City Sales Tax Dies

(Updated) Shoppers like Tanea Drummonds (pictured) won’t be slapped with an extra tax to buy an IKEA bed: A proposal to create a city sales tax is dead.

Drummonds was strolling through IKEA​’s bedroom section this week looking to outfit her daughter’s new room. She was one shopper who would have been the target of a so-called penny tax proposal at the state Capitol. The bill would send distressed cities some added revenue by allowing them to add one percent to the 6 percent sales tax.

New Haven’s Mayor John DeStefano, Jr. joined mayors from three other cities in lobbying at the Capitol for the bill. DeStefano argued the bill would help make up for the city’s reliance on state aid. The city prayed for the penny tax to inject $15 million into the FY07-08 budget, which faces a $9.5 million shortfall.

The bill was raised before the legislature’s joint Finance, Revenue and Bonding Committee, which faces a Thursday deadline for approving all its bills.

(Update: The penny proposal didn’t shown up on the agenda at the committee’s final meeting on Wednesday. The idea had failed.)

While committee co-chair New Haven State Rep. Cameron Staples (at right in photo, debriefing City Hall lobbyist Laoise King) refrained from calling the proposal ​“dead” on Tuesday, the mood at the Capitol was that the bill has little chance of surviving the week.

“I do not expect it to come before committee,” said State. Sen. Eileen Daily, who co-chairs the committee alongside Staples.

“Members thought it was too chaotic a proposal,” she said. With the potential of driving business out of city limits, the proposal could end up ​“a revenue loser, not a revenue enhancer.”

A sister proposal, also supported by New Haven City Hall, would have raised the state sales tax by half a penny, with new funds sent to the regional Council of Governments. That bill appears similarly doomed, according to Daily.

“You’re not likely to see a sales tax increase” approved this session, the senator said.

The penny tax was supported by the cities of New London, Stamford and Bridgeport, where the mayor considering selling City Hall to balance the city’s books.

Hartford’s Mayor, Eddie Perez, was absent from the lobbying crew. ​“Mayor Perez has concerns with any effort that could discourage business in Hartford,” said his spokeswoman, Sarah Barr. She said he was concerned that both shoppers and businesses would be driven outside Hartford unless the tax were levied uniformly across the state.

DeStefano himself has admitted the penny tax is far from perfect. The proposal arose ​“because we came increasingly discouraged” with property tax stress, he said in an interview last week. ​“None of us are crazy about this penny tax idea but we’re less crazy about the pressure that’s being put on residential tax payers.”

The City of New Haven estimates the penny tax would pour $21 million in revenue over a 12-month period into city coffers. If enacted in October, it would produce $15 million for the city’s FY08-09 budget. Most of the revenue would come from the IKEA furniture store.

Some shoppers at IKEA said they thought they could swallow an extra penny tax, because IKEA has good deals anyway and attracts suburban shoppers. ​“Look at the cars in the parking lot,” said Justin Thomas, a young dad from Norwich. ​“It’s not all college kids here.”

Drummonds, moving between the bookshelves and bed frames, balked at the idea of more taxes.

“That’s highway robbery!” she said. Drummonds rents a home in New Haven’s Dwight neighborhood, where she keeps ​“falling in potholes everywhere.”

“It’s not fair,” Drummonds said. ​“They need to stop taking our money and fix our streets.”

Reached after a caucus huddle Tuesday afternoon, Staples said the committee is ​“exploring other options” besides the penny or hay-penny tax. (A third bill that would have let municipalities share a portion of hotel tax was also passed over in committee Tuesday.)

“The Democrats on the committee are very concerned about providing additional relief for municipalities,” Staples said.