Thoughts on Hartford Taxes by Mat Jasinski
We know the budget hearing is tonight (6pm, Bulkeley HS auditorium), but why not start the conversation online? This is a post by guest blogger Mat Jasinski, Hartford resident, attorney and (in his words) "one of the city's few – but proud! – registered Republicans." Disclaimer: Mat and I went to law school together, worked together for a year, and I think very highly of him. So treat him well, loyal readers.
The mayor has proposed a 13% tax increase (more or less depending on whether you own a business or a home) in a city already notorious for a punishing tax rate. At this point, my concern isn't with any specific budget provision but rather the simple fact that the City would hurt itself and, in the long run, decrease tax revenue, by hiking the mill rate. The budget hearing is tonight, and work will probably keep me from attending. So, I decided to e-mail some thoughts to my friend and city councilman, Matt Ritter. I should note that issue (1) – namely, property tax relief for homeowners – is beyond the Council's immediate control and would require a change in state law, but the Council and Hartford delegation could easily obtain the necessary legislation.
(1) Homeowners are under-taxed relative to businesses. Although it's nice to have the tax relief in the short term, the long-term consequence of imposing such punishing taxes on businesses is that they will leave (many have already), reduce the grand list, and drive up taxes on everyone. I'd love to know what the mill rate would be if residential real property were assessed at 70% of FMV. My experience is that folks considering buying a home in Hartford are convinced that its taxes are double the suburbs b/c of the mill rate, not realizing that, dollar-for-dollar, residential property taxes are less than in West Hartford. We should commit to normalizing our assessment so that the same effective mill rate applies across the board. Our taxes may then be higher than the suburbs but not nearly as high as home shoppers already fear.
The mayor has proposed a 13% tax increase (more or less depending on whether you own a business or a home) in a city already notorious for a punishing tax rate. At this point, my concern isn't with any specific budget provision but rather the simple fact that the City would hurt itself and, in the long run, decrease tax revenue, by hiking the mill rate. The budget hearing is tonight, and work will probably keep me from attending. So, I decided to e-mail some thoughts to my friend and city councilman, Matt Ritter. I should note that issue (1) – namely, property tax relief for homeowners – is beyond the Council's immediate control and would require a change in state law, but the Council and Hartford delegation could easily obtain the necessary legislation.
(1) Homeowners are under-taxed relative to businesses. Although it's nice to have the tax relief in the short term, the long-term consequence of imposing such punishing taxes on businesses is that they will leave (many have already), reduce the grand list, and drive up taxes on everyone. I'd love to know what the mill rate would be if residential real property were assessed at 70% of FMV. My experience is that folks considering buying a home in Hartford are convinced that its taxes are double the suburbs b/c of the mill rate, not realizing that, dollar-for-dollar, residential property taxes are less than in West Hartford. We should commit to normalizing our assessment so that the same effective mill rate applies across the board. Our taxes may then be higher than the suburbs but not nearly as high as home shoppers already fear.
(2) Everyone is over-taxed (i.e., the budget is too big). I recognize that the mayor has proposed a 0% budget increase but, in the face of drastically reduced revenue, that's not good enough. Raising taxes will make the problem worse. As Mike McGarry noted in the Hartford News, punishing tax rates not only discourage businesses from locating here, but they also discourage residents from paying up. Each time Val [Mat's wife] and I have moved (from Oxford St. to Temple St. to Beacon St.), we've practically had to beg the tax collector's office to give us a bill for our car taxes. Despite updating our addresses with the DMV, the registrars of voters, etc., we didn't get our bills and only were reminded when doing our taxes. Honestly, how many folks make the effort to pay their car taxes? Do we know what the rate of collection is? And, moreover, with such high taxes, the likelihood is that there are many cars in Hartford that aren't properly registered here. The lesson is that revenue will not increase on a 1 to 1 ratio with a tax increase. Concomitantly, revenue will not decrease on a 1-to-1 ratio with a tax cut.
