State Senate Majority Leader Marty Looney of New Haven has a creative proposal for changes in the state’s Payment in Lieu of Taxes (PILOT) program that leaders are signing onto, the most recent being New Haven Mayor Toni Harp. The legislature should sign on as well and correct the program that currently leaves cities and towns that have large amounts of tax-exempt property somewhat out in the cold as far as property taxes.
There have been competing ideas on PILOT for years but Looney’s proposal makes the most sense. He has asked the state legislature’s Office of Legislative Research to study how to change PILOT payments. Currently, every city and town gets the same PILOT percentage, now about 32 percent of what would be paid if the property had been taxable. Tax exempt properties are largely colleges, universities, hospitals and state-owned property. New Haven has the most such properties in the state.
Looney is proposing a three-tiered PILOT system based on the amount of tax-exempt property in each municipality. The more the city or town has, the higher the percentage of PILOT it would get.
The Looney PILOT proposal is far better than the idea being put forth by state Speaker of the House Brendan Sharkey. Sharkey favors a “reverse PILOT,” a change in which tax exempt properties would pay property taxes at the rate set by the city or town in which they are located. Those entities would then seek reimbursement from the state.
The problem with the Sharkey plan is that it would face fierce opposition from colleges and hospitals. It may also face a constitutional problem as Mayor Harp has pointed out. Yale University in New Haven is listed in the state Constitution as a tax-exempt entity. No change in state law can change that. Harp also points Yale is an economic engine for the city.
Increasing the overall pot of money for PILOT is something all mayors and selectmen would like to see. However, resources are scarce. Gov. Dannel Malloy has concentrated local aid in the form of education funding. He has increased PILOT funding but it remains nowhere near what cities and towns would get if the properties were taxable.
There is a political aspect to all of this as well. Looney is in line to become the new senate president, succeeding the retiring Don Williams. That puts him in a position to get things done.