David Blumenthal Photo
Festa, second from right, holds court with New Haveners at the Capitol after Monday’s hearing.
Next steps: Rally more state legislators to their side, and send the governor a message.
That was the plan of New Haveners who traveled to Hartford Monday to push for changes in the way that the state reimburses cities for tax-exempt properties owned by not-for-profit colleges and hospitals.
The New Haveners testified before the state legislature’s Finance, Revenue and Bonding Committee in favor of a bill by Sen. Martin Looney that would guarantee New Haven would receive at least 50 percent reimbursement under the Payment in Lieu of Taxes (PILOT) program. The law calls for the state to reimburse cities under PILOT for 77 percent of tax revenue lost to state exemptions. But in recent years legislators have slashed that reimbursement down to 32 percent of taxes lost on colleges and hospitals (and even less on state-owned property).
The bill received a mostly positive reaction from people testifying at the hearing, though Republicans raised questions about its affordability.
After the hearing, Anna Festa, who represents East Rock and Cedar Hill on New Haven’s Board of Alders, expressed optimism about the bill’s passage.
“I don’t think it will necessarily affect us this year, but it could maybe next year,” she said. The law would take effect in fiscal year 2016.
She and other members of the People’s Caucus, a dissenting group of alders pushing to avoid a tax increase in the next city budget, organized the trip to Hartford Monday for some of the speakers at the hearing.
“I do feel the fight isn’t over, and it may take more convincing from New Haven residents to get full PILOT [funding],” said Joy Monsanto of Morris Cove, who was among those who drove up to support Looney’s bill.
Monsanto said she was disappointed more New Haveners didn’t drive up to Monday’s hearing. She faulted in part the fact that the hearing had been scheduled on a Friday night for the following Monday morning.
“We do need more Board of Aldermen support, along with more constituent support,” she said. “All citizens of New Haven should support PILOT funding.”
People’s Caucus member Michael Stratton, an alder who represents Prospect Hill and Newhallville, reported that he found New Haven legislators like state Reps. Pat Dillon and Toni Walker “very supportive” of the bill during private meetings at the Capitol Monday. He described legislators from outside New Haven as “noncommittal.”
He said one challenge is to convince legislators to create more structural change by altering PILOT rather than passing year-to-year measures to help the city in the short term. He estimated that the city loses $50 million because of PILOT shortfalls.
“They’re used spending a lot of money trying to band-aid New Haven problems rather than getting to the root of them,” Stratton said of legislators. “PILOT really gets to the root of the problem.”
Stratton labeled a planned visit to New Haven Tuesday by Governor Dannel P. Malloy to announce new money to redesign New Haven’s Dixwell Community “Q” House as a perfect example of a “tinkering zone.” While the project’s goals are admirable, it is a classic example an “around the edges” philosophy behind “special projects,” Stratton argued.
Malloy’s reelection chances, according to Stratton, would be better served by the passage of the PILOT bill, since it would motivate more voters Malloy needs on Nov. 4 in order to serve another term. In the 2010 election New Haven delivered Malloy his largest vote total with a crucial 22,298 votes —and largest plurality, 18,613 votes. That was three times his statewide margin of victory.
“Gov. Malloy needs New Haven to be excited about his candidacy and the only way he can do that this year is to pass the PILOT bill,” Stratton said. “I worry that the governor is not focused on that which is actually going to energize the voters, and the Q House is not going to energize.”
Earlier versions of this article follow:
State Told: You’re Shorting Us $50M
Stratton and Anna Festa confers with Lemar outside Monday’s hearing.
Hartford—New Haven got its chance Monday to push the PILOT button — and showed up at the state Capitol to do so.
A half-dozen advocates from the city appeared at a legislative hearing to support a bill by state Sen. Martin Looney to boost PILOT, or payments in lieu of taxes.
Looney’s bill would set up new “tiers” of needy communities to guarantee that cities like New Haven receive at least 50 percent in PILOT reimbursements for not-for-profit-owned properties that it can’t tax. State law calls for 77 percent reimbursement, but in reality the legislature has reduced payments to 32 percent.
