Sunday, February 12, 2006

The Property Tax Pea Game

How quickly things change. Only a month ago, Democrat leaders in the state House and Senate seemed willing to go to the wall to defend a provision they had inserted into a Clean Contracting Bill favorable to unions. The provision required the state to perform cost benefit analyses before soliciting bids for private service contracts. Opponents of the provision insisted it would make private contracts more expensive and less desirable, but the provision was aggressively backed by state unions and their in-pocket legislators. Governor Rell vetoed the bill twice and vowed to veto it roughly forever if the offending provision was not removed.

Shortly after Rell had smuggled into her State of the State address a nifty and apparently popular idea, the elimination of property taxes on cars, leading Democrats in the House and Senate decided to jettison from the Clean Contracting Bill the provision that made Rell’s spine stiffen. According to both Rell and Democrat leaders in the House and Senate, rank and file Republican legislators were not advised concerning the governor’s February surprise; neither were rank and file Democrat legislators advised concerning their leader’s abandonment of the provision that had occasioned Rell’s two previous vetoes.

In a little more than a month, Democrats had pirouetted on their non-negotiable demand. The Democrat leader of the Senate, Donald Williams, suggested it should surprise no one that unions would be willing to give up an advantage to assure clean contracting. After all, why should anyone suppose that patriotic unions would not favor clean contracting? Williams stopped short of suggesting that unions might settle the agonizing problem of high and punishing property taxes by agreeing to a ten percent cut in wages that might then be returned to hard pressed taxpayers to alleviate their crushing property tax burdens.

The union-friendly provision may have been a throw-away measure or, in political lingo, a bargaining chip. We are now told by the Democrat leadership that unions were not distressed when the provision they had lobbied for was yanked from the bill; unions are not always mercilessly self interested, and they too stand to benefit from honest brokering in state contracts. If the measure was a bargaining chip, what did the chip buy from Rell?

What high stakes poker game is being played here, and who’s dealing the cards? It’s possible that Democrats are surrendering one offensive position in order to regroup behind another more advantageous position.

The elimination of the property tax on cars puts a serious wrinkle in the Democrat’s election year script. That script – like some Hollywood movies, years in the making – has Democrats coming to the aid of hard pressed property tax payers by shifting tax collections from municipalities to the state. The state will increase the amount of money it sends to municipalities by a few percentage points, raising the state’s burden for the cost of education to a previously agreed upon ceiling, thus providing “property tax relief” to townsfolk across the state.

The “relief,” however, is contingent upon equivalent reductions in town taxes. If the state assumes 10% more of the cost of education currently paid by municipalities, townsfolk will realize relief – if, and only if, the municipalities reduce taxes by an equivalent percentage. In fact, the so-called “tax savings” is simply charged to a different payer. Town taxpayers also pay state taxes and they will not realize a tax savings unless spending, at some point in the tax chain, is reduced. The Democrat plan is long on suggestion; a10 percent assumption of taxes on the part of the state does not necessarily mean a tax reduction. But the plan always has been short on particulars. Show me the money, says the cynic; show me the real tax savings in the plan.

Democrats started to play this pea and walnut game way back when Bill Curry, in his gubernatorial campaign, was warning us that then Governor John Rowland was a crook.

When Rell proposed to eliminate the property tax on cars, she threw a bean bag at the Democrat’s election year script. Democrats are now insisting, as always, that a real tax cut must be “paid for” by equivalent tax payments. Rell may not “cut” the car tax unless she provides additional tax dollars to off set the cut. In other words, the Democrats are prepared, as always, to frustrate any real tax cuts. The real purpose of a real tax cut is to create a temporary deficit that will be “paid for” through cuts in spending.

But the Democrats want no spending cuts. No Republican governor has yet been able to interrupt this entertaining – and very expensive – pea game. Some taxpayers, however, are beginning to catch on. And lately more and more voters are beginning, as the carnival barker might say, to “keep their eye on the pea.”

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