nothin Cities, Nonprofits Push State On Revenues | New Haven Independent

Cities, Nonprofits Push State On Revenues

Christopher Peak Photos

Vered Brandman (left), a member of Keep the Promise Coalition, and the Southwest Regional Mental Health Board, protest Tuesday against lifting nonprofits’ longstanding exemption from sales tax.

New Haven’s Joe Clerkin addresses state Finance Committee.

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.

Hartford Mayor Luke Bronin speaks in favor of a sales tax increase at Connecticut Conference of Municipalities’s morning press conference.

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 #StatusSummarySponsors
SB11/ HB5539Committee DeniedWould legalize, tax recreational use of marijuana.Candelaria
Dillon
Lemar
Walker
Porter
et al
SB 17Committee ApprovedWould make certain undocumented immigrant students (DREAMers) eligible for state college financial aid.Looney
HB 5434Committee ApprovedWould 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 6058Committee ApprovedWould establish electronic tolls on state highways.Genga
HB 5575/HB 7126Passed SenateWould regulate companies such as Uber and Lyft.Scanlon
HB 5589Passed HouseWould expand disclosure requirements for contributions to campaign funds.Dillon
Lemar
D’Agostino
Elliott
et al.
HB 5591Passed HouseWould require equal pay for employees doing comparable work.Dillon
Walker
Lemar
Albis
D’Agostino
Elliott
et al.
HB 5703Committee DeniedWould have CT enter into an agreement with other states to limit poaching” of each other’s businesses.Lemar
HJ 13/HJr 95Passed HouseWould amend the state constitution to permit early voting.Lemar
HJ 16In CommiteeWould amend the state constitution to permit absentee voting for all voters.Lemar
SB 1/HB 6212Committee ApprovedWould require employers to provide paid family and medical leave for their employees.Looney
SB 2Committee ApprovedWould make the education funding formula more equitable.Duff
SB 8Committee DeniedWould allow municipalities to adopt a 0.5% sales tax.Looney
SB 10/HB 5743Passed SenateWould strengthen hate crime laws.Winfield
SB 13/HB 6208/HB 6456Committee ApprovedWould increase the minimum wage.Looney
Winfield
et al.
Albis
Candelaria
D’Agostino
Elliott
Lemar
Paolillo
Porter
Walker
SB 137Committee DeniedWould expand birth-to-three and provide universal pre-school, among other things.Gerratana
SJ 5/HJ 1Passed HouseWould amend the state constitution to create a lock-box” for transportation funding.Duff
HB 5588Committee DeniedWould limit certain bond allocations.Dillon
Lemar
Albis
Walker
Elliott
et al.
HB 5912HB 6127Committee DeniedWould establish a 1‑cent/ounce tax on sugared beverages.Lemar
Elliott
et al.
HB 6554Committee DeniedWould tax carried interest as ordinary income.Porter
Albis
Lemar
Elliott
Winfield
Candelaria
Dillon
D’Agostino
et al.
HB 5831Committee DeniedWould provide bonding for transitional housing for NH female ex- offenders.Porter
Candelaria
Lemar
Winfield
Looney
Paolillo
SB 631Committee DeniedWould provide bonding to make structural improvements to the Shubert Theatre.Winfield
Looney
Walker
Porter
Lemar
Candelaria
Paolillo
HB 6863Committee DeniedWould authorize bonds for renovating the Barbell Club as a youth/ community center.Canelaria
Porter
Paolillo
Lemar
Winfield
SB 649Committee ApprovedWould allow local building officials to impose fines for building w/o a permit.Looney
Winfield
Walker
Candelaria
Lemar
Porter
Paolillo
Et al.
SB 590/591Committee DeniedWould limit police ccoperation w/Immigration and Customs Enforcement (590); establish an immigrant’s bill of rightsWinfield
SB 20Committee DeniedWould require affordability to be considered in reviewing proposed health insurance rate hikes.Looney
HB 6352Committee ApprovedWould establish a deposit system for car tires.Ritter
Gresko
McCrory
HB 6901Committee DeniedWould impose a surtax on large employers that pay an average wage less than $15/hour.Elliott
HB 7278Passed SenateWould convey various parcels to New Haven, among other things.Gov’t Administration and Elections

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