(3) The State has Hartford fatigue. We're in this mess because the city has had no incentive to trim the fat in previous years. Doing so would likely have resulted merely in comparably lower state aid, leaving Hartford taxpayers with the same burden. In the words of Rahm Emanuel, we shouldn't let this crisis go to waste. Now is the time to get costs under control. Reduced state aid gives the City leverage with its unions, counterparties and residents. Pointing the finger at the state accomplishes absolutely nothing; we're simply not going to get it from them. If we don't cut now, we'll be in an even worse position in the future. We cannot grow the grand list with our current tax structure. Period.
(4) This is somewhat redundant, but it's worth emphasizing that the best way for the City to stimulate jobs is not to spend money but rather to cut taxes. The costs of using the City as a jobs program far outweigh the benefits. Doing so keeps taxes high, which discourages private-sector jobs and the private-sector revenue necessary to support public-sector jobs/services.
Simply put, the vicious cycle has continued for decades – at least since Mayor Perry's ill-conceived commuter tax proposal. By now it should be abundantly clear that more of the same isn't the answer. Although our citizens demand services, we can't afford to provide them. Raising taxes decreases revenue in the long run, only making the situation worse. This will be a painful budget, but the pain should come from reduced spending, not increased taxes.
Posted by Emily Gianquinto at 4/28/2009 12:08 PM 
Categories: Guest post,Thought,Bureaucrazy
Tags: Hartford
Categories: Guest post,Thought,Bureaucrazy
Tags: Hartford
I agree with the second point. While I do make an effort to pay my car taxes somewhere, I have to admit that whenever I've moved from town-to-town, updating this information has not been a priority; as a result, places-not-where-I-was-living benefited from my car tax dollars.
Maybe I'm being naive, but things like car tax should be streamlined. Why do we file our other taxes by April 15th, but have car tax twice a year during other months? Wouldn't it at least be more memorable for people if they could pay all their taxes at the same time?
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I dont disagree specifically with much of this, but I must point out that as I see it there is really very little "fat" to cut in Hartford's budget. With the exception of the Mayors office, most departments are operating with barely adequate staff, and most city employees I know are not especially well compensated for what they do. Hartford parks are only maintained at a truly minimal level, which is a real shame.
While I do agree that the City should not try to be a jobs program, some city job programs which have been cut were actually really successful. The one I am most familiar with is the old student assistant program at the Hartford Public Library. High school students from Hartford were employed doing basic tasks for the Library. Many of them went on to become Library Assistants. I would rather pay more taxes to have these programs than pay less and have more unemployed youth out in the street. I would love to see the City hire more of its residents in programs that will give them real skills leading to real, full time sustainable employment. I worry that significant cuts to city services will only contribute to problems that already plague the city.
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What the author of this post doesn't address is the City services he proposes to be cut. Therein lies the rub and therein lies the complexity of the situation. As a law school graduate (so, I'm assuming a lawyer), Mr. Jasinki probably enjoys a comfortable salary. Nothing wrong with that, as I hope to be a law school graduate some day, too. However, people with larger salaries generally find themselves less reliant on City services because they can afford them on their own. For example, if you have more money, you probably go to a pay gym instead of a free rec center to work out. There are City services that everyone requires regardless of income, like fire, police, snow plowing, etc and those are also the services that are subject to cuts last. But anyway, those who can afford private services generally ask for cuts that in things that they don't use, but are used by people who cannot afford these things on their own. Self-advocacy like that makes sense, but a government does not mete out representation and services based on income or buying power. People who aren't using services because they can afford them on their own ask for things to be cut, and often those are the people have the loudest voice to make those requests. What about the people who aren't speaking, but rely on the services? I also believe that 77 mills is a really high tax rate. Nonetheless, it's still cheaper than West Hartford and you get a lot more services than you do in that municipality.
I'm not proposing class warfare or trying to vilify anyone. I think that small businesses pay a bazillion dollars in taxes and that needs to be addressed. Everyone hates taxes, but there are many meek and quiet residents who need the services that are funded by said taxes. It's also easy to write a missive against taxes without offering an creative solutions for how to run a City and provide services by shrinking revenue. Do I think that we need to take a break from capital projects right now? Totally. Do I think that there's some waste within government? Yes, but not like most anti-tax people would like you to think. Do I think that 77 mills is too high of a tax rate? Yes. So, let's have a productive debate and get passed the obvious of of simply declaring that we don't like taxes.
