New London — Mayor Michael Passero and State Rep Chris Soto, D-New London, made a case Friday for a proposed bill that would give municipal leaders, and not the state, the power to determine which properties owned by nonprofits should be tax exempt.

Soto introduced the bill as a way to ease the strain on taxpayers, especially in distressed cities like New London, where taxpayers are facing a disproportionally high tax burden because of a limited tax base and its small size. He called the current law allowing nonprofit entities to become tax-exempt “well-intentioned” when it was enacted decades ago but something distressed municipalities can no longer afford.

“As you are well aware, when something comes off the tax rolls, the local taxpayer is forced to make up the difference — essentially one of the most egregious unfunded mandates we have,” Soto said in his testimony at a public hearing of the state legislature’s Finance, Revenue & Bonding Commission on Friday.

“We’ve arrived at the point where shared sacrifice is absolutely necessary for the continued health of our communities,” he said.

The bill, which is opposed by multiple nonprofit groups, would allow municipalities’ local legislative body — for example, in New London that's the City Council — to make the decision on whether or not a property should come off of the property tax rolls. It would only apply to new properties and does not apply to previously owned property by tax-exempt entities.

Properties of certain nonprofits, “used for scientific, educational, literary, historical, charitable or open space land preservation purposes,” are exempt from paying property taxes under state law.

Passero said taxpayers in New London are struggling with the burden of a tax rate that has exceeded 40 mills, while 44 percent of the city’s properties are tax exempt.

“The remaining 56 percent must pay for the services provided to the entire city,” he said in his testimony. “Let the citizens who are affected by the state’s generosity decide whether their community can afford it.”

Passero said while members of the committee he testified before in Hartford appeared skeptical, he answered questions for 20 minutes and had a chance to explain New London’s plight.

“We had the opportunity to educate this committee, and there were a lot of them in the room, on the difficult challenges we have,” Passero said.

The proposal has elicited opposition from nonprofits.

Jeff Shaw, director of public policy for The Alliance, a statewide association of community nonprofits serving more than 50,000 people, said in his testimony the move would be a “cataclysmic change in state policy” that would stop some nonprofits from expanding and prevent them from meeting a rising demand.

“Connecticut rightfully recognizes that nonprofit organizations earn their property tax exemptions through community impact,” Shaw said. “The benefits of serving the most at-risk individuals in our state, creating jobs, revitalizing neighborhoods and encouraging vibrant growth of host communities outweigh the forgone revenue lost by local governments.”

David Sutherland, the director of government relations for The Nature Conservancy’s Connecticut Chapter, argued that the bill would result in significantly less acquisition of open space, forest- and farmland by land trusts.

Joanne Berger-Sweeney, president of Trinity College in Hartford, said in her testimony that she understood the fiscal constraints faced by many communities, but the bill has the potential to politicize the decision-making process and could be applied in a “arbitrary manner, perhaps allowing for disparate treatment between smaller and larger nonprofits.”

“The nonprofit exception from property taxation is a recognition of the public good that nonprofits provide the communities they call home,” she wrote.

Soto, the founder of the New London-based educational nonprofit Higher Edge, said he understood how this would impact tax-exempt entities.

“At the same time, I am acutely aware that the towns and cities in which we operate must be healthy in order for us to do our jobs and provide services," he said, "but more importantly, the desire to expand services should never come at the expense of the taxpayer.”

g.smith@theday.com