In testimony before the legislature’s Finance, Revenue and Bonding Committee, Looney pressed an “equity” argument. Cities like New Haven have disproportionately high amounts of property it can’t tax but no way to compensate for the money lost, he said.
Other New Haveners testifying including Harp Administration aide Rebecca Bombero, state Rep. Roland Lemar, and Prospect Hill/Newhallville Alder Michael Stratton of the Board of Alders’ dissenting “People’s Caucus.”
Stratton estimated that the city loses $50 million a year from this situation. He recommended that the PILOT program raise its funding level to “50 percent of the grand list,” as the Legislature had done before 2001.
“Living in a city will likely always mean having to deal with additional costs like caring for the needy and dealing with higher social problems,” he said. “But it should not be a double bind where taxpayers also pay for benefits to those outside the city.” (Read further down in this story for a longer statement prepared by the Caucus.)
Looney, a Democrat, estimated that his bill would cost the state $90 million over five years. State Sen. Scott Frantz — a Republican who represents Greenwich, Stamford and New Canaan— expressed concern about the bill’s impact on the state budget. Looney responded that his bill would represent only a partial reimbursement for lost revenue.
“Clearly, there are benefits to having non-profit entities there,” Looney said. “That is why it is a partial reimbursement.”
State Rep. Lemar mentioned his past experience as a New Haven alder, and how low PILOT reimbursements put extra pressure on local lawmakers in trying to balance the budget.
“I remember being on the Board of Aldermen for four years and going through the budget cycle, and every year having to rely upon some late-breaking information about how much aid we’re going to get from the state to balance our budget on the local level,” he said. “I do appreciate [efforts to pass the PILOT program] … It gives our local stakeholders a better opportunity to make responsible budget choices.”
No one testified explicitly in opposition to the bill. Mary Ann Hebert of Bannon & Hebert Real Estate, which owns properties all over Connecticut, said that it was more important that the state not choose to tax individual landlords, regardless of what path it takes in funding the PILOT program.
An earlier version of this story follows:
“What We Learned In Kindergarten”
As they prepared to join other New Haveners in Hartford Monday to push for greater state aid to cities, members of the “People’s Caucus” drew on their earliest lessons in school.
The seven-member caucus — dissident members of the Board of Alders—prepared a statement to submit to the legislature’s Finance, Revenue and Bonding Committee. The committee is hearing a proposal by New Haven state Sen. Martin Looney that would send New Haven more money than it currently gets each year in Payments in Lieu of Taxes (PILOT). Those are reimbursements for the tens of millions of dollars in property-tax revenues the city forgoes each year because of land owned by not-for-profit universities and hospitals.
Looney’s is one of two game-changing PILOT bills before the legislature this session. Click here to read an overview of the two by the New Haven Register’s Mary O’Leary.
Many people concerned about New Haven’s high taxes have for years clamored for a chance to increase the amount of PILOT money the state sends the city, or else have the state start taxing hospitals and/or universities. The state has gradually dropped the amount of lost revenue for which it exempts cities to about 32 percent, down from a high of 77 percent as envisioned under law. Meanwhile, New Haven is embroiled in debate over a proposed 3.8 percent tax increase for the coming year, weighing the need to take care of basic city services against the need not to tax homeowners out of the market.
That general argument animates the statement written by the People’s Caucus, which planned to join a crowd of people lining up to testify before the committee Monday. The Caucus called Looney’s bill — which would establish “tiers“of needy cities in order to guarantee New Haven at least 50 percent reimbursement a year — a “good start.” But not enough.
“We learned in kindergarten that paying your fair share is a basic value,” the Caucus argues. “This bill has some flaws but is a recognition of that basic principle. …
“New Haven taxpayers now subsidize the region to the tune of $50 million per year. The home values have fallen, the services have decreased, the pension debt has risen and our taxes rise every year. A vicious cycle that slowly kills our best city. And makes city taxpayers the subsidizers of their regional neighbors benefits. his is classic free-riding. The city pays the tab, and everyone else enjoys the ride.
