Governor Rell has proposed a cap on municipal property tax growth. Connecticut’s history shows that sufficient state aid leads to controlled growth in the property tax. The state should pay an increased share of town expenses and encourage and assist towns in achieving greater efficiencies in managing their costs. Experience in other states and in Connecticut shows that a cap does not necessarily limit revenue growth, but can shift its source (e.g., to fees and charges), and does not necessarily limit spending, but can shift its form (e.g., to bonding). These changes can result in a tax system that is less equitable, and in spending that has longer-term costs. Risks in implementing a tax cap could include encouraging sprawl, reducing the quality of our educational system, constricting the supply of housing for young families, impairing the quality of our town services, increasing town debt, and widening the inequities among our cities and towns.
This presentation was made by Shelley Geballe at the Finance Committee’s forum on the proposed municipal tax cap.