Governor Rell’s new property tax cap proposal is the wrong “cure” for high property taxes, which result primarily from towns’ nearly exclusive reliance on this tax to fund local services and the relatively low and declining level of state aid to cities and towns. The increased growth in property taxes cited by the Governor as a reason for the cap is a relatively recent phenomenon, resulting from very low growth in state aid to towns during the most recent recession, and not from excessive new town spending.
The experience in other states with property tax caps shows that a cap, like the Governor proposes, will widen inequities among Connecticut’s cities and towns. Wealthier towns are more likely to hold “over-ride” votes, and such votes are more likely to be successful in wealthier communities. Over time, the quality of education and public services in the wealthier towns will increase, while poorer towns — unable to override the cap’s constraints — will suffer a deterioration in such services and a further deterioration in their property tax bases.
Instead of a property tax cap, Connecticut should instead address the drivers of increasing property taxes through such measures as creating incentives for regional partnerships to reduce inefficiencies, increasing and maintaining higher levels of state support for public education, and directly assisting towns with health insurance and utility costs.