NORWALK, Conn. — The pendulum in Connecticut has swung from the suburbs to the cities, State Senate Majority Leader Bob Duff (D-25) said Saturday, claiming that the state government’s investments in cities are paying off.
The prolonged discussion, at the League of Women Voters’ Pie and Politics event, on the state’s budget included Mayor Harry Rilling asking for an update on efforts to revamp the Educational Cost Sharing formula and possible property tax reform.
Democratic Town Committee Chairman Ed Camacho got the ball rolling by asking what the state might do to increase revenues, other than by raising taxes, to help address the fiscal crisis Connecticut is in.
“We are taking donations,” moderator Darnell Crosland jested.
There are buckets that have been ignored for 20-25 years, with “education funding reform is one of the highest priorities we have” and a need to improve the transportation system in response to comments from CEOs about the challenge of getting good employees to work, Duff said.
This is why work on the Merritt 7 train station is so important, Duff said, going on to assert that the lack of investment in housing over the decades is also an issue, as young people leave after graduating college and older people retire elsewhere.
Despite controversy, the New Britain busway is hugely successful and education funding reform is needed to give people the confidence to move to the cities, he said.
State Rep. Chris Perone (D-137), now Connecticut’s “transportation czar,” said Transit Oriented Development (TOD) is important.
“The busline was considered a boondoggle but the numbers are pretty staggering,” Perone said, describing growth along that corridor.
There’s a need to make the state friendlier to business, State Rep. Fred Wilms (R-142) said, as “20 years ago companies moved to Connecticut without bribes” and “GE left because we are in an unstable ecosystem.”
As a banker, he is aware of people leaving the state to avoid the onerous taxes, and the state lost $30 million in income taxes by the exit of one Fairfield County executive, Wilms said.
“There is a hostility that my customers face,” Wilms said, describing an unemployment compensation situation that he said drove a company to North Carolina.
Two things keep Connecticut from expanding its tax base, State Rep. Gail Lavielle (R-143) said.
It’s not just the hedge fund guys but the retirees as Connecticut is the only state with a gift tax, the estate tax far exceeds federal requirements, there’s a tax on Social Security and a tax on pensions, she said.
“When you add all of that up people cannot afford to retire here,” Lavielle said.
“Without tax reform, we are not going to turn our state around,” State Rep. Terri Wood (R-141) said.
She knew five teachers who moved to South Carolina or Florida and paid $20,000 to $30,000 a year less in taxes, she said.
This year it looks like Connecticut might remove its “double whammy” of gift and estate tax, something she has long supported, she said.
GE decided to leave when the Democrats increased taxes in 2015, because the state was not creating fiscal sustainability, Wood said.
It made sense to raise taxes on those who could most afford it but there’s a tipping point, State Rep. Bruce Morris (D-140) said.
“I am moving to the mindset, you’re right, let’s move to the federal threshold (on estate tax),” he said.
You need to keep cities whole but at some point it begins to feel like a form of welfare, he said, postulating an idea.
An “empowerment model” would attract businesses to vacant property in Bridgeport, which isn’t generating much in property taxes, by graduating property tax over time and encouraging a public-private partnership by which the companies would help the education system, he said.
“I believe if I have read correctly, the ECS bills are off the table?” Rilling said later.
That was a misunderstanding. Lavielle said that on Friday, most of the content was pulled out of House Bill 7270, leaving only support for the educational cost study requested by the Connecticut Coalition for Justice in Educational Funding (CCJEF).
Gov. Dannel Malloy’s proposal is probably toast, she said.
“Legislation can be introduced at any time during the session, despite the Committee process,” Lavielle said. “…Things can happen on the night prior to the last night of the session or even the last night. Everyone all over the legislation is working on something” for educational funding.
Wilms promoted the idea he is sponsoring with Morris, using District Reference Groups (DRG) as a foundation for an educational formula.
As for property taxes, Wilms said, “I believe…we should be allowed by the state to directly levy a small sales tax.”
Norwalk doesn’t get the value for its retail base, he said, and, “A small sales tax would be fair because, frankly, it would be paid mostly by people from outside of Norwalk.”
Duff’s Senate Bill 2 is still being worked on, Duff said.
“Some of the ideas are not ready for primetime yet,” he said, explaining that’s why the bill is not yet offering specific proposals.
Norwalk gets money through other methods and the sales tax sharing brings $2 million to Norwalk, he said.
Every redevelopment project in Norwalk gets state support, Duff said; Side by Side Charter School would not be building an addition without support from the State Bond Commission, he said.
“The state supports the city,” Duff said. “… All of those things have to be looked at in totality.”
The large cities have more votes, Morris said, explaining why it’s tough to change ECS.
His partnership with Wilms played well, as legislators were impressed by the combination of a representative of an urban area working with a representative of a well off area in an effort to change educational funding, he said.
“It sent a totally different message,” Morris said, “and right now you really do have Democrats and Republicans” thinking about changing ECS.
Wilms, Wood and Lavielle are holding a town hall meeting at 7 p.m. Tuesday, March 28, in the South Norwalk Library, located at 10 Washington St.