A new bill drafted by the legislature’s Finance, Revenue and Bonding Committee would establish a special panel to look into the taxation of certain personal property on the reservation lands the federal government holds in trust for the casino-owning Mashantucket Pequot and Mohegan tribes.

Spurred by ongoing debate over the taxes Ledyard and Montville levy on non-Indian property owned by lessees and vendors, the measure calls for a “working group” to report its findings by Jan. 1, 2024.

Representatives of the tribes, Montville’s mayor and others have expressed support for the new bill, which was vetted Friday during a public hearing in Hartford.

Earlier in the current legislative session, tribal leaders and municipal officials took opposing views in testifying on a bill exempting certain personal property from taxation. On Friday, Rodney Butler, the Mashantucket chairman, again decried what he called “the racist and unjust tax policy” that allows Ledyard to tax personal property on the Mashantucket reservation, which includes the tribe’s Foxwoods Resort Casino.

Ledyard and Montville both tax such personal property as furniture, fixtures and equipment at non-Indian restaurants and retail shops operated by Foxwoods and Mohegan Sun, respectively, Butler said. Ledyard assesses about $600,000 in such taxes annually, while Montville collects about $700,000.

“This despite the fact that no municipal services are utilized within Mashantucket to support the non-Indian property owners,” Butler said.

Mashantucket tribal government provides all its own services, including police, firefighters, health inspectors and water and sewer, he said. In many cases, the tribe absorbs the local taxes vendors pay, and typically refrains from levying its own taxes in addition to those assessed by Ledyard, thereby avoiding dual taxation.

Butler said existing tax policy has a chilling effect on tribal economic development.

The Mohegan Tribe also supports an end to local taxation of personal property on federally recognized reservations, and also wants the proposed working group to examine a decades-old agreement that requires the tribe to pay Montville $500,000 annually in lieu of property taxes on up to 700 acres of land. If the tribe has more than 700 acres taken into trust, it faces additional payments.

“Mohegan believes all tribal taxation should be looked at with a wholistic approach in an open and transparent forum, including Mohegan’s restrictive land settlement,” Mohegan Chief of Staff Chuck Bunnell wrote in an email. “The tribe currently owns 436 acres in trust, not including (Fort) Shantok, and has another 540 in fee simple so the 700 acres limit is very real to them.”

Fee simple land is tribal-owned land not in trust that the tribe pays taxes on.

In written testimony, Montville Mayor Ronald McDaniel said the proposed working group “would be a crucial step in ensuring justice for Indigenous peoples and the affected municipalities.” Sandra Allyn-Gauthier, first selectwoman of Preston, also supported the new bill, writing that it could have an impact on her town, its grand list of taxable property and future revenue.

“Currently, the Mashantucket Pequot Tribe is one of our top ten taxpayers,” she wrote.

In an email, Ledyard Mayor Fred Allyn III wrote that he is concerned the legislature is addressing the dual taxation issue while there are other more pressing issues facing Connecticut, including “infrastructure, educational gaps, crime, energy costs, solid waste management and workforce housing.”

He suggested the taxation issue was settled during lengthy litigation that ended in Ledyard’s favor, with federal courts upholding the right of local governments to tax non-tribal personal property on federally recognized reservations.

The proposed working group would comprise the secretary of the state Office of Policy and Management, who would chair it; the chairmen and ranking members of legislative committees that have oversight of appropriations, local governments and finance, revenue and bonding; at least one representative of each federally recognized tribe; and at least one representative of each town that would be affected by a change in tax policy.

b.hallenbeck@theday.com