It's budget time for municipalities and in this difficult economic climate, boards of Selectmen and Finance are working at developing 2013-2014 fiscal year budgets that hold tight reins on taxes. It's not easy, and Governor Dannel Malloy's proposal to eliminate taxes for vehicles valued at and less than $20,000 in assessed value has come as an unexpected surprise. Motor vehicle taxes, after all, are a local revenue source.

What does it mean for Madison? Tax Collector Alma Carroll has done the calculations. Using the October 2012 Grand List, which will be used for the July 2013 tax bills, she predicts motor vehicle taxes could equal $2.9 million. The Grand List, which is the compilation of all taxable property on town, shows 17,790 vehicles. Of those, 1,356 are exempt. Using the present tax rate, which is 19.77 mills, Carroll computes a total of $2,883,000 in motor vehicle taxes.

There is also something called the supplemental list. This is the compilation of the vehicles purchased during the year after the Grand List has been completed. Madison's current supplemental list, which Carroll used as a reasonable assumption, totals 2,814. Using the same tax rate, and adding, the total reaches just over $3.2 million. That equals, she says, 0.94 mills.

The governor's proposal, if accepted, would mean that local leaders would be required to find the necessary revenue elsewhere, and that means shifting the taxes to property owners. In Madison, by a wide margin, that means homeowners.

Local leaders, big city mayors, and organizations representing municipalities have all raised concerns about this proposal.

Governor's Letter

In a letter to mayors, first selectmen and local leaders sent shortly after his budget address, Malloy responded specifically to some "misconceptions," including one that contends that "exempting car taxes is nothing but a huge cut to local revenue."

Malloy says that Connecticut families continue to struggle.

"It is incumbent upon their government-state and local-to finds ways to help them. This is tax relief for your constituents and mine-families who are middle class, working class, and working poor. I understand adjustments will need to be made locally?eliminating the tax on cars under $20,000 in assessed value will eliminate much of the aggravation and paperwork from your local tax assessment and collections operations."

He then adds, "Communities have a number of options available to them to make up for this, including spending cuts?Overall Connecticut residents will benefit from this change, but local officials need to evaluate the specific impacts in their towns."