One of the most touted campaign promises for both Republicans and Democrats, property tax relief, finally saw the first shot across the bow during the 2007 Session. This week, Governor Rell became the first elected official in state history to step up to the plate and put a property tax relief plan out there for consideration. Democratic response: DOA (dead on arrival).

The Hard Cold Facts: Local property taxes in CT have increased by an average of 6% annually over the past 5 years. Currently, CT ranks only behind New Jersey for the highest property taxes per capita in the country. Those taxes are a whopping 85% higher than the U.S. average! Forty-three other states already have some sort of property tax relief measure and 29 states limit property tax increases. New Jersey has recently passed its own property tax measure that is awaiting the signature of the Governor.

The Plan: Although still not in statutory form, the Governor’s plan would cap local property tax increases at 3% annually beginning July 1, 2008. There are 4 exceptions to the cap that allow for a higher increase:

1. Emergencies – in the event of a natural disaster such as hurricanes and other catastrophes.
2. Debt service - expenses related to paying for capital projects are exempt.
3. Grand list growth - if the local list of all taxable property grows by more than 1.5% then the tax limit can be exceeded.
4. Community override - if two-thirds of a city of town council approved a referendum and a simple majority of voters approved a larger increase.

The Reaction: Rell believes, “there is going to be a revolt in this state if real action is not taken – and the people will be right to revolt.” House Republican Leader Larry Cafero (Norwalk) backed the Governor up by giving her “huge kudos” for being the first person to propose a plan to control spending in municipalities.

The Connecticut Conference of Municipalities (CCM), a nonpartisan lobbying firm for cities and towns, played the middle ground by issuing a statement that the Governor’s proposals are in need of further study. It did note the concern that with a cap on property taxes, municipalities would be more reliant on and vulnerable to state funding commitments that could be broken in the future.

The Democrats flatly dismissed the plan altogether. House Speaker Jim Amann (Milford) went so far as to call it “mumbo jumbo”. He scoffed at the idea of 169 towns holding referendums to raise the property tax limits. Amann also jabbed, “I do not know how the Governor can justify proposing a cap on municipalities when the state can’t abide by one.” The Governor’s budget plan proposes breaking the spending cap for state education funding. Senate President Don Williams (Brooklyn) suggested that the timing of the presentation, with only 2 months left in session, is evidence of “another attempt to mask serious flaws in that February 7 proposal.” Democrats also complained that this property tax proposal should have been part of the two year budget introduced by the Governor back in February.

The Problems: Top of the list is that the proposed cap would usurp local control over spending and threaten municipal services. “There is an effort to control local spending, but there’s no effort to control what’s driving local spending,” Rep. Cam Staples (New Haven) said, referring to health care, energy costs, and other big ticket items. Interestingly, just last week the Gov and Republican leadership tossed the same accusations at the Democrats for not passing legislation to deal with these issues.

The Outcome: Without statutory language, the Governor is hoping to have the Democrats reach out and work with her to come up with a viable solution for sustainable property tax relief. Don’t hold your breath though, and don’t discount the most important jury yet to weigh in: the taxpayers of CT.

It has been nearly two years since the U.S. Supreme Court set a precedent here in Connecticut on eminent domain in the Kelo v. City of New London Decision. Republican lawmakers have been adamant about restricting the use of eminent domain to public use. They want to prevent any developer or municipality from seizing private residential property for economic development purposes. In an interesting twist, the Democratic Majority, who have historically sided with private citizens over business and municipal interests, have failed to address this issue.

Municipalities have utilized this power to revitalize blighted residential areas. The goal is to bring in developers and entice businesses to relocate in order to revitalize an area. Development and big business means jobs, economic development and, of course, a much larger commercial tax base to take the tax burden off residential property owners. That’s a sentiment that has elevated many legislators into office during elections. It’s also reason enough for municipalities and businesses to oppose a proposal to restrict the use of eminent domain that halts progress here in Connecticut.

Slowly but surely this issue, which started off as a sleeper, has begun to gain momentum again this year with three bills being introduced in the legislature. Eminent domain has become a divisive issue and has strongly pitted the Republican Minority against the Democratic Majority. The divisiveness is not necessarily between two party ideals, but is based more on geography. Many urban legislators tend to be Democratic and they are continuously facing the issue of eliminating blighted neighborhoods and reducing the tax burden on residents of that city. The Republican lawmakers tend to represent sleeper communities where blight is not an issue and taxes have not hit the proportions of urban communities.

Since this precedent was set in 2005, over 30 states have enacted major legislation to prevent the use of eminent domain for economic purposes, but Connecticut has stayed on the sidelines merely watching and debating how to address the issue. As long as the General Assembly is represented by a Democratic Super Majority, it is unlikely that any legislation that restricts the use of eminent domain as an economic driver will see the light of day.