CROMWELL - With cities and towns concerned about possible cuts in state aid, Gov. Dannel P. Malloy said Wednesday that he favors a local hotel tax and increasing taxing options for cities and towns.
Malloy, the former mayor of Stamford for 14 years, says he wants to helps cities and towns as he prepares his proposed budget that will be unveiled February 16. The budget gap is currently projected at about $3.5 billion in the next fiscal year, and municipalities are hoping to receive at least as much money next year as they are receiving now. Overall, the municipalities receive about $2.8 billion in a wide variety of grants, including education.
"Every step of the way, I'm concentrating on how do I avoid hurting municipalities,'' Malloy told nearly 300 first selectmen and local town officials at a meeting of the Council of Small Towns in a hotel ballroom in Cromwell. "I do understand what's going on in local government.''
In the past, Malloy and other big-city mayors traveled to the state Capitol and asked the legislature to approve new methods that would allow them to raise revenue. That includes allowing them to keep a portion of the state's hotel tax or increase the local sales tax by 1 percentage point. The sales-tax increase, for example, could generate an additional $550 million to $600 million per year that could be distributed back to the towns. The legislature's finance committee voted last year to allow the state's 12 percent hotel tax to be increased to 15 percent, but the measure failed in the state Senate.
Now, after being elected in November, Malloy is in a position to help enact the policies that he pushed during his years as mayor.
"We do need to broaden the tax base,'' Malloy told the crowd Wednesday in his keynote address.
In 2009, then-Mayor Malloy came to the Legislative Office Building with New Haven Mayor John DeStefano to say that "we need a little sanity in this discussion'' so that cities would not continue to be overly reliant on property taxes. While the property tax provides the lion's share of revenue for most municipalities, they can also raise money - although in much smaller amounts - from the real estate conveyance tax, permits, and fees.
"The hotel tax would be paid by out-of-state people. It's a no-brainer,'' Malloy said in 2009. "And the local-option sales tax has been on the table for a long time. But the state is saying, 'We're not going to give you what we promised, and, by the way, no new tools in your toolbox will be allowed.' ''
But state Rep. Craig A. Miner of Litchfield, the ranking House Republican on the budget-writing appropriations committee, said he believes that the money would never filter back to the towns that need it the most. Instead, he thinks the money would end up with a regional entity and not be funneled back, dollar-for-dollar, to the town that initially generated the revenue.
"I don't think the money is going to go to the municipality,'' Miner told the crowd during a panel discussion before Malloy arrived at the hotel. "It is not going to happen, ladies and gentlemen.''