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Waterford First Selectman Opposed to Eliminating Car Tax

A proposal by Gov. Dannel Malloy would mean the town would lose nearly $3.9 million in tax revenue a year, and it will mean property owners and businesses will pay more, First Selectman Dan Steward said.

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.

Foofaraw February 15, 2013 at 12:56 PM
What about if the Gov did a combined total auto value of under 20k per household? Then the town could collect on most and poor families with 2 crappy cars wouldn't need to be burdened. I'd take on a little extra in real estate tax for that.
Ron February 15, 2013 at 01:09 PM
Great political move by Malloy, give a tax break that he does not have to find money for. Just as the state continues to force mandates on local town that they do not fund, now they are planning on cutting one of the town's few revenue sources.
Sarah orr February 15, 2013 at 01:27 PM
I agree, 20k COMBINED sounds like a better option. This way our towns can still provide funding for schools, road projects, etc.
Maggie L. February 15, 2013 at 02:16 PM
Motor vehicle taxes are very difficult to collect since vehicles registered to the town may belong to transient people or could be registered to a false address. A collection rate of 4.4% isn't great and that's through no fault of anyone in the Assessor's Office or the Tax Collector's Office. Why spend the time, the effort and the money to continually send delinquent notices or to try to collect back taxes and fees that will probably never be collected. People will always find a way to skirt around the system and continue to be able to register their vehicles without paying taxes.
Paul Petrone (Editor) February 15, 2013 at 02:20 PM
That is not a collection rate of 4.4 percent. It is 4.4 percent of all the funds the town collects from taxes is from motor vehicle taxes. I asked the tax collector if there was a difference in collection rates between motor vehicle taxes and others and he said he didn't have that stat, but I can assure it you is most likely above 95 percent, not 4.4 percent. Overall the town collects around 99 percent of the taxes it is due each year.
John Sheehan February 15, 2013 at 03:33 PM
If the legislature does not make its will known early on the car tax issue, it will add to the confusion in determining the mill rate in May. Generally, the Grand List is issued on the last day of February with Board of Assessment Appeals hearings in March so the final Grand List is known in April - plenty of time before the tax rate is determined in May. This year there will have to be two figures for the Grand List, one with the car values and one without. Knowing the value of the Grand List and the expected revenues from other sources is important for the Board of Finance and the RTM when they are discussing the budget. IT is easier to determine the expenses when you have a good handle on the expected revenues. It is expected that the Grand List this year will be less than previous due to the decline in residential home values. A lower Grand List means a higher mill rate, thus, higher taxes. The revenue from car taxes is a bit more than one mill ($3.6 million). So, unlike previous revaluation years, expect the mill rate to increase by two or more mills if the property tax on cars is repealed. If the car tax is not repealed, there will probably be at least a mill increase in the tax rate due to the grand list shrinkage due to reval.
Ron February 15, 2013 at 04:10 PM
Dan Molloy and Dan Steward are two typical Democrats, and symbolic of what has destroyed America. Molloy as a classic 1950's large government Democrat wants to appear to cut a tax (really impose larger taxes on workers who can afford better cars due to their hard work and attention to getting quality educations) where in fact he is the biggest tax raising Governor in America. His taxation and anti business policies have made CT last in the nation in business friendliness. On the other hand Steward, as a classic Democrat wants to keep a tax because as a Democrat he does not know how to govern without imposing taxes, and has seemingly no idea or political will to reign in spending, which could lower taxes. Molloy and Steward, weaned on taxation increases their entire lives, only have one solution, and that is to impose larger and larger taxes because balancing a budget, and reducing spending is a solution in a taxation mentality. Luckily because both Molloy and Steward live in a state that rewards political "leaders" who constantly raise taxes and in the process destroy the middle class, the elderly, private business and the college graduates, they stay in power. Thus is totally fitting that Molloy wants to give the illusion of lowering a tax to a select segment of the population just to raise it on another segment ( Democrat's redistribution of wealth initiaives) and Steward wants to maintain a tax rather than cut spending.
Kathleen McCarthy February 15, 2013 at 05:02 PM
I believe Mr. Steward is a Republican.
John Sheehan February 15, 2013 at 05:25 PM
Ron - If you know what you want to cut from the Town's budgets, please attend the BOF meetings in March and make you opinion known.
xsailor8 February 15, 2013 at 06:30 PM
As a property owner i would prefer a single larger tax on my home rather than 3 extra taxes on cars and boat trailer....plus no property tax on cars might further stimulate car purchases because there would be no tax penalty on a newer vehicle
Waterford Rez February 15, 2013 at 08:06 PM
Typical Dem/Lib/Socialist/Progressive (actually most politicians), buying votes. All the people living in apartments and low income housing (subsidized by the taxpayer) will now have their "fair share" shifted to home owners, the ones who pay a majority of the taxes already. Brilliant move Malloy. Why don't we just pay for a bunch of peoples cell phones too....oh ya, we already do that. Is there anything left at all that I am not paying for?? Instead of 'buy one, get one free" we are turing into "buy one, buy another one for someone you don't even know". When will this insanity end?
noone February 16, 2013 at 02:44 PM
First off isn't the car tax strange? We pay tax on that car when it was first purchased, and we pay tax on that car every time it is sold. Now we pay tax on the car to the town we live in....gee how much revenue can one car give! How about this.. 1.Lower the tax rate on the cars if you still plan on having a redundant tax. 2. Eliminate the tax for people ALREADY paying property tax..ie real estate tax. or 3. Tax people who don't own real estate on their cars, to a lesser amount...for the joy of living in your town. or 4.CUT GOVERNMENT spending...and eliminate the tax, that has been paid for already on that car!
fedspy February 16, 2013 at 04:01 PM
Lets look at the total picture of taxes by the state govt. Lower the sales and income tax to stimulate the economy as the free enterprise system is the best way to raise revenues. We have a consumer driven economy, and when the private sector thrives without govt. interference by the state or federal govt., revenues will increase, and in turn, additional revenues raised can be returned to the cities and towns, not used to increase the size of govt. or the uncontrolled spending in the education budgets (with the exception of the classroom teacher). My proposal to help cities and towns meet budgets is to eliminate collective bargaining. however, the state is ruled by one political party, as well as all of new england, so nothing will change, which is why CT. is the worst state in the union to retire, according to the TopRetirements.com.
Myself February 16, 2013 at 09:15 PM
The type of car you own is no indication of your wealth or education. Anyone with half a brain and any knowledge of true wealth knows that a car is the worst investment as they depreciate value rapidly. There are many drug dealers and uneducated fools driving around in luxury vehicles. I think the republican ignorant mentality of who is deserving and who is not based on inaccurate assumptions of people (like yours ) have had just as much to do with the demise of America as any democrats opinion. It was the Republican Party that got our country into this mess in the first place and if you we're so educated you would know this, rather then insulting those who drive modest cars as lazy and uneducated people.
ted March 04, 2013 at 01:25 PM
the car tax is the worst tax ever. forcing people to drive old unsafe cars and not making new very safe cars affordable. why should i pay a additional 2-5% per year on a car - every year - for the life of the car!!! this is why we have to lease cars and waste our money doing it - because no one can afford to buy a nice new car. ELIMINATE IT FOR ALL CARS REGARDLESS OF VALUE - i want to someday afford a very safe very expensive car and i will not be able to in CT

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