Taking Away the Car Tax: It Could Mean a $7.2M Loss for Windsor Locks and East Windsor

Gov. Dannel P. Malloy wants to save Connecticut taxpayers money by eliminating the car tax on vehicles appraised at less than $28,000, as proposed in his 2014-15 budget.

But not all Connecticut taxpayers want the relief.

According to a Yankee Institute survey, 52 percent of voters polled were against removing the tax after being told that it could negatively affect municipalities. Thirty-four percent of those polled supported the cut. 

The Yankee Institute, a free market and limited government think-tank, questioned 500 likely Connecticut voters to complete the survey.

A number of small town leaders agree with voters who want to keep the car tax. Leaders traveled to Hartford this month to argue against the cuts, stating that property taxes would undoubtedly go up as a consequence.

According to information provided by the state Office of Fiscal Analysis, if the car tax is eliminated Windsor Locks stands to lose an estimated $5 million. In East Windsor, the town could lose an estimated $2.2 million. Officials in those towns have not said how they would make up for the loss of funding.

East Windsor First Selectwoman Denise Menard said recently that she favored a standard, statewide tax rate applied to all cars, but she disagreed with state Sen. Gary Lebeau’s suggestion that state collect the tax and then give it back to the municipalities.

The concern is that any taxes collected by the state will remain with the state.

“If it goes to the state, every dollar we collect, we’re not going to see a dollar,” East Windsor Selectman Richard Pippin Jr. said. “We’ll see 50 cents.”

East Windsor Selectman Jim Richards said that he, too, does not support eliminating the car tax.

“This galls me,” he said. “We’re trying to keep businesses here. … The [statewide mill rate] makes sense if we control and collect it.”

“It’s a shame [Malloy] is creating all this furor,” Richards said.

Richards said that the town has been fiscally responsible for years.

While Malloy's proposal would cause a loss of millions in Windsor Locks, First Selectman Steve Wawruck said he supports a conversation about taxes and the reliance on property taxes.

That said, Wawruck said that getting rid of the car tax would cost Windsor Locks about $2.1 million, and cause the mill rate to rise about 2.25 mills.

While the governor said in a letter to town leaders that this move will provide "tangible relief to our middle class," Malloy acknowledged that towns may have to make municipal service cuts without the revenue from car taxes.

"I understand that adjustments will need to be made locally, but I strongly believe that we should stand with them and find ways to make this work," Malloy said in the letter.

The governor added that many towns collect less than 90 percent of all car taxes owed, and that car tax revenue generally makes up 2 to 10 percent of town budgets.

See how the car tax removal will affect your town and nearby towns with our searchable database above that includes information collected by the state's Office of Fiscal Analysis.