New London — Elected officials in southeastern Connecticut's cities and towns are divided over a proposed bill that supporters say would make taxation and distribution of state funding more fair for New London and other urban centers. 

Senate Bill 1, or “An Act Concerning Tax Fairness and Economic Development,” would restructure how state payments in lieu of taxes (PILOT) funding is distributed to cities and towns, and establish a statewide uniform tax rate for motor vehicles, among other measures.

New London Mayor Daryl Justin Finizio has supported the bill in part because a city like New London, where nearly half the land is tax-exempt, would receive a greater portion of PILOT funding from the state.

“This bill addresses the inequities in our current PILOT system by recognizing and mitigating the disproportionate burden placed upon cities like New London with high percentages of tax-exempt property,” Finizio wrote in testimony he gave before the Planning and Development Committee last month. “The tiered PILOT reimbursement plan outlined in this bill lessens the inequities in our current system by directing more revenue towards the municipalities where a high percentage of tax-exempt property has created more need.”

Finizio also argued in favor of taxing motor vehicles at a statewide tax rate.

“It makes no sense for the same vehicle to be taxed at 74 mills in Hartford, 38 in New London and 15 in Darien,” he wrote. “Unlike a house or a business, a motor vehicle’s value doesn’t change depending on its location or upon the services provided by a municipality.”

But in Waterford, Finance Director Maryanna Stevens told state Sen. Paul Formica (R-East Lyme) and Rep. Kathleen McCarty (R-Waterford) at a town meeting last week that she was concerned the proposed changes to the PILOT program would result in the town losing roughly $90,000 in revenue it anticipated it would have for the 2015-16 budget.

The changes would result in municipalities receiving payments based on properties included in PILOT during the 2014-15 fiscal year, according to Stevens. She said the new Lawrence + Memorial Cancer Center would not be factored into PILOT payments, contributing to the $90,000 shortfall.

Stevens said other changes in the PILOT funding distribution formula would allow the town to recoup some of that loss, but that the town would still take a hit.

The first selectmen of Stonington and Old Lyme also submitted testimony to the Planning and Development Committee opposing the bill, as did the Connecticut Council of Small Towns.

“The problem is (there are) 169 towns. You’ve got Waterbury, Hartford, New London, New Haven and Bridgeport, and then everyone else is not worried about PILOT reform,” said Rep. Ernest Hewett (D-New London), who called himself a “big fan of PILOT reform.” 

“That makes a bill like this hard to pass ... because those towns don’t feel my pain.”

Hewett also said that the bill has a better likelihood of being passed into law because it was introduced by Senate President Pro Tempore Martin Looney (D-New Haven).

Proposed changes to the car tax would entail the state collecting vehicle taxes then distributing them to towns based on a formula that would take into account the 2014 grand list, town population, PILOT amounts and poverty levels, according to a Connecticut Conference of Municipalities summary of the bill.

“I’m hopeful that whatever comprehensive solution that comes to be includes a reform of the unfair car tax, a very broken PILOT system and a property tax system that needs to be shaken up,” Rep. Aundré Bumgardner (R-Groton) said after a town hall meeting Tuesday in New London. “When New London is only 5.54 square miles, you have to do something very different, and it is unrealistic to expect the same model for taxation will work for Waterford or any other surrounding municipality as it will for New London.”

The prospect of the state taking on the role of motor vehicle tax collector makes Stevens, Formica and First Selectman Daniel Steward wary, they said.

“I don’t think the state has proven to be a good steward of those such funds,” Formica said, adding that were he still a first selectman, he would be alarmed by the bill.

Last week, the bill was advanced to the Committee on Finance, Revenue and Bonding and will be studied further as the legislative session continues.

t.townsend@theday.com

c.young@theday.com

Twitter: @ConnecticuTess and @ColinAYoung