Let New Haven have its own sales tax. Let it tax downtown bars. And let it set up red-light cameras to catch speeding cars.
That wasn’t John DeStefano talking. That was the Republican candidate for governor.
Tom Foley, who’s running for governor on the Grand Old Party ticket, made those remarks Wednesday, as he stopped by the University of New Haven for a campaign event.
In a surprise move for a candidate who has shunned tax hikes, Foley came out in favor of letting municipalities levy “local option taxes,” including municipal versions of the sales tax and hotel tax.
“I believe that communities ought to have as much control over their destinies as you can give them,” Foley told the crowd.
In keeping with that theme, Foley also came out in favor of letting cities use red-light cameras to catch speeding cars, and creating an “entertainment district” in order to tax downtown bars to pay for police overtime.
Most of the time, Foley didn’t sound like a Democrat, especially when asked about another prime objective of Democratic urban mayors—fully funding Payment In Lieu Of Taxes (PILOT).
But in a few instances, he departed from the Republican script, and sounded like he could have been reading from New Haven Mayor DeStefano’s playbook.
State law prohibits local taxes except property and conveyance tax.
DeStefano has been trying to convince the Democratic-controlled state legislature for years to allow the city to levy local option taxes, which Gov. M. Jodi Rell has also opposed.
The Democratic mayor has also made a perennial push at the Capitol for red-light cameras, to no avail. Last session, he found little support in the legislature for a new idea—to let cities create taxable “entertainment districts,” so he could get a handle on downtown post-club mayhem by hiring more cops.
In endorsing these urban priorities, Foley also ended up sounding at times like his Democratic contender, former Stamford Mayor Dan Malloy.
Malloy has also long supported local option taxes. He said he is glad Foley “woke up” to the issue, but he characterized his opponent’s gift to cities as a Trojan horse.
Let Them Levy
Foley raised the tax issue in a talk before 60 economics students Wednesday morning at the university’s Alumni Lounge. The Greenwich businessman and former ambassador to Ireland took his off suit jacket, laid it down in a heap on the hardwood floor, and led students in a wide-ranging conversation that focused on the economy and jobs.
Foley promoted the local option tax as a way to help cities wean off of reliance on property taxes—another signature Democratic issue.
“With property tax as the only tax that cities and towns are able to charge, property taxes keep going up,” he said. “Many of our senior citizens are forced to leave their homes and go into institutional care much sooner than they would be in other states—much sooner than they would be, if there, in some communities, was a more equitable way of raising revenues.”
“I’m sure there was some good intentions behind having towns and cities restricted to property taxes,” he said, “but the good intentions actually ... have had adverse effects on some of our most needy citizens.”
Foley—who recently praised DeStefano’s school reform drive—said New Haven’s mayor, and other municipal leaders, should be given more control.
“Let the mayor of New Haven decide what tax policies are in the best long-term interests of New Haven,” Foley said.
DeStefano has long sought state approval for a local option tax. For at least the last three years, he put the issue at the top of his lobbying list in Hartford. He argued it would send relief to cities that are hamstrung by their reliance on the property tax.
In a post-speech conversation with three reporters, Foley said he supports giving towns the option of adding local versions of taxes, including the hotel tax and sales tax.
“I’m not suggesting that they raise additional taxes, but I don’t see why the state is telling them that they can’t,” Foley said.
Cities used to share revenue from the sales tax. Now all the revenue from Connecticut’s 6 percent sales tax goes directly to the state. Cities are prohibited from taking a piece, or adding to that tax.
In 2008, DeStefano—along with Malloy and other urban mayors—sought to change that. New Haven City Hall lobbyists, aldermen and budget watchdogs pushed hard for a so-called “penny sales tax.” Under the proposal, cities would have been able to levy an extra 1 percent sales tax, and the revenue would go back to cities. The proposal would have generated $21 million in revenue at a time when the city was laying off staff. The bill got raised in the legislature, but died in committee. Further attempts to press the issue made less progress.
