Tax reform shell game for more spending

Rivaling Gov. Dannel P. Malloy as a big thinker, state House Speaker Brendan Sharkey wants to fix Connecticut's tax structure for good once the Democrats are safely back in power for another four years. Sharkey proposes to repeal the property tax exemption for colleges and hospitals and to shift more school expenses to state government to ease the property tax burden on municipalities.

The old complaint is that colleges and hospitals consume municipal services they don't pay for, but there is not much to it. While colleges and hospitals take land off local tax rolls, the services they require are small. No, the big consumer of municipal services is of course housing with children, as school systems constitute about two-thirds of municipal expense. (In fact, the more that colleges and hospitals displaced such housing, the more money a town would save.)

Meanwhile colleges and hospitals provide many jobs, which happens to be the rationale for the millions of dollars in grants, loans, and tax exemptions being distributed by the Democratic state administration in the name of economic development. Why should this rationale apply to the Jackson Laboratory project in Farmington, which will be exempt from property tax, but no longer apply to colleges and hospitals - except that the former is the governor's pet project?

Besides, the finances of colleges and hospitals are tied up with government's own. Government subsidizes higher education with direct grants to colleges and student loans. Through its various insurance mechanisms government is the biggest buyer of medical care. If property taxes are levied on colleges and hospitals, the money saved on one side of government may just be spent on the other side.

While this would bring about a tax shift within government, from the local level to the state and national level, it could be arranged without taxing colleges and hospitals at all. State government just could take over more municipal expense - Sharkey's bigger point with his desire to study rearranging Connecticut's tax system generally on the premise that municipalities are at the breaking point with property taxes.

Yes, increases in state aid to municipalities lately may not have kept up with increases in municipal employee compensation, particularly that of school employees, but that isn't the fault of the property tax system. It's the fault of the state's labor-relations system and particularly binding arbitration of public employee union contracts, a system whose presumption is that the more money a municipality gets from the state, the more it should pay its employees. As long as that system remains in place, "tax reform" can accomplish nothing more than higher pay for public employees - which always has been the real objective.

For almost 40 years, since even before the state Supreme Court decision in the school financing equalization case of Horton v. Meskill in 1977, Connecticut has been searching for a formula of school financing and "tax reform" that would put education right. It has all been a charade, since nothing in education can be put right while half the students have no parents.

Should state government, as Sharkey implies, assume all local school costs? Then either state government will pay whatever a school system wants to spend or it will take over the administration of that school system as well as its costs. That's the essence of it.

Government in Connecticut has become little more than an ever-expanding shell game of shifting and hiding costs so that responsibility can never be understood, what the French economist Frederic Bastiat called "the great fiction by which everybody tries to live at the expense of everybody else."

After 40 years "reform" is actually the status quo and the only reform left may be to undo it all.


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