From:  Susan Kniep,  President
The Federation of Connecticut Taxpayer Organizations, Inc.
Website:  http://ctact.org/
email:  fctopresident@ctact.org

860-524-6501

December 6, 2005

 

WELCOME TO THE 59TH  EDITION OF 

 

TAX TALK

 

 

 

 

The following statement was presented by me on December 1, 2005 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

 

I thank those who came to this hearing and spoke so eloquently for property tax reform in Connecticut with a focus on establishing assessments based upon the actual sale of real estate as opposed to the current practice of  taxing real estate as unrealized capital gains.  My comments follow.  Susan Kniep, President of FCTO  

 

I appreciate the opportunity to speak before you this evening.  I am Susan Kniep, President of The Federation of Connecticut Taxpayer Organizations, Inc.  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. 

 

I am in real estate.  I have heard from seniors who had been forced to go on Medicaid because they had no health insurance, they continue to live in their homes, the state has liens on their homes, they cannot afford to pay the property taxes that continue to increase on the value of their homes, and yet they cannot sell their homes. 

 

Some homes have been passed down from generation to generation.  Yet, the current generation cannot sustain ownership of the property due to Revaluation and annual property tax increases.

 

The property tax system in Connecticut is in crisis.  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 tax real estate on its value established at the time of sale, reform our state mandates, and think out of the box. 

 

Recently, I had written to Governor Rell and our local legislators proposing that municipalities be allowed to retain 1% of the 6% sales tax generated from new businesses established within Enterprise zones.    As you are aware Enterprise zones allow for tax breaks for new businesses thereby affecting the amount of tax a municipality receives, while taxpayers pay for services to sustain these businesses.  I ask that your Committee consider such a proposal.  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 this year by the legislature and should be approved, along with laws governing campaign finance reform and ethics.     

 

It has become apparent within the past few months, 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 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, I ask that you allow municipalities to retain 1% of the 6% sales tax generated from new businesses in enterprise zones, implement a tax structure which establishes the true assessed value of a home upon its actual sale, 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.              

 

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 From:  Theresa McGrath, Executive Director, FACE,

Family Alliance for Children in Education

(860) 570-1203

FACE0203@comcast.net

December 6, 2005

Hello Susan, I thought you would be interested in this article. Wouldn't it be nice to do something like this in our state? 

A tiny little tidbit of totalitarianism

By Paul Jacob

Dec 4, 2005

Do you want to make politics illegal? Should our opponents be blocked from democratic participation? Must those who agitate for ideas that we disagree with be silenced?

Surely, most Americans are blurting out, "No! Of course not!"

Yet, that's the growing trend in today's politics: the totalitarian impulse. Quietly, behind the scenes, it's rearing its ugly head again, this time in Oklahoma.

The Oklahoma Education Association is not demanding its political opponents be thrown into gulags. The state's largest education labor union would do nothing that extreme. Don't be silly. The OEA just wants to silence citizens petitioning to place an initiative on the ballot.

This isn't rampant, chest-beating totalitarianism. There is nuance. Only a smidgen of despotism.

At issue is a measure called Stop Over Spending, which is similar to Colorado's Taxpayer Bill of Rights. A group of citizens filed the initiative and formed a campaign committee called Oklahomans in Action. The goal of the measure is simply to put the people in charge of state government spending.

The Stop Over Spending (SOS) initiative places a cap on how much politicians can increase government spending. From year to year, the increases cannot be greater than inflation plus population growth. No cuts in spending are mandated, but the increases are capped. That is, unless the people of Oklahoma vote to let their state government spend more money, which they can do. The SOS Amendment thus puts government on a citizen-controlled diet.   The article is continued at the following website:  http://www.townhall.com/opinion/columns/pauljacob/2005/12/04/177703.html

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Again, I extend our appreciation to Pat Snyder for keeping us current on the news.  Please continue to visit Pat’s very informative website:  http://www.watchdog4pop.blogspot.com/

Gov. Sanford to Push for Private Property Protections
PRESS RELEASE, December 5, 2005, Contact: Joel Sawyer
803-734-2100, jsawyer@gov.sc.gov

Aiken, S.C., December 5, 2005 - Gov. Mark Sanford was in Aiken today to emphasize the need for strengthening the state's eminent domain laws in the wake of a recently-defeated local TIF proposal. Earlier this year, the governor vetoed S.97 because of his concern that it expanded eminent domain powers at the expense of private property rights. That same bill was almost used to create a TIF district that gave benefits to private developers. Gov. Sanford said that issue, combined with the recent U.S. Supreme Court decision, Kelo v. City of New London, Connecticut, have illustrated the need for stronger eminent domain protections in our state, and that he will work with leaders in the General Assembly to promote that legislation in the coming year. The article is continued at the following website:  http://www.scheadlines.com/release.asp?relID=502

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From:   Fred Standt ,   FStndt@aol.com

Brookfield Taxpayers Association

RE:  Slashing the Budget by U. S. Rep Ron Paul

November 21, 2005

 

SLASHING THE BUDGET By Ron Paul, U. S. Rep:  http://www.house.gov/paul/index.shtml, http://www.house.gov/paul/legis.shtml

Only in Washington DC can a spending increase be called a spending cut-- but that’s exactly what happened last week.  Congress passed a budget bill that merely slows the rate at which some federal spending grows by a tiny percentage, and both parties acted as though a revolution had taken place.

