The good news for 2018 is that the downtown mall nears completion late in the year. Just how that plays out with a projected million visitors each month, I-95 congestion, competition effects on local businesses and residents remains to be seen. As are the overall net effects on City tax revenues from the mall and affected local business, residence. Best guesses are mildly positive. But not a tax bonanza.
As always higher City property taxes with concern focusing on the City’s property revaluation late in the year. With a stagnant grand list since 2009-10 and local realtors reporting severely distressed local housing markets throughout the county, homeowners may well find themselves shouldering a larger portion of the City’s tax burden following the reval. Only 10 percent of the grand list is commercial with nearly one-half from public utilities. And new construction is likely to be more than offset by declining valuations in existing commercial properties. Especially the big box properties.
The state’s budget problems will overhang our depressed state economy still shouldering the burdens of the historic 2011 and 2015 state tax hikes. The budget deficit at year end, about $200 million, will surely increase substantially over the year. Current estimates by the Yankee Institute call for a projected $4 billion state budget deficit for the 2019-2020 biennium. That make a third state tax hike almost a certainty. After the 2011 and 2015 tax hikes a third state tax hike will further accelerate the exodus of jobs, firms and wealthy residents from the state.
All in all, Norwalk’s tax and budget situation for 2018 will likely be determined by factors well beyond City Hall control. Fairfield County increasingly reflects the state’s depressed economy with high vacancy rates in Class A office buildings, greatly reduced new business formations and a well documented exodus of high income residents. State aid will remain under severe budget pressure. And the new federal IRS local property tax and state income restrictions will depress spending throughout the state.
Increasingly there’s recognition that no matter which party controls the legislature or the governorship, resolving our state’s convoluted budget difficulties are not subject to quick fix. But will take years to fully address. And perhaps a decade. The effects of nearly a decade of billion dollar budget deficits are increasingly affecting virtually every facet of Connecticut. Especially disconcerting are reports that the majority of college grads are exiting upon graduation for better opportunities elsewhere. Wealthy individuals who provide such a disproportionate share of state tax revenues are leaving in substantial numbers. And increasingly Connecticut is viewed as an unfriendly business state. Certainly not one friendly to retirees.
All in all City Hall will remain under severe budget pressures.
And these may be strong enough to reduce City Hall and public school headcount. Like much of Connecticut, Norwalk’s economic future lies in Hartford’s hands.
Peter I Berman