Federation of Connecticut Taxpayer Organizations

On December 1, 2005 I spoke at the hearing held in Groton, Connecticut before the State�s Legislative Program Review and Investigations Committee on Connecticut�s Property Tax System . Their report can be found at the following website:� http://www.cga.ct.gov/2005/pridata/Studies/CT_Tax_System_Briefing.htm . Other reports by this Committee can be found at this website:� http://www.cga.ct.gov/pri/year2005studies.htm�

Excerpt from Bill 701:

Section 1. (NEW) (Effective July 1, 2006) (a) Notwithstanding the provisions of section 12-62 or 12-62a of the general statutes, all appraised valuations of real property as of July 1, 2006, shall remain unchanged, and shall not be reappraised until such time as (1) existing real property undergoes a change in ownership, (2) newly-constructed real property is purchased, or (3) a property owner makes improvements to a property. Upon a change in ownership or purchase of newly-constructed real property, such property shall be assessed at its sales price. When improvements are made, the property's valuation shall increase by the cost of the improvements.

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From Susan Kniep, President

The Federation of Connecticut Taxpayer Organizations, Inc.

To the Finance, Revenue and Bonding Committee

Re Bill 701,� March 27, 2006

I am Susan Kniep, President of The Federation of Connecticut Taxpayer Organizations, Inc.� I had served as Mayor of East Hartford from 1989 to 1993 and for several years on the Town Council.

Property owners throughout Connecticut are struggling to maintain ownership of their most prized possession, their homes.� With annual property tax increases exceeding their income growth, many property owners are forced to choose between the basic necessities of life or their property taxes to keep from losing their homes.�

There is a correlation between the property tax structure in our State, and the Eminent Domain issue in Connecticut where private interests can usurp the rights of private property owners if the price is right.� If someone cannot afford to pay their property taxes, a lien by the municipality is placed on their home or business.� Ultimately a municipality can force the sale of that property to a private party.��

The injustice in Connecticut�s property tax structure is that we are being taxed on unrealized capital gains.�� Unlike our stocks or bonds wherein we are taxed upon the cash we receive as a result of sale or any interest or dividends actually received, the value of our home is something simply written on paper by Revaluation companies.�� We do not realize the actual value of our home until it is sold.� Therefore, we do not have the cash in hand to pay for the steady property tax increases year after year.��

State Statutes governing Revaluation place a cost burden on taxpayers not only through the significant increases of our properties as documented on a piece of paper but also on municipalities which must budget to facilitate the process.� In essence, the State is keeping those within the Revaluation industry in business, while taxpayers become poor.�

The property tax system in Connecticut is in crisis.� I am in real estate.� I have heard from young and old alike who cannot continue to sustain annual property tax increases.� Yet, we cannot address this issue without concurrently looking at the issue of State Mandates.�� Those laws which the State imposes upon municipalities which carry a financial burden upon local property taxpayers.�� Two mandates which are bankrupting municipalities are Binding Arbitration and Prevailing Wage.�� Our laws must be changed to prevent the driving costs of wage and healthcare benefits in union contracts due to Binding Arbitration and the high cost of construction born by local taxpayers due to the existing Prevailing Wage mandates.� Approximately, 75% to 85% of municipal budgets support municipal personnel related expenses.� While those who work in the private sector �At Will� are losing their jobs, or taking a cut in pay and/or paying more for healthcare benefits for themselves, they are also picking up the tab to pay for high healthcare, pensions and wage costs for town employees which are factored into municipal budgets and which are driving up property taxes.��

Municipalities, unlike the State, have only two primary means of raising revenue,� property taxes and fees.� In contrast, the State of Connecticut has placed a tax on nearly every facet of our life, from the tax on a movie to the conveyance tax on the sale of our homes.�

I emphasize that property owners can no longer sustain continued property tax increases.� The solution to this crisis is to adopt Bill 701 and to not impose property tax increases until a property undergoes a change in ownership. �� Further, we must reform our state mandates and think out of the box.�

At the end of 2005, I had written to Governor Rell and legislators proposing that municipalities be allowed to retain 1% of the 6% sales tax generated from new businesses.�� Further, there should be a mandatory audit of municipalities which receive at least thirty per cent of their revenues in any fiscal year from the state.� This was a proposal made last year by the legislature and should be enacted.��

Also, it has become apparent that our taxes have been driven by corrupt business practices at the state and in some municipal governments.� It is also apparent that we have an urgent need for true campaign finance reform to prevent influence peddling usurping sound business practices.�� The State and the 169 individual towns must put their finances in order.� There must be accountability of government expenses while concurrently providing accountability of those who have a fiduciary responsibility over the money taxpayers give them to finance State and local budgets.��

Thank you for your time.� In summary, we ask that you approve Bill 701 and thereby� implement a tax structure which establishes the true assessed value of a home upon its actual sale, allow municipalities to retain 1% of the 6% sales tax generated from new businesses, reform state mandates and give local governments greater control over their costs, require audits and provide accountability of how our money is being spent, and most importantly, implement sound business practices by instilling strong ethical standards and end the corruption which has permeated our state and some of our municipalities.