By Susan Merrow
In the thick of a long legislative session, like the one we are about halfway through, each day brings forth a surprising proposal for addressing an issue that cries out for public policy innovation. Some of the proposals never make it to a public hearing. Some are heard but never seen again. A few survive and change our political landscape for the better, and some, unfortunately, survive and change the landscape for the worse.
Connecticut’s legislative history is littered with bills often cobbled together in the hectic wee-hour, waning days of the session that somehow survive the rough and tumble of the process but end up as the poster laws for unforeseen consequences. Think of the bond covenant passed in 2017 that severely limits options for managing state finances, or the net metering changes passed late last session, which may weaken incentives for investment in rooftop solar. Their unfortunate policy consequences that will either haunt the state for years or require great effort to resolve.
Think of how the outcomes might have been improved if the state had a transparent, organized way to research and analyze the proposals, gather data, allow nonpartisan experts to weigh in on them, and learn how other states have tackled the same issues. This is precisely what public policy institutes do in states that have figured out how to organize and support so-called think tanks. This may be why some states are far ahead of Connecticut in overhauling their tax structures in creating a robust economy; a solvent, stable and effective government; strong communities; and a healthy environment.
Connecticut’s over-reliance on local property taxes is legendary. Forty-two cents of every tax dollar collected in the state comes from the property tax. Property taxes exacerbate public education disparities between towns; burden small businesses; encourage really bad land-use decisions; and bear no relationship to a taxpayer’s ability to pay.
So far this session, the legislative process has yielded a number of proposals aimed at the welcome goal of reducing the onerous property tax. One proposal would provide another source of revenue to towns by increasing the sales tax and returning a share to the town where it is collected. Although towns sorely need new sources of revenue, the unfortunate consequence of this proposal would be to pit town against town in the scramble for grand list growth and widen disparities between retail-rich and retail-poor towns. What is missing is a fair, equitable, and regional way to distribute any new sales tax revenue destined for municipal use.
A second proposal, aimed at a creative way to tackle the state’s projected budget deficit, would impose a statewide tax on homes valued at more than $750,000. The revenue generated would replace what would otherwise presumably come from increases in sales or income taxes. Also included would be a $50,000 homestead exemption for owner-occupied dwellings. Taken together, these could introduce some healthy progressivity in the state’s tax structure.
But has anyone thought through the risks? How would this scenario actually play out in towns that would lose a large chunk of their grand lists due to the $50,000 homestead exemption? Unless those towns are reimbursed somehow, the tax burden will just shift to other properties – probably commercial -- and many municipal budgets will crash and burn in multiple referenda.
These are just two examples of the kind of policy innovations that would benefit from thoughtful analysis and deliberate consideration by an entity designed to do such things in the cold light of day, not during the heat of a frenetic legislative session.
Connecticut’s finest policy making hours have not generally been spent late at night in the back rooms of the Capitol. It’s time that Connecticut had a rational, deliberative and nonpartisan process that includes the valuable contributions of a public policy institute.