As towns fear fallout from a state budget crisis this year, the Connecticut Conference of Municipalities, the main lobbyist for cities, is lobbying gubernatorial candidates for local option taxes.
Malloy, who served as Stamford mayor for 14 years, said he has been pushing for local option taxes for as long.
“I’ve been advocating for that issue for years,” Malloy said in an interview Wednesday. Of Foley’s recent support, Malloy said: “I’m glad that he’s woken up to that issue.”
However, Malloy warned that if Foley becomes governor, the new taxes may not be such a gift.
Malloy noted that just Wednesday morning, Foley announced he would balance the state deficit without raising taxes.
“This is interesting—this is a guy who doesn’t want to see taxes raised, but he’s supporting local options. You know what that means? He’s going to cut state aid to municipalities.”
“That’s not local options for additional revenue,” Malloy cautioned—it’s local options for recovering from state funding cuts.
New Haven Democratic Town Chairwoman Susie Voigt shared his skepticism about Foley’s comments. “I would expect much more comprehensive tax reform than to suggest that we all start taxing people more for the things we do in the city.” She said she support’s Malloy’s more wide-sweeping property tax reform.
Foley was asked if adding a local option tax would indeed be a stepping-stone to cutting municipal aid.
“I don’t think it’s that black and white. We’re providing a tremendous amount of aid to towns and cities. I don’t think anybody’s saying let’s open them up to new sources of revenue” and cut aid. He advocated letting municipalities set their own local taxes, then allocating additional state support based on remaining need.
Foley was asked if he would restore funding to PILOT, the state’s program for compensating cities for nontaxable land owned by universities or hospitals. New Haven has a lot of nontaxable land, and its budget has suffered as PILOT funds dwindled.
DeStefano and aldermen have pleaded at the Capitol for a fully funded PILOT program, with few results.
Foley said allowing city to create a sales tax or hotel tax would “alleviate” the problem of diminishing PILOT funds.
“New Haven could find other sources of revenue,” he said.
Would he fully fund PILOT?
“I would prefer if a city could figure out a way to generate revenue,” rather than have the state “just compensate them because they don’t have the tax” base.
Would he eliminate PILOT?
Foley said no. But “I think over time, if you could get a city like New Haven to open it up to a different regime of taxes and ways of generating revenue so that the state didn’t have to provide the support it’s provided, that would be a good thing.”
Red Lights, Bars
In an interview Wednesday, DeStefano welcomed support on one of his pet issues—but said that doesn’t make him a Foley convert.
Of Foley’s stance on the local option tax: “I think that having a broader revenue base is a smart thing,” DeStefano replied. “I think Connecticut is way too dependent on property tax.”
In general, DeStefano argued, “the delegating of more choices to municipalities makes a lot of sense.” That’s true on issues such as creating entertainment districts for bars, and using red-light cameras to fine traffic scofflaws.
On both of those issues, DeStefano and his allies have failed to convince either the Democratic legislature or the governor to give cities broader power.
“I just think they over-regulate cities and towns,” DeStefano concluded.
Reached later by phone, Foley came down on DeStefano’s side on both of those issues.
Foley said he hadn’t considered the red-light camera question before. “I think that cities ought to be free to make those choices on their own,” he replied, “unless it violates some right of privacy.”
On the entertainment district: “I’m not sure why the state would be interfering with a city who thought this was good policy,” Foley replied. He said the state should not intervene with “the city and town’s abilities to be flexible and raise their revenues.”
With so much agreement between them, would New Haven’s mayor—who ran unsuccessfully for governor in 2006 on the Democratic ticket, after beating Malloy in a primary—support the Republican?
DeStefano said no.
“I don’t even know Tom Foley,” DeStefano said. “I know Dan Malloy.” He said as an urban mayor, “Malloy is a heads-and-shoulders choice over Tom Foley. ... He’d be better for New Haven and Connecticut.”