Karen Lin, employee photographer
$ 1.7 billion is a lot of money – enough to give every single person in New Haven a check for about $ 13,000.
Last Tuesday, New Haven Mayor Justin Elicker, in his second speech on the state, pointed out the fact that Connecticut billionaires increased their fortunes by that astonishing $ 1.7 billion last year. Elicker called on Governor Ned Lamont to raise taxes on Connecticut's richest residents in order to raise more money for the "Pay Instead of Tax" program or the PILOT program, which reimburses cities for a portion of the property taxes they pay Taxes would have received exempt properties. Properties in Elm City include Yale and Yale New Haven Hospital.
The remarks came after Elicker announced the city could have a budget deficit of $ 66 million for fiscal year 2021-2022, which runs from July 2021 to June 2022. The number will be at least $ 41 million, Elicker said. If the PILOT program were better funded – at the suggestion of Senate President Pro Tempore Martin Looney – the city could fill that void. That, however, depends on the governor's willingness – or, according to his communications director – to tax Connecticut's richest.
"Connecticut billionaires made far more millions over the past year while hundreds of thousands lost their jobs," Elicker said Tuesday. "There's something deeply wrong with that."
By taxing Connecticut's billionaires, the mayor said, the state can generate additional revenue for its severely underfunded PILOT program. The program, launched in 1976, aims to reimburse cities for 77 percent of lost property taxes, but has only reimbursed 26 percent in recent years. In New Haven in particular, that lost reimbursement adds up: According to Looney of New Haven, over 50 percent of New Haven property is exempt from tax because of the city's large percentage of university property.
However, following a new proposal from Looney, that number would increase to 50 percent, which would result in New Haven receiving an additional $ 43.6 million. The second tier would get up to 40 percent reimbursement, and the third, made up of the richest communities, would get 30 percent, Looney said.
Looney told the News in an interview that the increased funding would total $ 129 million. Looney, along with Elicker, suggests taking this sum from the purses of the richest people in the state. One possible way to get this funding is by increasing the capital gains tax: a tax on the appreciation of investments. Others include increasing the income tax on the state's super-rich and what Looney referred to as a "mansion tax," which would increase the property tax on any Connecticut home worth over $ 430,000.
Looney's proposal also aims to address inequalities between Connecticut cities that face vastly different municipal budgets and local property tax landscapes. Under current law, a city like Greenwich – the richest area in the state – receives the same reimbursement as New Haven, even though New Haven owns 45 percent more non-taxable property, namely university and hospital real estate.
"We need to test cities' ability to fund their own services," Looney told the news.
The proposed change to the PILOT program is supported by both parties. Republican Michael Freda, North Haven's first chosen, has publicly expressed his approval of the program. For his part, Elicker helped organize 27 signatures from Connecticut mayors and first electors in a letter to Lamont asking for the bill to be passed.
Looney also stressed that this funding will go a long way toward delivering aid outside of New Haven.
"The difficult situation we found ourselves in is that there are a relatively small number of cities that are eligible for significant PILOT funding," Looney said. "Everyone needs it urgently, but because there are so few, most other communities are more interested in broader funding categories."
However, according to Max Reiss, director of communications for Governor Lamont, a move at Elicker's request to the governor appears unlikely. Lamont said Reiss is not considering tax increases while underscoring some of Connecticut's recent financial achievements: a projected budget surplus and above-average job retention for the region.
"Governor Lamont was resolute in the run-up to his budget address that he did not want to see any large-scale tax hikes in the next two-year budget," Reiss said in a statement to the news.
There are currently seven billionaires living in Connecticut. Four of them are hedge fund managers and four live in Greenwich. Nobody lives in New Haven.
Karen Pritzker from Branford, Alexandre Behring from Greenwich and Andreas Halvorsten from Darien, who are among the state's seven billionaires, did not respond to a request for comment on proposed tax increases.
While one common criticism of a wealth tax is that it could cause billionaires to leave and move to other states, Elicker told the News that he wasn't very concerned about the possibility of billionaires simply moving out of the state. The mayor said this was in large part due to the fact that even in Connecticut, tax payments vary greatly from city to city. In New Canaan, a family with a home of the same value as one in New Haven would pay roughly half the taxes on their home than their New Haven counterpart. Elicker also pointed out that Connecticut saw an incredible "influx of interest" in its real estate market during the COVID-19 pandemic.
"Let's not make a myth that if we tax people there will be no one left for taxation because they leave the state," said Elicker. "It may happen to some people, but it won't happen en masse."
And at the end of the day, Elicker said Lamont needed to add more funds to its upcoming budget for communities like New Haven facing severe financial difficulties. Elicker said Looney's proposal is not only pragmatic but also takes into account the state's limited financial resources.
"The state and the governor are a priority to ensure that the working class and poor residents have more opportunities to flourish," Elicker said.
The full log of Elicker's address for the state of the city can be found here.
Thomas Birmingham | [email protected]