Following is the full statement:
People’s Caucus Statement
Dear Legislators,
We are a caucus of alders who come from all walks of life, cultures, races and socioeconomic backgrounds. We share two things in common. First, we are all native New Haveners, and have a deep love for our roots here. Second, we each believe that good public policy is driven by doing what’s right not what’s politically expedient, and that special interests should never win out over what’s best for all.
We learned in kindergarten that paying your fair share is a basic value. This bill has some flaws but is a recognition of that basic principle.
PILOT was a law that was supposed to ensure that city taxpayers were reimbursed for benefits state law required them to provide for non- residents.
As you know, State law limits towns to raising revenue through a property tax. So We cannot tax the 40,000 suburbanites who work in New Haven, and we cannot tax commuters or put up tolls. We must focus on taxing property within out boundaries.
And then to really complicate matters state law also prohibits towns from taxing non profit property. And New Haven is central headquarters for many of the states colleges, hospitals, and nonprofits who service most of the regions special needs population.
So in New Haven we are in double bind. Our population is made of many desperately needy people who require many city services, and the only way we can pay for them is to overtax the the 50 percent of property the state lets us tax.
So New Haven is absorbing the region’s needy, and then on top of that subsidizing the region in the form of not taxing nonprofits who mostly benefit the region as well.
Imagine the state with no Yale University, no Albertus, no Yale-New Haven Hospital, no Smilow, no Gateway. The state recognized when it originally passed pilot that 77 percent of the benefits of city-based nonprofits went to non-residents.
At 77 percent we pay over $90 million in benefits to the suburbs that without full PILOT are not reimbursed.
When PILOT was fully funded in the ‘90s and until 2001, New Haven became prosperous. It grew because it had the funding to be autonomous, keep taxes reasonable, and predictably budget.
Then the state started to cut PILOT. Over time it fell to just 32 cents on the dollar. The result: New Haven taxpayers now subsidize the region to the tune of $50 million per year. The home values have fallen, the services have decreased, the pension debt has risen and our taxes rise every year. A vicious cycle that slowly kills our best city. And makes city taxpayers the subsidizers of their regional neighbors benefits.
This is classic free-riding. The city pays the tab, and everyone else enjoys the ride. The unfairness of this cannot be denied. New Haven already deals with a very difficult population of myriad needs. Returning felons, the homeless, the disabled, the generational poor, the special needs children, and so much more. Because New Haven absorbs all these folks, other towns have 2 – 3 acre zoning, homogenous populations,few social issues, lower taxes, rising prop values. The virtuous cycles enjoyed in the suburbs is attributable to and paid for by the vicious cycle experienced in the city.
When the state adds to this burden by not paying for pilot, it creates an oppressively unfair environment. New Haven is willing to care for this state’s neediest but it goes to far when it plays reverse Robin Hood and makes us also pay for its nonprofit exemption. This is disrespectful and bad for future sustainability
Pay New Haven its full PILOT and we will continue to do the heavy lifting of caring for this states neediest. But make us subsidize the region on top of this work and you have all gone too far. The state owes us $400 million in unsatisfied PILOT over past 10 years. We will even forgive this if we pass a law that guarantees full PILOT.
The bill before you is a decent start but as drafted it leaves New Haven taxpayers still paying for non-resident benefits. The top tier should be at least 70 percent. If you amended the bill to allow for a top tier of towns who have more than 100,000 people and who have less than 60 percent taxable property, there would be 3 – 4 cities that would qualify for 70 percent PILOT reimbursement.
The benefit to the state is that you have now taken care if the imbalance. The city needs no more. No special programs. No handouts. The welfare is over. You gave given us our freedom back. That’s all we need. Respect. Autonomy. Dignity. Full PILOT.
We think everyone should be able to choose where they wish to live. We ask only that a choice to live outside New Haven is not subsidized by those who choose to live in New Haven.
Thank you for your hard work and dedication to the best values of public service.
The People’s Caucus
New Haven Alders
Claudette Robinson Thorpe
Brenda Foskey Cyrus
Carlton Staggers
Anna Saracco Festa
Richard Spears
Michael Stratton
Bravo!
Glad to see some Alders at least trying.
Keep up the good work People's Caucus.