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Brendan,
Thanks for your response.
(1) “For example, if you have more money, you probably go to a pay gym instead of a free rec center to work out.” Really? Couldn’t you have come up with a better than gym membership as an example of what I can afford and, thus, take for granted? A few alternatives: I can afford to buy my own groceries and don’t use food stamps or rely on a soup kitchen. I own a house and don’t have a section 8 subsidy for rent or, worse yet, have to stay a shelter. Clearly, there are important, fundamental services that society must provide. The point is, we have to draw lines. We can’t rely on government merely to provide whatever we can’t afford. Moreover, we have to determine which level of government—if any—is responsible for and in the best position to provide such services. The mayor has “foreclosure prevention” in his budget, but what power does the city have to prevent foreclosures?
(2) “[G]overnment does not mete out representation and services based on income or buying power.” Are you kidding? Hartford has a long tradition of providing representation and services based on income or buying power. Most of the money that flows into municipal elections comes from folks who do business—or wish to do business—with the city. Many projects touted for “job creation” do little but line the pockets of campaign contributors.
(3) “People who aren't using services … are the people have the loudest voice to make those requests.” Not in Hartford. Most of those people have complained by leaving. And that’s my point: people who aren’t using services are typically the ones who pay for them. When those people (and businesses) leave, they take their tax revenue with them.
(4) “77 mills is a really high tax rate. Nonetheless, it's still cheaper than West Hartford.” Yes and no. Residential property is assessed at about 25% in Hartford, not the 70% standard in the rest of the state. So, I get a nice break on taxes for my home. My car, of course, is another matter. That said, far from “simply declaring that [I] don't like taxes,” my very first proposal is to normalize assessments so that the mill rate applies equally to residential and business property. In other words, under my plan, I’d end up paying the same or more.
(5) “It's also easy to write a missive against taxes without offering an creative solutions for how to run a City and provide services by shrinking revenue.” The solutions are easy. They’re just politically unpalatable. I’ll tackle a few line items in another post.
-Mat
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Part 1:
1) I'll admit that a rec center could be considered a poor example, though I don't think that it is a terrible example. We live in a city with many small or non-existent yards. Thus, those of us with small or non-existent yard must rely upon parks and recreation centers for exercise and fresh-aired diversions. I find this to be an important service as I live in a building with a very small yard. I'm in a park probably every day. If the taxes I pay through my rent work to keep these things working, I'm glad. I find that your alternatives go a little bit too far in the other direction. Also, they're mostly state or federal examples. If you want to go through a list of City services and discuss which are core and which count as "provid[ing] what we cannot afford," I suppose we could. This sounds highly subjective, though.
2) Ok. I was trying to not to be cynical in my previous reply. The GOAL of government is not to mete out representation based on income or buying power. I think that you'll find some in City Hall who practice that.
3) Therein lies my contention. We have a City with a 25% home ownership rate. That remaining 75% may pay their taxes through rent, but still pay taxes. Find me a landlord who doesn't pass on the cost of taxes to his or her tenant and I'll buy you lunch. I will venture to say that the vast majority of residents who are riled by a tax increase are home owners. I have not heard of renters complain as of yet.
4) Regarding West Hartford, homes are simply more expensive there. So, you can't really do dollar for dollar comparisons of houses and then look at taxes. You can buy a kick ass house in Hartford for much cheaper in Hartford and therefore pay lower taxes. For example, there's a really nice Tudor down the street from me on Fairfield. The seller says that he or she will entertain offers between $260k and $300k. You can't find a house like that in West Hartford for the same price (closest match was $319k, everything else was $400+) or at least you can't on the Prudential website. These more expensive houses are in turn assessed way higher and pay high taxes. In Hartford, we have nice housing stock and you can buy a lot of it pretty cheaply. There's no dispute about car taxes, though one could make the argument that cars are less necessary in Hartford, so a household could get away with only one.
