While the state is dramatically dependent on income tax for revenue, municipalities live and die with property tax in Connecticut, a situation which has resulted in depressed communities being slammed with 30 plus rates while wealthier ones enjoy rates well below that.
And for years, lawmakers have said something should be done about it.
Here’s how property tax works. You own a piece of property. The town sends assessors out who look it over and then compare it to the market rate, or how much homes are selling for in the town and your specific neighborhood. Then the value is assessed and the town taxes 70 percent of that.
Now, when the real estate market booms, the value of the homes goes up and the cities and towns set their millage rates based on the total value. If the majority of homes increase in value, the town can raise the same amount of money with a small mill rate. If, however, the inverse happens, and values plummet, the town raises the money to cover its budget by increasing the mill rate. Theoretically, your actual tax bill should not fluctuate much year-to-year under this system. But, as the property taxes support fire departments, school districts, police and a lot of other vital and expensive municipal operations, property taxes have become a problem in some cities and towns.
Well, what Gov. Dannel P. Malloy has in mind so far to address this is to allow communities to phase in declines in assessments over five years, like they can massive hikes.
The idea is to prevent cities and towns from dramatically hiking in a single year mill rates when property values crash. (Warning total editorializing going on next sentence.)
Instead, they will be able to slowly tax homeowners to death instead of going for the swift kill.