tax rates a drain;
city, suburbs rank near top on state list
By Allan Drury, Register Staff July 03, 2000
New Haven and three of its neighbors are among the highest taxing communities in Connecticut, according to a study by a research group.
The study by the Connecticut Policy and Economic Council rates New Haven as having the third highest "equalized mill rate," a formula created by CPEC that it says accurately measures a community’s tax burden.
The formula is not the same as each community’s tax rate.
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Hamden, East Haven and West Haven were ranked sixth, seventh and eighth, respectively, in the study.
CPEC used data from fiscal 1998-99 to rank the state’s 169 communities.
Hartford had the dubious distinction of ranking highest, while Greenwich had the lowest equalized mill rate.
The state’s other large city, Bridgeport, had the fourth-highest figure.
"There’s a general tendency, not only in Connecticut, but across the country, for the more urbanized, more developed communities to have" the highest taxes, CPEC President Michael P. Meotti said.
The equalized mill rate, also known as the effective tax rate, is a way to measure a community’s tax burden taking into account when the community last performed a property revaluation.
Cities and towns set their tax rates in mills. Each mill equals $1 in taxes for every $1,000 in assessed property.
Local governments put the money they raise by taxing real estate, motor vehicles and business equipment toward police, fire, transportation, education and other services.
A tax rate usually declines — sometimes drastically — when a community performs a property revaluation.
That means tax rates are of questionable value in helping to compare one city or town’s tax burden to another’s.
"We think equalized mill rates are the best way to compare tax burdens from town to town," Meotti said.
New Haven’s equalized mill rate was 34.06. That was lower than the 37.3 the Elm City posted in fiscal 1996-97 when CPEC performed another study.
Hamden had an equalized mill rate of 27.24 in the latest study. East Haven followed at 26.64 and West Haven at 26.54, according to the study.
The state average was 18.14.
A number of factors contributed to a community’s equalized mill rate.
East Haven Finance Director Paul S. Rizza said his town is saddled with two disadvantages: a modest grand list and a large amount of debt.
The grand list is a compilation of all the taxable property in a city or town. East Haven’s is about $1 billion, roughly half of neighboring Branford’s.
East Haven also has about $72 million in debts it must pay off. Much of that debt is going to pay for school renovation projects done in the late 1980s and early 1990s and the construction of a new $45.7 million high school.
The amount of debt the town is carrying exceeds its $61.48 million fiscal 2000-2001 budget, Rizza noted.
"Even if we took a year off from providing any services and just paid down our debt, we’d still owe at the end of that year," Rizza said. "That’s not good."
Rizza pointed out that East Haven Mayor Joe Maturo has resisted borrowing more money for capital projects.
"This is the reason why," Rizza said, referring to the high debt.
New Haven Mayor John DeStefano Jr. said he believes the study underscores the importance of the state fully funding the payment-in-lieu-of-taxes program.
Under that program, the state provides money to cities and towns that have non-taxable property within their borders.
Large cities tend to be home to more non-taxable institutions — such as hospitals, colleges and universities — than suburban communities, DeStefano noted.
Cities also spend more on social services for the needy, DeStefano said.
"Often other cities and towns don’t want to take on this challenge," DeStefano said. "But New Haven and other large cities do."
Hamden Mayor Carl Amento said easing his town’s high tax rate is one of his administration’s priorities.
Amento, who was just elected last November, said the fiscal 2000-2001 budget the Legislative Council passed contained no tax increase.
"With more lead time to prepare for next year’s budget, our goal is to lower Hamden’s tax rate," he said.
Milford Mayor Fred Lisman, whose city had the 39th highest equalized mill rate in the CPEC study, said he believes it is important to consider the services a community provides for its residents.
He said Milford provides a number of services its neighbor Orange does not. These include a paid fire department, garbage collection, public sewers and two high schools.
Milford is about the same size as Hamden, West Haven and Stratford and fared better in the study than all three, he noted.
West Haven Mayor H. Richard Borer Jr. said he thought it was significant that the study found several mid-sized communities have high equalized mill rates.
"The interesting thing is you see these mid-sized cities are really getting squeezed," he said.
"If I saw one (mid-sized) town in the top 10, I would think it’s a symptom of a problem in that community, but it’s obviously a regional issue that needs to be addressed," he said.
Note: The equalized mill rate is calculated by dividing the total amount of money the community raises in local property taxes by the total worth of all real estate, business equipment and motor vehicles in the city or town.
The higher the equalized mill rate, the more tax money comes out of the homeowner’s pocket:
EQUALIZED TAX RATES
9 EQUALIZED TAX RATES