After seven meetings, the Motor Vehicle Property Tax Taskforce convened for the last time on Feb. 6, where they revealed their recommendations on abolishing the state’s motor vehicle property tax. These suggestions are set to be presented to the General Assembly, which commences on Wednesday (Feb. 7).
However, the two recommendations generated by the taskforce fail to provide any concrete or practical solutions. Moreover, the report lacks any supporting data regarding the potential consequences of these suggestions rendering it useless and destined to remain untouched on a shelf, collecting dust.
During the meeting, Co-Chair Sen. MD Rahman (D-Manchester) outlined strategies to offset the revenue loss to towns and cities resulting from eliminating the motor vehicle property tax. Under the plan, municipalities would be allowed to set their own assessment ratio for real property (e.g., land and buildings). The other would eliminate the tax on non-commercial vehicles only.
Under current law, the state’s 169 towns and cities must assess all property at 70% of its actual value. This means a municipality applies its tax rate (or “mill rate”) to only a portion of a property’s value. The taskforce recommends the legislature allow these municipalities to tax a larger portion of the value of real property without raising their mill rates.
In other words, the taskforce is asking homeowners and businesses to shoulder the burden of replacing $1.04 billion in revenue raised with the car tax. Renters won’t be off the hook either, as an increase in property taxes is likely to result in subsequent rent increases.
While the report proposes retaining the tax solely on commercial vehicles, the taskforce acknowledges that such a measure would limit the amount of revenue municipalities receive and won’t be able to maintain the level of services they are currently providing residents.
Even Co-Chair Rep. Brandon Chafee (D-Middletown) conceded that the specific details and mechanisms required to repeal the car tax and ensure municipalities are financially whole remain “elusive.”
To transform the taskforce into a more effective entity, Matt Hart, Executive Director of the Capitol Region Council of Governments (CRCOG), proposed an alternative approach. Rather than adhering to the recommendations outlined in the report, he proposed that the taskforce request additional time and resources from the General Assembly to develop a “more equitable and sustainable solution.”
Additionally, Hart suggested the retention of one or more tax policy experts to assist in “critically exam[ing] options, models and long-term revenue projections.”
Subsequently, Hart proposed a motion to amend the report, but Sen. Rahman rejected it. Sen. Rahman, highlighting that the committee had already convened seven times, expressed, “We don’t want to go forward. We have a session starting tomorrow. So, I don’t think we really need to put more time in.”
Sen. Rahman explained that the taskforce’s primary objective was to present a policy option: a goal they achieved with the report. Reiterating his pride in the report, he labeled it a “very good option” and sought to conclude the meeting.
However, Mark Boughton, Department of Revenue Services (DRS) Commissioner, chimed in voicing concerns about potential unintended consequences stemming from the ideas in the report. He did not endorse the report, stating that the taskforce has “not done their homework.” Emphasizing the need for more expertise, Boughton echoed Hart’s sentiment, asserting the necessity of involving experts and emphasized the importance of a comprehensive understanding of the impact on each town.
It seems that the taskforce may have served more as a procedural exercise and that eliminating the car tax was not a serious consideration. There is a possibility that the General Assembly might consider eliminating the tax; but with it being a short session (coupled with their laser focus on dismantling the state’s spending cap), the outlook does not seem good. The most likely scenario is that we will likely find ourselves writing checks to the tax collector come July 1.