal budgets. Those exemptions would translate into significant losses for most Connecticut towns and cities.
Canterbury Tax Collector Natalie Riemann said her town would need to increase the mil rate by 3 points to make up for the loss. “I know it's a proposal, but I don't know that it will get anywhere,” she said. “The motor vehicle tax is a municipal tax, not a state tax. It doesn't have anything to do with the state budget.”
First Selectman Austin Tanner estimated the revenue loss to Brooklyn could mean the town would need to raise the mil rate by 2.25. Finance Director Michael Martin estimated a $1.5 million loss for the town of Thompson. “We don't have a lot of expensive cars in Thompson,” he said. “It would mean about a 2.5 mil increase for the town.”
In Sterling, where the 2012 grand list of taxable property was $492,357, with an additional $60,000 in supplemental motor vehicle tax, the town would need an additional 3 mils to make up for the loss. “That's a lot of money,” said Tax Collector Anna Gagner.
State Rep. Mae Flexer (D-44) called the issue a tough one. “I don't know where the compromise is going to be,” she said. “The car tax bill is a huge nuisance, and I'm generally supportive of trying to alleviate people from that tax, but it's a huge revenue issue for the towns.”
Riemann thinks the motor vehicle tax is necessary. “That money has to come from somewhere,” she said. Taking out the motor vehicle tax means the burden would most likely fall on real estate owners. “If the tax rate goes up 3 mils, mortgage payments will have to go up because taxes are tied into escrow. When you start looking at it like that, it's a big chunk of money. At least the motor vehicle tax is spread out over many vehicles. Taxing motor vehicles seems a more equitable way of spreading the tax burden around,” she said.
Thompson resident Lynn Landry said if the motor vehicle tax isn't collected, the burden will fall on property owners. Martin thinks the proposal is unlikely to pass muster. “Collecting it is a nuisance, and it sounds great politically, but I don't think it will pass,” he said.
First Selectman Larry Groh, Jr., urged residents to call their representatives.