Waterford First Selectman Opposed to Eliminating Car Tax

A proposal by Gov. Dannel Malloy will cost the town nearly $3.9 million annually, and will just mean that homeowners and businesses will be taxed more, First Selectman Dan Steward said this month.

This month, Malloy released his budget proposal for the upcoming two fiscal years. In it, Malloy proposed eliminating the local property tax on motor vehicles assessed below $20,000, which constitutes a nearly-$4-million-revenue-stream for the Town of Waterford.

“This is tax relief for families who are middle class, working class and working poor,” Malloy said in his speech. “It gives a break to businesses – especially small businesses, and it takes an administrative burden off local governments.”

Steward disagreed with that statement, except for the last part. The tax will just be passed onto homeowners and businesses, as the plan comes with no funding from the state to make up the difference.

“It is an unfunded solution,” Steward said. “It is just going to be passed on to homeowners and businesses.”

Waterford Tax Assessor Mike Bekech and Waterford Tax Collector Mark Burnham both agreed that removing the motor vehicle tax, or at least most of it, will reduce the amount of work done in both offices and could result in some savings. But Steward said those savings are dwarfed by the millions the town will lose in revenue, and instead businesses and property owners will just pay more.

“Are there some possible savings? Maybe,” Steward said. “But I still need people in those offices. And it doesn’t come close to balancing out the amount we lose.”

Specifics

Bekech said his interpretation of what Malloy proposed is that the first $20,000 of assessed value on vehicles will not be taxed. That means that all vehicles assessed below $20,000 will pay no taxes, and vehicles above $20,000 will only be taxed on the value above $20,000.

Malloy said the proposal would be optional in the 2014-15 fiscal year and then mandated in the 2015-16 fiscal year. It is also worth noting that Malloy said assessed values, which is 70 percent of the real value, so a car with an assessed value of $20,000 has a value of $28,500.

Both Bekech and Burnham agreed the amount of time they spend on motor vehicle taxes is vastly disproportionate to the percentage of income the town collects from motor vehicle taxes. In the 2012-13 fiscal year, the town is expected to receive 4.4 percent of its taxes from motor vehicles, yet Bekech said his staff probably spends half of its time dealing with motor vehicle assessments.

Burnham said there were 9,253 real estate accounts and 1,299 personal accounts for the 2012-13 fiscal year, and 23,710 motor vehicle accounts – more than double the other two combined. That means that if the town would no longer collect taxes on the vast majority of motor vehicles, there would be far fewer accounts to collect and therefore less work for the tax collector's office, Burnham said.

Steward agreed, and said there could be some cost savings. But that isn’t going to pay for the $3.9 million in lost revenue, he said.

What’s going to happen, unless the town’s budget changes drastically, is the mill rate will increase and property owners and businesses will pay more in taxes, Steward said. He said he will lobby against this proposal, if asked, and hopes it will be eliminated by the state legislature.