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Malloy’s proposed car tax exemption causes exasperation in Norwalk

Norwalk boot
Failure to pay property taxes is one reason the city of Norwalk will boot a parked car.

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.”

Comments

12 responses to “Malloy’s proposed car tax exemption causes exasperation in Norwalk”

  1. jlightfield

    I’ve never been a fan of car tax for a few reasons. First, if you lease a car, you are paying a tax on property you don’t own. Second, the same car registered in different towns could have wildly different tax rates. The value of the car, of course remains the same. But Malloy needs to propose more. It is unfair that suburbs around our urban cities benefit by proximity to rails and downtown amenities without contributing to the tax base that provides the infrastructure that makes those suburbs possible. It’s time to view Connecticut not as 169 different tax rates, but as a large metropolitan city and streamline property taxes overall.

  2. This story says renters will spend more on state taxes as a result of the car tax exemption:
    http://www.ctnewsjunkie.com/ctnj.php/archives/entry/municipal_loss_is_states_gain/

    “That’s because under the proposed budget, the people who rent apartments rather than own a home will no longer receive a property tax credit to apply to their state tax liability. The governor’s proposed budget estimates the state will save around $21 million annually as a result of not having to pay out the property tax credit to apartment dwellers.”

  3. Tim T

    “The proposal is “basically another unfunded mandate,” Moccia said last week”
    Heres a great idea cut the salaries of the overpaid city employees which seems like most are making six figures.

  4. LWitherspoon

    “Communities have a number of options available to make up for this, including spending cuts,” Gov. Malloy said.
    LOL! How about some spending cuts at the state level, so that Gov. Malloy can pay for this tax cut himself? I am really disappointed, I did not think Gov. Malloy was the sort of politician that would resort to such underhanded tactics as this. He’s taking the glory of announcing a tax cut, but he’s forcing City governments to slash spending on schools, police, and fire by 5% to pay for it. That’s despicable and cowardly. Gov. Malloy should man up and pay for his proposals himself, rather than making a mess for others to clean up.

  5. Tim T

    LWitherspoon
    Do you ever have anything good to say about any democrat?

  6. LWitherspoon

    @Nancy
    Good point, renters will no longer be able to deduct their car property taxes from their state income taxes. Renters will also be hit when landlords pass along any resulting increase in real estate taxes, which they eventually will. I agree with your earlier comment that landlords may not be able to pass along the real estate taxes right away, but you can rest assured that they eventually will the moment that market conditions allow it. Those landlords don’t like their incomes reduced by higher taxes any more than anyone else does.

  7. Bryan Meek

    Removing the car property tax is a good idea. The way Malloy is going about it is idiotic.

    He says GAAP out one side of his mouth, and then pushes these unilateral gimmicks out the other side.

    Just listen to Tim. It is the GOP’s job to cut useless 6 figure salaries that the Democrat union has worked so hard to create so many of. That will pay for all of this fantasy land spending.

  8. LWitherspoon

    @Tim T
    Over the summer I wrote many good things about Democrat Bruce Kimmel, long before he joined the Council’s majority caucus.
    I am less interested in party affiliation than in fiscal responsibility and good government. If Council ever changes hands to Democratic control, and a small group of Republicans become partisan bloviators in hopes of penalizing Democrats for making hard decisions about spending cuts, I will be equally of critical of Republicans for that.
    Gov. Malloy is better than this. His current plan forces cities to cut spending by 5% or raise taxes by approximately that amount, while state government continues to spend more every year. How about spending cuts at the state level? Apparently Gov. Malloy thinks spending cuts are great, as long as he can push the responsibility for them onto cities and towns. It would be nice to have a Governor with the courage to make hard decisions about spending himself, rather than punting them to others because he’s scared of doing something unpopular.
    I should add that the majority of our elected officials in the City of Norwalk are unpaid volunteers. So Gov. Malloy collects his nice paycheck and enjoys all the trappings of being Governor, while leaving unpaid volunteers to make the truly difficult and unpopular decisions. That’s despicable and cowardly.

  9. LWitherspoon

    @Tim T
    You may also recall that I wrote good things about Andy Garfunkel for having the courage to make a balanced and thoughtful comment about a possible mayoral pay hike. Matt Miklave, as usual, took the easy way out and refused to comment.

  10. Tim T

    WOW LWitherspoon
    If your posts are something positive about dems I would hate to see negative. I see your post are snide comments once again about the dems. At least admit you party allegiance. I’m proud to say that I’m a dem..Are you not proud about being a Republican?

  11. Tim T

    Bryan Meek
    That same old same old about the dems and the union is one big lie that no one is buying any longer, which was proven on election day. The facts are that the Republicans are the tax and spend group. Also do not bring up about about Obama budget as the reason for that is simple. It was to get us out of the mess that the Republican Bush created.
    The six figure salaries are due to the current administration and the old boys club of Norwalk.

  12. Joe Espo

    I endorse what Tim T says. There’s no reason to have all these six-figure-salaried employees when there are so many unemployed people begging for jobs. The non-union employees should be, and can be, be fired and replaced with recent college grads at more reasonable salaries. There are so many unemployed recent college graduates who would probably work for less than $40,000. It can be done. Hopefully the new council elected in November will have the courage to bring forth this reform.

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