New Statewide Property Tax Proposed In CT: What To Know

CONNECTICUT — State Senate President Pro Tempore Martin Looney (D-New Haven) has proposed a set of property tax reform proposals aimed at reducing the economic disparity in Connecticut.

Looney proposed a statewide 1 mill ($1 tax per $1,000 assessed value) on properties worth $430,000 or more. The proposed formula would exempt the first $300,000 of assessed value; homes in Connecticut are assessed at 70 percent of their fair market value, which works out to around $430,000.

Homeowners with a home valued at $500,000 would pay $50 annually and those who own a $1 million home would pay $400, Looney said.

“We have such a great disparity and a great inequity in the property tax of the state of Connecticut that has really held us back in so many was in terms of economic development,” Looney said during a news conference about the proposals.

The money would then go back to help property tax relief to help municipalities that have high tax rates. The tax would raise around $73.5 million, he said. The exact mechanism of how taxes would be applied to residences and commercial properties would have to be ironed out in a committee meeting, he said.

“This isn’t necessarily raising taxes across the board, this is targeting tax reform,” he said.

Municipalities in Connecticut derive most of their operating revenue from property taxes on residential and commercial property, but the system has long been considered regressive because it doesn’t take into account an owner’s ability to pay. The issue is more apparent when looking at the motor vehicle tax system where the same exact vehicle is taxed at a much higher rate in New Haven than it is in Greenwich.

Legislative Republican leaders criticized the proposal and said the tax would affect many middle-class families.

“It hits all communities,” state Senate Republican Leader Kevin Kelly said at a news conference. “This isn’t like your mansions down in southwestern Fairfield County only. A $400,000 home is in every single town.”

House Republican Leader Vincent Candelora said new taxes would only increase economic anxiety during an unpredictable time with the pandemic.

“It’s disturbing that we see these type of proposals cropping up, more taxation on our Connecticut residents and our families,” he said.

Property owned by non-profits such as colleges and hospital systems are exempt as are properties owned by the state. This hits New Haven especially hard because around 60 percent of property is tax-exempt, according to the New Haven Independent.

Looney also proposed a bill that would reform the state’s payment in lieu of taxes program, which reimburses municipalities for non-taxable property owned by non-profit colleges, hospitals and the state itself. There would be three tiers of reimbursement that take into account the fiscal health of a community, but under the bill all towns would stand to gain at least a little more than they currently get in reimbursement, Looney said.

The tier system would be tied to the net grand list (all taxable property) per capita. Communities with a per capita grand list of $100,000 would get 50 percent reimbursement while the middle tier would get 40 percent and the last tier would get 30 percent. The program would cost the state an additional $144 million annually.

Currently, communities get the same reimbursement amount regardless of their status. Greenwich gets the same reimbursement level for Greenwich Hospital that New Haven gets for Yale-New Haven Hospital, Looney said.

Looney pointed out that Greenwich has a net grand list per capita of $734,000 while New Britain has a per capita grand list of $50,000. There are more than 30 communities that have a per capita grand list below $100,000.