NORWALK, Conn. – A state proposal to help middle class taxpayers would likely cause Norwalk to look for another way to come up with about $17 million, Finance Director Thomas Hamilton said.
Gov. Dannel Malloy is proposing to eliminate the car taxes on vehicles worth less than $28,500. “At a time when hardworking Connecticut families continue to struggle, it is incumbent upon their government – state and local – to find ways to help them,” Malloy said in a letter to Mayor Richard Moccia and leaders of other Connecticut municipalities Friday. “This is tax relief for your constituents and mine – families who are middle class, working class and working poor. I understand adjustments will need to be made locally, but I strongly believe we should stand with them and find ways to make this work.”
The proposal is “basically another unfunded mandate,” Moccia said last week. “At least when Gov. (Jodi) Rell proposed this she had some other revenue in place.”
Implementation of the tax exemption on July 1 would not be mandatory this year, a statement from the governor said. Statewide implementation will begin on July 1, 2014. Both private and commercial vehicle will be covered by the exemption.
Hamilton said the situation hadn’t been studied yet. “The current year levy on motor vehicles, between supplemental and regular automobile collections is about $17 million,” he said. “We have not had an opportunity to do the analysis in terms of what would still be left if we were exempting the first $28,500 of car value. My guess is there’s not going to be a whole lot left. I think 90-95 percent of that $17 million would be gone. You would obviously have to raise the mill rate on the remaining portion of the tax base, real estate and personal property, in order to make up for the loss.”
Malloy said in his letter that the proposal doesn’t take any money out of the aid the state gives to towns. “It simply says that the money that’s already raised locally, from your constituents, has to be done in a fairer way.”
Eliminating the tax will “eliminate much of the aggravation and paperwork from your local tax assessment and collections operation,” he said.
And, “most communities are fortunate if they collect 90 percent of car taxes. Factoring in the cost of collecting and the number of tax delinquents, the car tax makes up a small portion of the tax base in most communities – between 2 and 10 percent.”
Still, his letter indicated that the burden is on Norwalk.
“Communities have a number of options available to make up for this, including spending cuts,” he said. “I encourage your administrations to review your grand list, your anticipated budget requirements and your tax system, and undertake a detailed analysis of how this exemption will impact the taxpayers in your community.”
Hamilton said a study was in order to determine the affects on individual taxpayers.
“If you’re a renter chances are you’re going to make out very well,” he said. “If you’re a homeowner, it’s hard to tell. If you happen to be someone who is living in a very modest home but has three or four expensive cars, then maybe you’ll make out very well. If you’re somebody who is in a more expensive home and you’re driving a 1970 Dodge Dart, you’re not going to do well.”