Contrary to tax cut promises made in 2022, Connecticut residents need to brace themselves for increases after the General Assembly’s special session last week.
Gov. Ned Lamont summoned lawmakers to “adjust certain statutory changes scheduled to take effect over the coming months to protect the public from tax increases,” according a June 22 press release. The Senate met on Wednesday (June 26) and the House the following day.
However, the special session became, more or less, a covert opportunity to bypass the public hearing process and discreetly introduce a car tax increase.
The agenda appeared simple enough. Lawmakers were scheduled to vote on eight policies, including preventing a tax increase by maintaining the classification of commercial vehicles as motor vehicles and clarifying that municipalities can set lower mill rates for motor vehicles than for real and personal property.
Other measures aimed to enhance transparency in school construction projects, attract innovative financial services companies by updating banking regulations, and reduce administrative costs for the state’s retirement savings program. Additionally, the General Assembly were tasked to provide certainty for the insurance industry regarding annual assessments; relieve employers of interest payments related to the Employee Retention Credit; streamline historic property preservation reviews; and allow the South Central Connecticut Regional Water Authority (RWA) to acquire water companies outside its current service area.
One might expect that lawmakers would draft eight separate bills for these unrelated topics. Instead, the leadership in both chambers chose to combine them into a single omnibus bill, often referred to as an “aircraft carrier.” This nearly 140-page bill was released to the public on the very morning the Senate was set to vote on it.
During discussion, Sen. Rob Sampson (R-Wolcott) explained that bills like these are “extremely difficult because a lot of times there are pieces of this bill that I want to support that I would like very much to vote for. But then there may be other sections. Which I am not in favor of, or at least have questions about.”
The bill’s most contentious part was the section allowing the RWA the opportunity to bid on the purchase of Aquarion Water Company from Eversource Energy. It was not vetted at the committee level and never received a public hearing.
This mirrors the recent striking workers bill, which also bypassed the public hearing process. There is troubling trend that the General Assembly is increasingly comfortable excluding the public from important conversations.
Senate Republicans introduced two amendments, one of which aimed to separate the Aquarion provision into its own bill. This was partly due to Sen. John Kissel (R-Enfield) having to recuse himself from the vote because his role as an attorney for Eversource posed a conflict of interest. The bill as written would have prevented him from weighing in on the other seven parts of the bill, thereby leaving his constituents without a voice.
Senate Minority Leader Stephen Harding (R-Brookfield) addressed the amendment, stating, “You’re denying that Senator [Kissel] his ability to cast a vote. It’s also denying the constituents that that Senator represents 100,000 people in the state of Connecticut that deserve representation.”
The amendment failed across party lines 19-8 with eight Senators absent or not voting.
The second amendment sought to strike the Aquarion provision entirely, but it met the same fate as the first and failed to pass.
Eversource purchased Aquarion in 2017 for more than $1.6 billion. However, after losing more than $440 million in 2023, Eversource decided to refocus on its core electric and natural gas distribution businesses, moving away from water distribution and clean energy projects.
One concern about Aquarion’‘s sale is the potential lack of accountability. Unlike Aquarion, which is overseen by the Public Utilities Regulation Authority (PURA), the RWA operates without PURA oversight. Instead, it receives input from a 60-member council representing New Haven area municipalities, with five members elected to its 11-person board of governors.
Another controversial part of this gargantuan piece of legislation is a revision to a 2022 law set to take effect this October. This change modifies the way motor vehicles are assessed for taxation purposes, ultimately resulting in higher car taxes than what was originally promised in the 2022 law.
The bill originally proposed by Gov. Lamont, aimed to change the process of how motor vehicles are assessed. It shifted away from using car values from the National Automobile Dealers Association (NADA) to using the Manufacturer’s Suggested Retail Price (MSRP) with a corresponding depreciation scale. Under this new formula, a vehicle less than a year old would be valued at 80% of its MSRP for tax purposes, with the value decreasing by 5% annually over 20 years until it reaches a minimum value of $2,000.
Lawmakers were warned that, on paper, this promised to be a simpler and more predictable process for valuing automobiles, it required a more thorough examination. They were advised that more information was needed to understand the impact of this change on property tax revenues in each municipality and its effect on car tax bills for residents.
Randy Collins, Advocacy Manager of the Connecticut Conference of Municipalities (CCM), wrote in his testimony opposing the bill that while improving the vehicle tax systems is “a goal that we all support” any reform should be “part of a comprehensive reform of the property tax system.”
Collins argued that any plan significantly altering a system that raises nearly $1 billion in local revenue must be thoroughly vetted by all stakeholders. Key concerns include the revenue differential between the current NADA valuation and the proposed MSRP depreciation scale, the impact of potential revenue losses on residential and commercial property taxes, and the accuracy of the 20-year depreciation scale.
“This in-depth review is essential,” wrote Collins, “to ensure that any changes do not result in an increased burden to our residents, local businesses and our towns and cities.”
The bill died in the committee process but was later resurrected in the budget implementer with one change, reducing the minimum vehicle value after 20 years to $500.
The change was initially planned to take effect in 2023 but was delayed to October 2024.
Having rushed this change without proper vetting, lawmakers have now discovered that according to CCM the original assumption of “no more than a 1% reduction in motor vehicle grand lists” was grossly inaccurate. In reality, the projections are “closer to 20% for some towns and cities.”
To avoid towns from seeing such a large decrease in revenue (which they would have to recoup through other tax increases or face budget deficits), the House introduced a bill during the 2024 regular session to increase the percentage of the MSRP by 5% each year in the depreciation schedule.
The bill passed the House, but when it got to the Senate on the last day, Senate Democrats introduced an amendment allowing towns to eliminate the tax entirely. The amendment passed across party lines, but due to time constraints, the House was unable to take it up.
This resulted in its inclusion in the special session omnibus bill, which ultimately passed and is now awaiting the Governor’s signature.
So here we are. Some lawmakers argue that this is not technically a tax hike since the new assessment procedure has yet to go into effect. However, the reality is different and under troubling circumstances. The General Assembly’s habit of bypassing proper procedures and excluding the public from crucial conversations is becoming increasingly apparent and troubling.
If the legislature continues down this path, Connecticut residents can expect more last-minute, poorly vetted changes that burden taxpayers and undermine trust in government.
