Federation of Connecticut Taxpayer Organizations

Dowd Muska is Philip Gressel Fellow for Tax and Budget Policy at the Yankee Institute for Public Policy, Trinity College, P.O. Box 260660, Hartford 06126. E-mail address: dowd@yankeeinstitute.org.

New Haven Register, May 11, 2004

"It is a general popular error," Edmund Burke warned, "to suppose the loudest complainers for the public to be the most anxious for its welfare."

Connecticut�s overtaxed homeowners, already burdened with enough evidence to support Burke�s dictum, received even more during the just ended session of the state legislature.

In an effort to address what he accurately called "Connecticut�s extraordinarily high property taxes," state Senate President Pro Tempore Kevin Sullivan trotted out something new: a "homestead" proposal.

Originally an exemption of up to $75,000 of an owner-occupied residence�s assessed value from property tax, Sullivan and allies switched it � at the last minute, without a public hearing � to a 15 percent surcharge towns could place on business properties. The plan met a much-deserved death, but there�s little doubt it will return in 2005. When it does, it�s sure to once again do nothing to control the burgeoning costs of Connecticut�s municipal governments.

As usual, the major drivers of property-tax increases were ignored by legislative leaders during this session. In fact, through their lock-step opposition to meaningful reform of the binding-arbitration mandate, the same politicians pushing for homeowner relief are the most reliable defenders of the key cause of soaring taxes: workers� salaries and benefits.

Research by the Federation of Connecticut Taxpayer Organizations shows employee compensation can consume up to 90 percent of a town�s budget. And binding arbitration severely limits the ability of local officials to negotiate realistic wages and benefits.

Taxpayer-friendly alterations to the system include not allowing arbitrators to take into account a town�s rainy day fund, and requiring that arbitrators consider a town�s effective tax rate. These reforms, which the Connecticut Conference of Municipalities said can give relief "at no cost to the state, in a way that is fair to employers and employees," died in committee.

At least supporters of arbitration modifications got a hearing. That wasn�t the case for foes of the prevailing-wage law, which requires state and municipal construction and renovation projects award unnecessarily high pay to workers.

The prevailing-wage mandate, modeled after a federal law from the 1930s that the General Accounting Office recommended be repealed 25 years ago, ensures union wage rates prevail on government jobs. The majority of Connecticut contractors are not union, and can pay less than union rates. But since they are forced to pay "prevailing wages," these contractors aren�t able to pass savings on to taxpayers.

With school enrollments growing and construction a major expense for many communities, prevailing-wage reform or repeal would make a major contribution to halting town budget growth.

Another reform aimed at reducing school-construction costs, developed by the Yankee Institute and the taxpayer group Non-Partisan Action for a Better Redding, is being ignored by state legislators. An alternative to building schools, it devotes a third of a school district�s per pupil costs to a scholarship parents use to obtain private education. The second third remains with the school system and the final third is used to cover towns� other expenses.

In Redding, by avoiding the cost of a new school, this would have saved taxpayers $90 million over 20 years.

Just think what such a plan might accomplish statewide. But union-controlled legislative leaders refuse to even consider the idea. This year they even blocked Gov. John Rowland�s modest scholarship program, which would have let a paltry 500 students escape the state�s most dismal schools.

Homeowner-relief formulas do not remove any of the over 700 mandates legislators have imposed on municipalities. They fail to deal with mounting personnel costs. And they ignore promising, free-market alternatives to the schools that comprise more than half of local-government spending in Connecticut.

Proponents of homestead provisions consider themselves visionaries who are willing to boldly rethink the revenue system paying for services towns provide. But their proposals are nothing more than mild tweakings of broken state-local fiscal partnership.

Homeowners and business owners deserve real property tax relief. Such relief will only arrive when legislators are willing to face the true sources of runaway municipal spending.