5) Things are politically unpalatable because constituents don't like them. Elected officials are elected because they've got some constituents who voted for them. Hopefully, they listen to those people.
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Look, I said in my previous reply that 77 mills is really high. I differed in my approach to how I might change it. I think a good place to start would be postponing capital improvement projects. I think there are a few services that cost money and nobody uses, but there a lot of ones that are considered core to a lot of people, but not the people we're hearing. In terms of long term planning, I think that the City truly needs to grow its grand list and not just issue press releases about it. When I think about a City that's mastered that, I look at Farmington. That town has a fantasically diverse grand list and keeps their taxes at, I believe, the lowest rate in the region. They've also got homes that really run the gamut of prices. Bums like me can pick up a nice little house in Oakland Gardens. However, their services aren't as good and their park(s) is/are more or less privatized. Someone also needs to sit down with budget books of New Haven & Bridgeport. They've got cheaper governments and bigger populations.
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I agree the city needs to grow it's grand list -- and the simplest way to do that is to attract businesses back to the city. Raising the mill rate doesn't do that.
To your point about capital projects, I think you raise a good issue. Kudos to the Courant for running an op-ed today that notes the huge cost of union-only bidding. "Because project labor agreements require that all contractors and subcontractors agree to union representation of all workers, use union hiring halls and conform to restrictive union work rules and job categories, these agreements are expensive. A 2004 study of Connecticut school construction by the Beacon Hill Institute at Suffolk University, which we underwrote, showed that such agreements raised costs by 17.9 percent."
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I don't think I'm going to echo your sentiments in terms of union bidding...
However, I'm pro-business in the sense that I think the economic development division does need greater latitude to aggressively attract or incubate small businesses. I think TIFs and TFAs should be on the table because they can pay out big time in a few years. Surrounding towns are doing these kind of investments and stealing businesses from us. You look at the state register and manual and so many smaller towns dwarf Hartford; it's depressing.
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I'm assuming that TIF means Tax Incentive Financing. Isn't that the process of lowering taxes for a few years for certain businesses in order to lure businesses to an area? Then once the incentive period is over, taxes rise for those businesses? So then they are on the real tax rolls and need to deal with the astronomical mill rate and skyrocketed tax amount? They then look to move elsewhere.
I'm not sure how that helps Hartford in the long run. The people and businesses that are already here supplement the TIF (by paying higher taxes) and then the companies that benefit from the TIF are not able to sustain the true taxes once the incentive period expires.
Am I understanding this correctly?
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That's awfully simplistic.
For example, it assumes the cost of relocating is 0. It also assumes that there's no benefit of being in the city vs. elsewhere.
So, a lot depends on the terms of the TIF and how much it differs from the eventual tax bill. It also depends on how easy it is for the business to relocate, how big it is. It also depends on the benefits of being in a particular location.
For example, firms in NYC won't move too far because there's a benefit to being there. Transportation infrastructure, food, dining, entertainment, and population keep people there even though it's actually pretty expensive to do business there.
Tax policy is merely a single dimension to various problems. It's not bad or good in and of itself. without considering the other aspects of the policy, wtf is the point of debating whether a TIF is good or bad?
Sujal
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Why is it overly simplistic? The largest addition to the grand list recently was accomplished with a TIF.
We've already got an educated workforce in the region & office space.
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I wasn't saying using a TIF is simplistic, but responding to Amy's point (that I'm infering from her question) that TIFs don't work.
Just pointing out that whether they work or not is dependent on many factors.
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So, adding incentives to bring businesses to the City is a bad thing, while slashing services is a good thing? The reason why all these other cities and towns have lower taxes is because they have a higher taxable grand list. We've definitely got a problem in that we can only tax 50% of real estate around here.
I mean, Southington has a bigger grand list than Hartford.
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dude, I'm not debating anything you're trying to say.
I'm also saying the exact opposite of what you've just said. Incentives and slashing services aren't good OR bad things in and of themselves. It matters what those incentives are and what services you want to cut.
