CCM director: Connecticut still needs to change the way it does business

The executive director of the Connecticut Conference of Municipalities said Monday that the General Assembly didn't go far enough during the past legislative session to enact sweeping changes to tax structure and spending that would have made the state more competitive.

Joe DeLong and CCM Director of Communications Kevin Maloney spoke to The Day's editorial board during an hourlong interview Monday afternoon in which they discussed topics, including tax reform, education spending, pensions, regionalization, and the shift to an urban-centered economy. 

During the past legislative session, CCM called for comprehensive reforms to reduce spending at the municipal level, promote service-sharing, and diversify revenues to shift away from an over-reliance on property taxes, DeLong said.

DeLong said that as a whole, CCM found the General Assembly was largely "structured to be anti-reform in almost every way" during the past session. In general, he said, Democrats weren't interested in reforming spending but were willing to work on creating revenue diversification. Republicans, on the other hand, were willing to discuss controlling spending, but had no appetite for reforming tax structure.

He said the legislature made progress in areas "around the margins." But he said there was "not enough of the sweeping changes of the way we do business that are going to make Connecticut competitive again." 

He pointed to the legislature's change to thresholds for prevailing wage as an example of a marginal change that many small communities like. He said the threshold for construction of a new project to fall under prevailing wage increased from $400,000 to $1 million. If repairs on an existing building collectively fall under $100,000, the repairs are not subject to prevailing wage. 

Prevailing wage mandates that a certain hourly wage be paid to those in the construction trades on projects undertaken by a given municipality. In New London, for instance those wages are typically well in excess of $30 an hour. 

In other areas, he said, the legislature missed opportunities for reform. CCM advocated that arbitrators should be able to walk in with a "clean state" and look at all the factors that impact a community's finances, rather than only being allowed to consider the last best offers from each side, which creates an artificially high floor. The proposal passed, but it only applies to Tier 4 communities, such as Hartford, in major distress, rather than all municipalities.

DeLong said CCM will continue to advocate for the proposals outlined in CCM's January 2017 report on service sharing and revenue diversification.

Shift to urban-centered economy

The proposals come at a time when there is a shift from a suburban-driven economy to an urban-centered economy, and DeLong stressed the importance of holistic tax reform to allow the state's cities to prosper and drive economic growth for the state.

With a nationally suburban-driven economy in the 1980s and 1990s, workers flocked to the state's suburbs where they could pursue the American dream, he said.

Even then, Connecticut's tax system was a "recipe for disaster" for urban centers, where much property was tax-exempt, he said. But the state plugged the gap by redistributing wealth from the booming suburbs to cities, for example, through a fully funded PILOT (payment in lieu of taxes) program.

Today, the nation's economy is urban-centered, and millennials want to live in vibrant urban communities where they can bike to the grocery store or walk to work, he said. Cities are relied on to generate growth, but the state doesn't fully fund the PILOT program anymore and Connecticut's urban centers are still operating under a failed structure that prevents them from prospering. 

He said that until the state reforms the tax structure and stops over-relying on property taxes, cities such as New London, which has so much tax-exempt property, will never be able to evolve at the rate they need to. With the right reforms, New London could become an urban economic driver for the state, he said.

One of the proposals in CCM's report is to create a formula within the sales tax so money could be set aside to fully fund PILOT, he said. If the PILOT payments are reduced, nonprofit organizations such as colleges would then have to pay a portion of PILOT for the services they are receiving.

"We no longer have the wealth to continue to plug the hole of that broken structure," he said regarding the state's tax structure. "We've got to address the structure and change the structure and we have to understand that as go these urban centers, as goes the state, to some degree."

He said that while the General Assembly has a tendency to pit cities against towns, CCM is driving home the point that Connecticut is a small state and municipalities are interdependent on each other and a "rising tide lifts all ships."

He said the attitude can't be Old Lyme versus New London, but has to instead be Connecticut versus Massachusetts, or Connecticut versus New York.

k.drelich@theday.com

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