Following the spring 2013 budget season, the Mayor (Pedro Segarra) and the Court of Common Council President (Shawn Wooden) created the City of Hartford Tax Task Force to study the City’s property tax structure and make recommendations about how to improve it. The final report was issued on January 22, 2014 and can be found here.
The Tax Force identified key objectives that they used to guide their effort. They believed that the City needed to grow the Grand List, but that the high mill rate was an impediment to investment. They also noted that taxpayers’ ability to pay should be considered in the property tax structure.
Their ultimate goals for the revised property tax were to support and attract small business, encourage the development of large commercial properties, and attract new residents.
A few specific challenges were highlighted by the Task Force, including the fact that 51% of property value in the City is tax exempt. For some of the tax exempt institutions, the group found it difficult to separate the value that accrued to the region from the value that accrued to City.
They concluded that a 30 year recession in commercial property value was more damaging to the City’s financials than spending increases. Finally, they observed that small commercial properties had been disproportionately impacted by the current property tax structure.
Numerous recommendations were organized into three categories. The Task Force identified changes that would need to be made via the state legislature, changes that could be made by the Mayor and Council within the City budget process, and actions to be explored in cooperation with established regional organizations.
The most noteworthy recommendation was a phase out of the differential assessment ratio. The Tax Force proposed that the residential assessment ratio be gradually increased over the course of 30 years until all property owners were taxed at the state standard 70% assessment ratio.
At the time of their report, the residential assessment ratio was about 29%. The recommendation was to increase the ratio by 1 percentage point per year for 20 years, and then 2 percentage points per year until it reached 70%. This would move the ratio up to 49% after 20 years and then the remaining amount in about 10 years to reach 70%.
Other recommendation included allowing monthly tax payments by certain types of property owners, enforcing existing laws, looking further back in order to collect delinquent taxes, resisting conversion of additional properties to tax-exempt, requiring an economic benefit analysis and a community benefit agreements for a tax fixing deal, and reducing the City’s expenses.