Also, my apology on tone was directed at Amy (not that I don't want to be civil or nice with you, just stating that for the record... that whole comment was for her).
Sujal
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Oops. Sorry for the misunderstanding.
You know, now that this debate has been raging for pretty much the length of budget hearings, it'd interesting for Mat (or anybody) to weigh in on what they think about the process.
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Btw, sorry if my response seemed a bit harsh - been a crazy week. Beyond that, I wasn't really reacting to what you said, but to a more general sense that our political conversation is too often one dimensional. Policy tools are often considered in isolation, and I think that makes it easier to divide voters and to make otherwise complicated issues black and white...
Not suggesting you're trying to do that, though. Sorry about the tone.
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No issue with the tone, but I don't think that I was considering things in isolation either.
-short term: cut spending in a few places (perhaps the ones that weren't touched before like HPD & BOE) & suspend many capital projects
-long term: grow the grand list. Lowering taxes without cutting services takes awhile.
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Another way to look at it is where else can the city increase its revenue. Maybe this wouldn't pay off soon enough but here goes:
Every dog in the city should have a license - how about some enforcement?
Everyone whose primary residence is Hartford should have their primary vehicle registered in Hartford (and therefore pay the property tax). Ever notice the gazillion MASS license plates around and about at all hours of day and night?
And then there are the chronic infractions of things like parking regs, proper presentation of garbage for pick-up and how about those permits for home remodeling . . . .
Anyway, some efficiency in those areas would at least make us look better if not put us nearer the black.
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The problem with "enforcement" is that enforcement costs money. Most of the items you're discussing are labor intensive (inspecting dogs for registration?). Would the income outweigh the costs involved?
Beyond that, there's the notion of dog patrols (show me your papers, pup!).
Anyway, the argument against enforcement is the same for eliminating small taxes like this - it causes people to live outside the law, and it's not enforceable enough to meet projections.
That's why I'm generally against fees and small taxes. It just makes things complicated in an inefficient way. Not saying all fees are bad (generally like parking permits, for example...).
Sujal
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I wouldn't say it is labor intensive for a beat/patrol officer to stop a dog's person and say may I see your dog's license please? If it isn't on the dog then a citation is given to produce it w/in say 10 days. Something like a parking ticket - yes it is a small fee and perhaps it should be larger, however it is not small thing to have record of a dog's rabies shots if you or your dog or cat or child or friend are hurt by someone else's canine.
I agree that unenforceable rules should be assessed, however I DO NOT agree that they "cause people to live outside the law." Obeying the "small laws" is part of what makes us civil, i.e., I will pick up my dog's poop, I won't throw my coffee cup on your lawn, I will put my garbage out with its lid closed and pointed the proper way to the street, I will leave room for someone to get out of a driveway when I'm stopped on a through street, etc., etc., etc. . . . Everyday we do small things that are in fact the legal thing to do. When lots of people aren't, I believe it is time to 'teach' them that they also are expected to play by the rules by applying some reasonable enforcement of said rules.
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Couple of thoughts: Hartford has beat cops on foot patrol? Nice, didn't know that.
Anyway, even in your hypothetical, there are costs involved. Where do you go to produce it? Who processes the citation paperwork? I think we're talking about a low net gain for the town while inconveniencing many. Of course, I have no numbers to back this up. Do you know where we can find out how many dogs are estimated to be unlicensed in the city of hartford?
As for your point about small laws, I agree with the sentiment, certainly. You're also right, that my statement was too strong. I didn't mean to draw a direct cause/effect between requiring dog registration and living outside the law.
What I was trying to express was that the goal of these laws isn't to raise money, but to encourage safe pet ownership, as you point out. It's not a revenue source, and thus shouldn't be considered revenue neutral or a profit center for the city.
So, in my ideal world, we'd all pick up the tab for this as part of the general fund and make registering dogs free. I'm OK with that because the safer pets are a public good. Even though I don't own a dog, I benefit from you taking proper care of your's.
Hopefully, even if you don't agree, you can see where I'm coming from.
Sujal
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