Republicans trumpeted the measure as a huge victory for fiscal conservatism, while Democrats were enraged by the supposed “slashing” of government programs.  The uproar shows just how entrenched the spending culture has become on Capitol Hill-- even insignificant reductions in the rate of growth in federal spending are seen as earth-shattering.  But if we’re really serious about cutting federal spending, why not simply cut 10% from the 2006 budget? 

Remember, the same Republicans claiming victory for slowing spending next year also passed the Medicare prescription drug bill, which will add over $50 billion to the federal budget in 2006 alone!  In just one year the Medicare bill adds ten times in new spending what the budget bill purportedly cuts.  So nobody who voted for the Medicare drug bill has any business talking about government spending.  Neither do those who refuse to consider cutting one penny from the military and foreign aid budgets.  You cannot conduct a foreign policy based on remaking whole nations using military force and pretend to operate a frugal government.

The Democrats, by contrast, never want to cut spending on anything, no matter how much the federal budget grows-- and it’s doubled in 15 years.  A $2.4 trillion federal budget is woefully inadequate in their eyes, and ten years from now they’ll say the same thing about a $5 trillion budget.  No amount of spending will ever satisfy those who believe government should address every human problem and involve itself in every aspect of our lives.

The budget bill fails to address the root of the spending problem--this belief that Congress continually must create new federal programs and agencies.  However, with the federal government’s unfunded liabilities-- Social Security, Medicare, and Medicaid-- projected to reach as much as $50 trillion by the end of this year, Congress no longer can avoid serious efforts to rein in spending. Instead of a smoke-and-mirrors approach, Congress should begin the journey toward fiscal responsibility by declaring a ten percent reduction in real spending, followed by a renewed commitment to fund only those government functions that are consistent with the Constitution.

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Doug Schwartz, thedougschwartz@gmail.com

New London

Subject:  The Coalition to Sue State Over School Funding

November 24, 2005

 

It is clear this effort to tax individuals and corporations to death has been years in the making and is well-organized.  Their web site is full of interesting stuff, see especially their list of members:  http://www.ccjef.org/member.htm

 

September 29, 2005

Coalition to sue state over school funding
By: Matthew J. Malone
Reprinted from The Stamford Advocate

STAMFORD - A coalition of municipalities, labor unions and interest groups plans to file a lawsuit charging that state funding of education is unconstitutional because it fails to provide all students with an adequate education. Continued at the following website:   http://www.ccm-ct.org/advocacy/2004-2005/092905c.html

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November 23, 2005

State sued over school funding -- issue for governor's race
By Mark Pazniokas and Robert A. Frahm
Reprinted from The Hartford Courant

A school-funding lawsuit filed Tuesday aims to increase state aid to municipalities by as much as $2 billion annually, creating an instant issue for the 2006 campaign for governor.

Nearly 30 years after Horton vs. Meskill, a landmark lawsuit that opened the state coffers for school aid, the courts once again are being asked to force political leaders to redefine the state's role in local education.

The lawsuit claims there are vast disparities in opportunities and levels of achievement among Connecticut's public schools. Continued at the following website:   http://www.ccm-ct.org/advocacy/2004-2005/112305.html

 

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New school funding lawsuit pursues only greed, not equality 

Editorial By Chris Powell, Journal Inquirer,  November 28, 2005

 

 

Education, Robert Frost remarked, is mainly a matter of hanging around until you've caught on. Having just been slapped with another class-action lawsuit claiming that its system of financing education is unconstitutional, 30 years and billions of dollars in new education spending after the last such lawsuit, Connecticut should be catching on. Continued at the following website:  http://www.journalinquirer.com/site/news.cfm?newsid=15652726&BRD=985&PAG=461&dept_id=161556&rfi=8

 

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No trial means no details; Construction company the big winner in Ellef/Tomasso plea deal, by Don Michak, Journal Inquirer, Oct 31, 2005

 

The criminal convictions this week of former Gov. John G. Rowland's co-chief of staff and one of Rowland's biggest benefactors mean there will be no trial at which federal prosecutors detail the racketeering enterprise they alleged was run out of Rowland's office. Continued at the following website:  http://www.journalinquirer.com/site/news.cfm?newsid=15476928&BRD=985&PAG=461&dept_id=161556&rfi=8

 

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CL&P seeks 21.5 percent rate hike,  Electricity users, get ready to shell out approximately 21.5 percent more every month for power.  Journal Inquirer, Dec 3, 2005 

 

Late Friday afternoon, Connecticut Light & Power finalized its proposal for a 21.5 percent rate hike for next year and filed it with state regulators, Mitch Gross, CL&P spokesman, said. It is now up to the state Department of Public Utility Control to review CL&P's proposal, hold a public hearing, and act upon it this month, Gross said.
"We anticipate an increase being approved," Gross said Friday. "The DPUC will make the final decision as to how much it will be."  DPUC spokeswoman Beryl Lyons said Friday that the department "will review the filing to make sure it is correct, and we'll issue a decision sometime this month, giving the company enough time to be able to program their computers so the rate can go into effect Jan. 1."  Continued at the following website: 

http://www.zwire.com/site/news.cfm?newsid=15685878&BRD=985&PAG=461&dept_id=161556&rfi=6