Connecticut Local Politics comments on Governor Rell’s proposal to cap municipal tax increases:
Instead of 2.5%, Rell is proposing a 3% cap, with exceptions for grand list growth, debt service and emergencies. Under Rell’s plan, a town would be able to override the cap if 2/3 of that town’s legislative body signed off and a majority of voters agreed at referendum.
This is an idea that sounds good at first.until you think about it and realize that it’s somewhere between pointless and a bureaucratic speed bump in town budgeting.
Consider the following:
- In town budgets, if I’m not mistaken, education is one of the largest components of the budget. Education funding is impacted by contractual obligations for certain pay raises, as well as funding health insurance and retirement benefits.all of which tend to grow a bit faster than “regular” inflation. This obligatory increase in spending, combined with a spending cap could mean that other budget items could be squeezed out of the budget.
- Tying a spending cap to grand list growth creates an incentive for towns to undertake revaluations during times of real estate price inflation. However, revaluations tend to be disruptive, because real estate value changes is not homogenous across the town. I’m not sure that incenting disruption is the best idea in the world.
- If memory serves, the state can be rather fickle when it comes to giving grants to the towns. A sharp cut in state grants during an economic downturn could trigger many towns to have issues with the cap.
I don’t think I like this proposal.