Ryan’s Four-Part Plan to Cap Property Taxes

I. Eliminate Costly Unfunded Mandates

• According to the Connecticut Conference of Municipalities, there are approximately 1,400 unfunded state mandates imposed on Connecticut’s towns and cities.
• These mandates were passed by the state legislature without funding attached, forcing local taxpayers to foot the bill.

Proposed Reforms:

1. Cut or eliminate hundreds of unfunded mandates where the cost outweighs the benefit.
2. Create a commission upon passage of the reform, composed of key stakeholders and policymakers—chief among them municipal representatives—to identify mandates that can be repealed, reformed, or streamlined.
3. Require a 60% vote of the legislature for any legislation that creates new mandates or imposes additional costs on municipalities, creating greater accountability.

Examples of unfunded mandates include:

• Requirements to advertise notices of public meetings in paid media rather than on municipal websites.
• Requirements to store personal items and property of evicted tenants.
• School bus contracting mandates.
• HB5324 is a small example of a bill rolling back costly mandates, but the Governor and Senate did not support its passage into law
• Requirements that take effect immediately for small towns and small projects rather than at higher thresholds.

II. Payment In Lieu of Taxes (PILOT) Reform

• Certain large nonprofits that effectively operate as corporations are generally not required to pay property taxes and, under the state’s PILOT system, often do not make payments equivalent to that level.
• Institutions like Yale University and Mitchell College are fundamentally different and should not be treated identically under state policy.

Proposed Reforms:

1. Link endowment size and institutional resources to tax-exempt treatment and PILOT obligations.
2. Require large universities and hospital systems to pay a fairer share of the local costs associated with their growth and expansion.
3. Close loopholes that allow institutions to avoid paying property taxes on properties that are not directly related to their educational or charitable mission.
4. Require that any additional revenue generated from these reforms be used to offset property taxes rather than increase municipal spending.

Example:

• Universities are not intended to receive property tax exemptions for non-educational properties, yet Yale pays property taxes on only a small percentage of its total property holdings.

III. Stable and Predictable Funding for Municipalities

• Municipal leaders need certainty when preparing budgets and planning for future expenses to ensure municipal funding is predictable, formula-based, and grows with costs.

Proposed Reforms:

1. Tie Education Cost Sharing (ECS) funding to inflation or a similar objective metric.
2. Simplify and strengthen the ECS formula using measurable factors, including the percentage of students eligible for free and reduced-price lunch.
3. Reduce political influence in funding decisions so municipalities receive aid based on need and objective criteria rather than political connections.
4. Provide towns and cities with greater certainty when preparing long-term budgets.

IV. Cap Property Tax Increases

• Connecticut taxpayers need protection from excessive year-over-year property tax increases.

Proposed Reforms:

1. Cap annual property tax increases (the product of the mill rate and existing assessments) at the greater of: the rate of inflation, subject to a minor adjustment; or 2 percent.
2. Allow local governments or voters, through a referendum, to temporarily suspend the property tax cap for one year when a clear public need exists, subject to approval by a supermajority vote of 60 percent to 75 percent.