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HARTFORD — On Wednesday, the State House passed Senate Bill 873, three-part legislation to give tax credits to former commuters, remove liens from the property of recipients of public assistance and to modify the state’s PILOT program for reimbursing towns for tax-exempt property.
The bill passed with a vote of 125-24 with one member abstaining.
This vote came despite assurances that each part of the bill would receive a separate vote.
A number of legislators expressed concerns about the combination of three apparently disparate issues into one bill.
“All of [the items] deserve our attention. But are they critical to do at this time? Have they gone through the appropriate process? We could easily have voted on each one in turn,” said State Rep. Holly Cheeseman, R-East Lyme.
State Rep. Dave Yaccarino, R-North Haven asked simply, “why are we not doing separate bills?””
The reason, according to State Rep. Sean Scanlon, D-Guilford, “to send a message.”
A message that commuters will not be double taxed. A message that there will be no more “poverty tax.” A message that the legislature will — at least try — to keep its promise to reimburse municipalities.
To others, however, the urgency does not make sense.
“The tax issue is urgent — these other two could really wait,” said State Rep. Tammy Nuccio, R-Tolland. “I feel like this bill is taking the easy way out.”
State Rep. Craig Fishbein, R-Wallingford, proposed an amendment that would strike out the proposals removing liens and adjusting the PILOT program, leaving the legislature to vote solely on the so-called “convenience of the employer” rule, which is eliminates the issue of double taxation for out-of-state commuters working from home during the pandemic.
Fisbein said that he didn’t see the need for the changes to the regulations on liens, and he said that addressing the PILOT formula was “irresponsible,” since the legislature had not solidified the funding mechanisms.
The amendment failed 95-53, with two abstaining.
Tax credits to stay-at-home commuters
If the bill is passed by the Senate, about 110,000 Connecticut residents who formerly commuted out-of-state for work will receive tax credits from the State of Connecticut to reimburse their 2020 state income tax.
The credits will not extend for future years. In fact, Connecticut hopes to collect the $500 million in lost revenue in future years as many of these individuals continue to work from home.
Whether or not this will happen depends on the outcome of a case pending before the U.S. Supreme Court, but which likely won’t be decided before June 2022.
Eliminating a poverty tax
The second part of the legislation would end the practice of placing liens on homes of welfare recipients that are valued at $250,000 or less.
Scanlon pointed out that only Connecticut and New York have a similar law, and that the practice places additional burdens on individuals who become unable to support themselves without state aid.
“People that get government assistance have no idea that at some point if they get out of poverty and they buy a home and try to be successful, that at some point, the state will come back and try to recoup the benefits they received through the state,” said State Rep. Catherine Abercrombie, D-Meriden.
“I can imagine how devastating it would be if someone thought they had turned their life around and then the state came after them,” said Cheeseman.
Abercrombie said the proposal would affect about 1,300 individuals in any given year.
Fishbein said that if a refinancing needed to be done, the legislative body could put into place a provision that would protect those individuals without removing the liens.
State Rep. Rosa Rebimbas, R-Naugatuck, said that no one has had a house foreclosed on as a result of such liens.
Rebimbas said that she supported allowing people to refinance, but she argued that removing the liens would prevent the state from taking that money and using it to help someone else in need.
Rebimbas said that individuals who received assistance in the past should have the opportunity to give back.
“Most of the people I have spoken to are very grateful and want to return the favor,” she said. “If you have a home and you’ve got equity, you should want to help others.”
A change to the PILOT formula
The final part of the legislation would direct additional funding to poorer municipalities through a reworking of the state’s formula for calculating PILOT funds. ‘
The new formula would separate municipalities into three tiers based on equalized net grand list per capita.
Municipalities with a net grand list per capita of less than $100,000 would receive a reimbursement of 50 percent of the taxes from tax-exempt property. Those with a net grand list per capita of between $100,000 and $200,000 will receive a reimbursement of 40 percent of these taxes, and those with a net grand list per capita of over $200,000 will receive a reimbursement of 30 percent.
The proposal includes a hold harmless provision, in which no municipality will receive a lower reimbursement than what it is currently receiving.
According to Scanlon, the top tier will also include the state’s 30 alliance districts and any municipality where more than 50 percent of its property is state-owned.
The bill also includes a special allocation of $5 million for the city of Bridgeport.
Scanlon explained that because Bridgeport has not re-evaluated its grandlist since 2016, and since it recently sold a large amount of property to the tax-exempt Sacred Heart University, the extra $5 million would better reflect what the city should receive in PILOT funds.
The bill also directs that the VA hospital in West Haven will receive 100 percent of its funding and that New London should receive PILOT payments for property owned by the Connecticut State Port Authority.
What the bill does not include, however, is a means of funding the expanded PILOT program.
State Rep. Toni Walker, D-New Haven, co-chair of the Appropriations Committee, said that the funding would be included in the budget presented in April. Asked whether that would require exceeding the limit imposed by the legislature’s current spending cap, Walker said they had not yet made calculations on what the cap was going to be.
Scanlon said it was important to pass legislation about the PILOT funding now so that municipalities knew what to expect as they drew up their budgets.
Several representatives said that they were concerned about the idea of promising to fund PILOT without having guaranteed the funding in the state budget.
“I want to support this, but I think it’s improper. I think we’re misleading the public. I don’t think we’re going to have the right amount of money,” said Yaccarino.
Rebimbas said there was no provision in the bill that would prevent raising taxes to cover the expense of the additional PILOT payments.
“How are we helping any town prepare for the future?” she asked. “Where is the accountability?”
Cheeseman, however, emphasized the importance of funding PILOT as a promise that needed to be fulfilled.
“If we don’t live up to our word as a legislature, I think we should come back with a resolution to change our motto — from the land of steady habits to the land of empty promises,” she said.