By CHRIS POWELL
The Connecticut Conference of Municipalities plans to convene a hundred state residents, a “citizen assembly,” to consider the many resentments people have about municipal property taxes and recommend changes to the General Assembly.
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Advocates of the gathering say the property tax system is broken. But the system still works well. It reliably produces a huge amount of money every year and is less vulnerable to evasion than other taxes. For every acre in every municipality is mapped, the real estate on it is impossible to hide, and the taxes due on it are fully collateralized. That is, if their taxes aren’t paid, municipal government can put a lien on delinquent properties, preventing them from being sold, or can foreclose on and take possession of the property.
By contrast, personal and business income and wholesale and retail sales — the other big sources of tax revenue in Connecticut — can be evaded simply by not reporting them. Many smaller transactions are always being conducted “under the table.” It is estimated that $3 billion or more of state income, business, and sales taxes are evaded every year.
The problem with the property tax isn’t the tax itself but rather the disproportionate burdens put on it. State government has decided that certain government functions, particularly schools, should be financed largely on a municipal level. By leaving property zoning largely to municipalities, state government also has decided that poor people, the cause of great public expense, can and should be largely confined to the cities, where residential development is denser and less expensive. Additionally state government has decided that nonprofit organizations should be exempt from property taxes, thereby substantially reducing city tax bases.
With extra financial aid to cities, state government does much to offset their property tax burden but it’s never enough, in part because the cities have lost their self-sufficient middle class and, with it, their capacity to operate local government efficiently. So Connecticut’s cities now function mainly as poverty factories.
In theory the disproportions in property tax burdens might be fixed easily.
School systems constitute most municipal government expense and state government could take them over and finance them through its own taxes, which are equal statewide. If state government didn’t want to raise its taxes to finance municipal schools, it could finance them with a statewide property tax, at a single rate or with a higher rate on more valuable properties. Municipalities would continue to levy their own property taxes to finance the remainder of local government — police, public works, sanitation, and such.
But this solution and probably any solution to the burdens and disparities of municipal property taxes would collide with what may be the highest value of civic life in Connecticut: local control. Few people want what seem like local matters to be handled by distant government officials and employees they don’t know and can’t easily locate. Such a system almost surely would be less responsive and efficient.
Local control is exactly what causes statewide disparities and inequalities. The virtue is also the sin.
Another solution to the burden of municipal property taxes is also simple in theory: Repeal the state laws that prohibit municipal government from controlling the biggest part of their expenses, labor costs. That is, repeal binding arbitration of government employee union contracts and the law that forbids municipalities from ever reducing their school budgets, even as enrollment declines.
Those laws were enacted to serve not the public but the government employee unions, the most influential special interest — to guarantee that any financial savings in government flow not to taxpayers but to government employees. Those laws also were enacted to relieve cowardly elected officials of the politically fraught duty to oppose that special interest.
The only tax that will ever be popular is the tax that only someone else has to pay. But even such a tax will never make government more efficient and effective. A “citizen assembly” that pursues efficiency in government rather than another shell game with taxes is the one Connecticut needs.
Chris Powell has written about Connecticut government and politics for many years. (CPowell@cox.net)
Chris Powell column 