With the state projecting a surplus of $1.5 billion in the current fiscal year, Gov. Ned Lamont and some legislators have been pushing repeatedly to avoid any tax increases during an election year.
But the tax-writing finance committee voted Wednesday to hold a public hearing on creating a new statewide property tax on mansions with a market value of more than $1.8 million. The annual tax would be two mills, and the money would be used to help fund the Sheff vs. O’Neill education desegregation settlement and special education costs for the towns.
But some moderate Democrats, such as Rep. Stephen Meskers of Greenwich and Chris Ziogas of Bristol, voted against the idea. The additional property tax would have a major impact in Greenwich, where the median sales price in 2021 was $2.3 million. The average price was more than $3 million as it was boosted by the sale of high-end mansions, according to local real estate statistics.
Rep. Sean Scanlon, a Guilford Democrat who co-chairs the committee, told colleagues that they were taking “not a vote for or against the concept. It is for or against having a hearing on it.”
But Rep. Holly Cheeseman, the ranking House Republican, said the prospects are dim because Lamont, a longtime Greenwich resident, had opposed a similar version last year.
“This is not going anywhere,” Cheeseman said before voting against the hearing.
Lamont’s chief spokesman, Max Reiss, said that Lamont has been promoting tax cuts, not tax increases.
“Thanks to our third consecutive year of budget surpluses, Gov. Lamont is focused on providing responsible tax relief to Connecticut families,” Reiss said. “However, his administration is reviewing the proposal, as we do with all legislation.”
The bill is being pushed by Senate President Pro Tem Martin Looney, a liberal Democrat who is one of the most influential legislators and a key player in negotiating the state budget with Lamont. He says officials need to look at taxes on a statewide basis and not strictly on a town-by-town basis.
The tax would apply annually to homes with a market value of more than $1.8 million, meaning an assessed value of $1.2 million as the assessment is 70% of the market value. The tax could raise as much as $86 million per year.
“We have to look at other options to the tax structure that we have now,” Looney said in an interview. “The thing about the property tax is — the positive is it’s reliable and collectible. The negative is it tends to be regressive.”
The measure, which passed by 32 to 18, now goes to a public hearing in the coming weeks. The committee’s deadline for voting on the bill is April 7, and lawmakers intend to vote on Lamont’s entire $24.2 billion budget before the legislative session ends on May 4.
Lamont has proposed a $336 million package that would reduce taxes on residential real estate and cars. Within income limits, the property tax credit would be restored to all residential property owners. Currently, the credit is limited only to those with dependents and those over the age of 65.
Under Lamont’s plan, an additional 500,000 people would become eligible for the property tax credit for the 2022 calendar year — and they would receive the credit when they file their state income taxes in April 2023. The property tax portion of the plan would save taxpayers a combined $53 million, and the credit would be limited to single filers earning up to $109,500 and joint filers earning up to $130,500.
The governor’s budget office estimates the current surplus at $1.5 billion, which represents 7.3% of the general fund budget. The projected surplus for the once-troubled Special Transportation Fund is now $275 million in the current fiscal year. In addition, the state’s rainy day fund for fiscal emergencies is expected to grow to $5.6 billion later this year if fiscal trends continue. That total would be reduced when money is taken out to pay off long-term pension debt.
The tax committee also voted Wednesday to hold a hearing for a personal income tax deduction for the first time for installing residential charging stations for electric cars. The deduction would be a maximum of $2,500. The measure was introduced by Rep. Lucy Dathan, a Democrat who represents New Canaan and Norwalk.
But Rep. Devin Carney, a Republican from Old Lyme, questioned “why we would give a tax credit for something that very few can afford.”
Some electric cars have been highly expensive in recent years, but advocates say that the prices will eventually come down as battery technology improves, production increases, and the cars become more commonplace.
Christopher Keating can be reached at [email protected]
