Hayden Calls Malloy's Proposed Car Tax Cut 'Potentially Devastating'

In his proposed budget, Gov. Dannel P. Malloy wants to exempt the vast majority of motor vehicles from an annual tax, which the Connecticut Conference of Municipalities estimates raises more than $560 million for Connecticut communities.

First Selectman Jim Hayden said the impact in East Granby would be about $1 million out of a budget of approximately $19 million. 

"Motor vehicles represent 8.5 percent of East Granby’s 2012 Grand List at a net assessed value of $50,432,905 out of a total net Grand List of $590,729,896," Hayden said in an email. "Approximately 71 percent of the vehicles in East Granby would qualify under the Governor’s proposal (net car assessment of $20,000 or less would be exempt) and their owners would not pay any property tax for those vehicles."

In his proposal, the governor said towns would be "held harmless," or not asked to make up for a loss of state revenue, but Hayden said towns may not have the flexibility they once had.  

"While it is true that the Governor’s proposed budget does not reduce overall state aid to towns there is a caveat. The Governor has proposed that some previously 'unrestricted state grants' to municipalities become shifted to 'restricted use' funds, which will reduce what can be used for general operating expenses," he said.

"For example there is a 'restricted use' state grant called Town Aid Road that under the Governor’s proposal would increase in East Granby from $100,000 to $200,000," Hayden said. "Town Aid Road is used to purchase salt and chemicals for winter storms along with pothole paving and other uses. While the increase in funding for Town Aid Road would be a positive for East Granby, as a 'restricted use' state fund it can only be used for road maintenance and in actuality would reduce by $100,000 what is available for 'unrestricted use.' With “strings attached” on funding, the town would need to offset the $100,000 somewhere else."

Hayden, who attended a meeting with other municipal leaders in Hartford on Monday morning, said the towns are still trying to figure out how the budget will work, which makes it difficult to move forward on their own local budgets.

"When you combine the effect of the Governor’s proposed revenue policy changes along with the elimination of most of the car tax, the effect on Connecticut towns is potentially devastating," Hayden said.

"Unlike the state, towns don’t have the ability to use a 'credit card' (state bonding of certain expenses) to balance their budgets. In Connecticut the main recourse that towns have to fund the services that they provide is a heavy reliance on the local property tax," he said. "Eighty-five percent of East Granby’s total revenue comes from the property tax. While East Granby will certainly continue to look for ways to reduce and control expenses, a one million dollar loss of revenue as planned by the Governor’s car tax proposal puts undue pressure on town real estate and business personal property taxes to make up the shortfall."

Towns would have the option of phasing in the exemption of the car tax in 2013 but would have to forfeit it in July 2014 if the governor's budget proposal gets legislative approval.

There will be a public comment period when residents and officials may voice concerns about the budget plan. Public hearings and bills are listed on the www.cga.ct.gov. Budget information will be listed under Appropriations.