NORWALK, Conn. – There’s no upside to the governor’s proposal to help the middle class by exempting some car taxes, as far as Norwalk’s mayor is concerned.
“If we don’t get the car tax we may as well shut the city down,” Mayor Richard Moccia said to a member of the Board of Education in an off-the-cuff moment Tuesday night, before the meeting began.
Gov. Dannel Malloy has proposed an exemption on the first $20,000 of a vehicle’s value if the vehicle is worth more than $28,500. Vehicles worth less than $28,500 would be exempt from taxes. He said last week that local tax collections need to be made more fair. Eliminating the tax would eliminate “much of the aggravation and paperwork” from local tax collections, he said.
“Most communities are fortunate if they collect 90 percent of car taxes,” he said. “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.”
Finance Director Thomas Hamilton doesn’t agree.
“Norwalk’s current motor vehicle tax is approximately $17 million, or about 6 percent of the city’s total tax levy,” he said in an email. “… As I understand the proposal, we will be required to exempt the first $20,000 of assessed value (of a vehicle worth more than $28,500) from each motor vehicle. This suggests to me that the tax assessor will need to maintain a file with current values on all motor vehicles in order to determine if someone owns a vehicle with a market value in excess of $28,000, so they can be taxed on the amount above $28,000. So, there will still be considerable work involved in maintaining records on motor vehicles, and issuing tax bills for those who are still subject to the tax, but there will be almost no revenue coming to the city from this effort.”
The exemption would be optional this July, but mandatory in July 2014, if it’s approved by the legislature.
Moccia, though, is talking about it like it’s happening now.
“There are limits to what the city can do, budget wise. …,” he said, during Tuesday night’s meeting. “If he takes the car tax – that’s $11 million minimum. Eleven million. How do we make it up? No provisions to make that $11 million up.”
Hamilton said the number is probably closer to $15 million. The $11 million figure is from collections two or three years ago, he said. Last year’s collection was about $15.6 million.
Other taxes will certainly go up, he said. “If we lose the right to levy a tax a motor vehicles, we will need to make up that revenue loss by increasing the mill rate on real property and business personal property,” he said.
Moccia said that, when former Gov. Jodi Rell made a similar proposal, she planned to provide more state aid to give communities five years to transition into the exemption.
“If the car tax is eliminated it will create chaos in every community,” Moccia said. “How do you make up $11 million? Only one way. Everybody that owns a house and a small car is going to save $100 on his taxes, or her taxes, and wind up paying $700-$800 more in house taxes, and the businesses.”
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