Democratic legislative leaders question whether Democratic Connecticut Governor Ned Lamont’s budget proposal is progressive enough to curb tax disparity in cities and towns across the state.
Though, Fred Carstensen, an economist at the University of Connecticut, is skeptical about how the Democrats in charge will boost the economy. Carsenten said the state’s economy has a structural problem that Lamont’s budget proposal fails to confront.
“The problem that Lamont has is he’s not promising to deliver a better future,” Carstensen told Capitol Avenue on WSHU. “We don’t have any economic growth.”
And he said it has been the case since the last recession in 2009.
“Since we began to recover, we had one year when we had a strong recovery of about 4% real terms,” he said. “But the last three years before the pandemic our recovery is 0.6%. It’s less than one percent annually.”
Lamont said Connecticut has a bright economic future, as more people move to the state. However, that population bump would only slightly change the dynamic, Carstensen said.
“The pandemic may give us a small opportunity with companies going for a more distributive network in terms of having satellite offices,” he said. “But none of that is going to change the trajectory for Connecticut. It’s all at the margin.”
Carstensen also took issue with some of the new tax proposals from Democratic legislative leaders.
“We can restructure our tax system. That would help,” Carsentsen said. “We can restructure the budget. Yes that would help. Would it fundamentally change the fact that we won’t recover until 2030? No.”
Senate President Martin Looney is a sponsor of some of the new taxes and budget restructuring proposals. That includes a new mansion tax and a 1% surcharge on capital gains. He said tax equity has to be part of an economic recovery plan.
“Because we do need to find revenue to provide property tax relief,” Looney said, “as we have proposed doing in creating a new payment in lieu of taxes program that takes need into account.”
He said all towns get about the same level of reimbursement, and that should not be the case.
“Last year, the PILOT was funded at 25% of the authorized level. But that meant that Greenwich got the same level of reimbursement for Greenwich Hospital property that New Haven got for Yale New Haven property or Hartford got for Hartford Hospital property,” Looney said.
He said his proposal would reimburse cities and towns based on their level of wealth and their net grand list per capita — the amount of taxable property in town.
“Greenwich has a per capita net grand list of about $740,000 per person. At the other end of the scale is New Britain whose grand list is $50,000 per person,” Looney said. “Therein lies the stark contrast in equity.”
Looney’s proposal would have all towns with a grand list average of less than $100,000 get half of their state-authorized reimbursement. Towns with an average of between $100,000 and $200,000 would have 40%. And towns over $200,000 would have 30%.
“So that would introduce greater equity in the program,” he said. “I would mean that everyone’s PILOT would go up at least to some extent. And it’s a way of targeting tax relief to communities who need it most.”
Looney would have to negotiate with the governor, who has said over again that he’s opposed to any new broad based tax.
Hear more about how Connecticut’s budget is being shaped on Capitol Avenue on WSHU.
