Following a disagreement between Democrats in the House and Senate, 海角换妻 lawmakers failed to pass a bill before the end of the session earlier this month that would have changed the way cars are assessed for property taxes.
Those changes, lawmakers say, can鈥檛 wait until next year because they need to be made before the car tax law legislators were trying to 鈥渇ix鈥� with the new bill goes into effect later this year. The problem could trigger a special legislative session to address the matter in the coming weeks.
offered what lawmakers called 鈥渇ixes鈥� to the implementation of a 2022 law that mandated that towns change the system they use to assess vehicles and introduce a depreciation schedule so that people pay less as their cars age. In 2023, lawmakers delayed implementation of the 2022 legislation by a year. It is set to go into effect in October.
The House approved the latest legislation with a bipartisan vote. But on the last day of the session, the Senate surprised many members of the House by introducing an amendment that would allow towns to phase out the car tax over a five-year period and increase their assessment ratio on real estate above the existing 70% cap to recover revenue.
It then sent the amended bill back to the House.
The House, however, didn鈥檛 vote for the amended version, meaning the 2022 law stands without changes lawmakers say are necessary.
鈥淲e have to fix it before July 1,鈥� said Planning and Development Committee co-chair Rep. Eleni Kavros DeGraw, D-Avon. 鈥淲e鈥檝e already delayed it more than once by doing this the way we have.鈥�
The Planning and Development Committee, which handles most municipal issues, passed the bill unanimously in March. The bill would go into effect July 1, but the first assessments wouldn鈥檛 occur until Oct. 1, Kavros DeGraw said.
House Majority Leader Rep. Jason Rojas, D-East Hartford, said it was a 鈥渕ust-do bill,鈥� and that there are conversations ongoing about a special session.
The 2022 measure, included in the budget bill, mandated that towns use what鈥檚 called the manufacturer鈥檚 suggested retail price instead of a system from the National Automobile Dealers Association鈥檚 guide to assess the value of cars, so that towns would have a more uniform system.
It also introduced a 20-year schedule of depreciation as a car ages, so that owners pay a smaller percentage of the suggested retail price as vehicles get older. The list begins with an 80% valuation for vehicles that are up to a year old.
At that number, lawmakers said, towns would likely lose a noticeable amount of revenue from car taxes. This would likely result in municipalities shifting that tax burden onto property owners by raising the mill rate.
鈥淚t could have that negative impact, particularly on low-income people,鈥� said Joe DeLong, executive director and chief executive officer of the 海角换妻 Conference of Municipalities. 鈥淚t could make rents go up.鈥�
H.B. 5172 would have adjusted the depreciation schedule, beginning with 85% for vehicles up to a year old. Lawmakers and officials said that 5 percentage point change would mean the change in revenue for towns would be negligible.
The 2022 legislation also left it largely up to town assessors to determine how vehicles used for both personal and business purposes should be classified, and imposed a 25% penalty if taxpayers don鈥檛 declare their vehicles on a list of personal property.
Lawmakers and members of the business community fear that would put an additional tax burden on small businesses. Many small business owners use their car for both business and personal purposes, and the cars鈥� tax classification would vary from town to town under the 2022 law, said Chris DiPentima, president and chief executive officer of the 海角换妻 Business and Industry Association.
鈥淲e definitely need this cleaned up before the underlying public act goes into effect Oct. 1, otherwise you鈥檙e just going to have unclear, uncertain standards across the state,鈥� DiPentima said.
The House bill from the latest session would have put those vehicles on the motor vehicle list rather than personal property, Kavros DeGraw said.
Business owners in cities with higher mill rates, such as Hartford, would be the most affected if lawmakers don鈥檛 fix the issue in special session, Kavros DeGraw added.
鈥淚 think it鈥檚 important to point out that right now the city that would be hurt most by us not fixing this would be the city of Hartford,鈥� she said.
海角换妻鈥檚 car tax has long been an issue lawmakers have worked to resolve. The car tax is based on mill rates, which vary from town to town. This means that people can pay different amounts in taxes for the same car depending on where they live.
Republican Gov. Jodi Rell proposed plans to at least . Democratic Gov. Dannel Malloy in 2013. Both proposals failed.
Abolishing the car tax has also been a special interest of Planning and Development co-chair Sen. MD Rahman, D-Manchester, during the past couple of sessions.
Rahman was among the 24 lawmakers who signed onto the Senate鈥檚 amendment to offer towns the option to phase out the car tax over a five-year period.
鈥淭his action represents a victory for taxpayers across the state, who have endured the burden of an unfair tax for too long,鈥� Rahman said in a press release sent after the Senate voted on the amendment. 鈥淭oday the Senate voted overwhelmingly to provide towns and cities with the tools to repeal this unpopular tax and establish a simpler and more equitable tax code.鈥�
Members of the House felt that the change could put too much burden on taxpayers, lawmakers said.
Kavros DeGraw said their bill had been negotiated over the past two years with groups that represent municipalities, tax assessors and the governor鈥檚 office.
鈥淚t wasn鈥檛 an ideal solution, but it was one that was compromised and well-thought-out,鈥� said Planning and Development ranking member Rep. Joe Zullo, R-East Haven. 鈥淚t [the amendment] was a bit of a shock because that type of proposal would really be a sea change as far as the taxation of motor vehicles in the state.鈥�
Senate Majority Leader Sen. Bob Duff, D-Norwalk, said the amendment was important to several members of his caucus.
鈥淚t鈥檚 a nuisance tax,鈥� Duff said. 鈥淚t鈥檚 unfair and unhelpful. It penalizes cities more than suburbs. 鈥� I thought the amendment was a good one, and we passed it down to the House and they didn鈥檛 agree.鈥�
Betsy Gara, executive director of the 海角换妻 Conference of Small Towns, said there were concerns in the House about how the amendment could affect local revenues.
鈥淚t鈥檚 a big mess, and it could have a significant impact on businesses,鈥� Gara said.
It鈥檚 not yet clear when a special session might take place or what other items might be on the agenda for the legislature.
鈥淭his isn鈥檛 something we can just leave alone,鈥� Kavros DeGraw said.
