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Lawmakers challenge Lamont to go bigger on property tax relief

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The Connecticut state Capitol.

The legislature’s Finance Committee upped the ante Wednesday on Gov. Ned Lamont’s plan to deliver property tax relief.

The Democrat-controlled committee endorsed Lamont’s bill to boost the income tax credit that offsets property tax bills from $200 to $300 — starting with tax returns filed in 2023.

But it then approved a second bill that would push the credit to $400 one year later.

Both the governor and the committee also want to make the credit available again to households without seniors or children. Those filers lost access to it in 2018 as lawmakers sought to close a budget deficit.

The finance panel also pumped more life Wednesday into the governor’s plan to ease property taxes on passenger vehicles.

Lamont wants to lower the existing state cap on municipal tax rates on vehicles from 45 to 29 mills. [One mill equals $1 in tax per $1,000 of assessed value.] The governor also would send $160 million to communities to offset the revenue loss — and local taxpayers would save.

The Finance Committee countered Wednesday, approving a bill that would lower by $5,000 the assessment on all passenger vehicles in communities that impose a tax in excess of 29 mills. This would save taxpayers an estimated $250 million, committee leaders said.

“This was the committee making a statement on policy, not saying ‘no’ to the governor’s proposal, saying ‘we’d also like to go beyond that,’” said Sen. John Fonfara, D-Hartford, co-chairman of the finance panel.

The committee’s car tax relief plan is progressive, Fonfara said, noting that vehicle owners in poor urban communities — which generally have the highest property tax rates in Connecticut — would get the greatest savings.

With state government’s coffers overflowing, Connecticut residents struggling with steep inflation — and most state offices up for election this November — Lamont and legislators have been calling for months for tax relief.

But the governor has been at odds with lawmakers over how much tax relief Connecticut can afford to offer this year, for two reasons.

States like Connecticut that accepted billions of dollars in emergency federal aid last year are supposed to use those funds to offset damage caused by the pandemic. U.S. Treasury rules specifically limit how much tax relief Connecticut can offer next fiscal year.

But even after the federal aid expires in 2024, there’s another concern. Lamont noted that roughly $1.8 billion in state budget spending across this fiscal year and next is supported with federal COVID relief. Connecticut must be ready to manage its finances without those funds two years from now, the governor says.

“You can’t do everything,” Lamont said Tuesday when asked about the Finance Committee’s various relief proposals. “… You’re going to have to make some choices people.”

Many legislators fire back that Connecticut has $3.1 billion in its rainy day fund, nothing this fiscal year is on pace to close June 30 with an unprecedented $2.7 billion surplus.

“I also feel that we can begin to invest in Connecticut and invest in families” while maintaining reserves and continuing to pay down state government’s debt, Fonfara said.

The finance committee on Tuesday recommended increasing the state income tax credit for working poor families. This would send about $42 million to more than 185,000 households earning less than $58,000 per year next spring. That’s roughly $300 per household.

The committee also is recommending the creation of another income tax credit for low and middle income households through a new child tax credit.

It would begin in 2024 at $300 per child, up to a maximum of $900 per household. Rep. Sean Scanlon, D-Guilford, the committee’s other co-chairman, spearheaded the bill, and says the goal is to eventually increase the credit to $600 per child.

Minority Republicans in the House of Representatives called for a $500 property tax credit starting next spring. Rep. Holly Cheeseman of East Lyme, the ranking GOP representative on the committee, tried twice to amend bills to push the credit to that level.

“I believe we have to do everything possible to create a more affordable Connecticut,” she said.

Both of Cheeseman’s amendments were blocked by Democrats in votes largely along party lines.

Scanlon said he hopes the credit can reach $500 soon, but said that tax cut, coupled with others already on the table, would push Connecticut over the tax-cutting limit set by the U.S. Treasury.

In other business Wednesday, the finance committee also approved:

  • A nearly $2.3 billion bond package that includes $100 million to fund air conditioning, ventilation and other air quality control projects in municipal schools and $15 million for a student loan assistance program for Connecticut residents who graduate from a state university or college.
  • A bill that requires the state to automatically return certain levels of unclaimed property to individuals each year. The measure, proposed by state Treasurer Shawn T. Wooden, sets conditions under which the treasurer’s office must pay abandoned property amounts of less than $2,500 to the owner — without the owner first having to submit a certified claim.