There is little evidence that tax caps do much to constrain property taxes, said an economist with the University of Connecticut during a presentation on economic issues co-sponsored by CEA in Hartford on Friday, March 7.

Steven Lanza, executive editor of The Connecticut Economy, a quarterly publication from the university, said there is “no statistical relationship” between tax caps and property taxes. “Capping taxes does not reduce the share of income that residents are required to pay their local governments — just the opposite of what proponents of caps might hope for.”

Lanza said property taxes are higher in larger population states with higher median incomes, such as Connecticut. “Larger populations and wealthier residents tend to demand more public services and accept higher taxes as the unavoidable consequence of this preference. A 10-percent increase in population is associated with a 1/10 of a point increase in taxes as a percent of income; a $10,000 increase in median income produces an 8/10 point increase.”

Taxes also vary with the quality of local services, he said. Keeping pupil-teacher ratios low, for instance, provides a more enriching classroom experience, but doing that takes money. Taxes also depend on the ability of local governments to generate revenue from other sources. Grants from the state or federal level make localities less reliant on local sources of funding.

CEA Executive Director John Yrchik, who also spoke, said a property tax limitation is not likely to bring relief for the people who need it most. It will also heighten disparities among Connecticut communities and imperil fundamental public services, including education.

Yrchik said sharp differences in the distribution of wealth in Connecticut translate predictably into differences in education funding and student achievement levels among districts. “One of the great ironies of our present tax system is that individuals owning property in communities with relatively low levels of student achievement tend to have far higher tax rates than those with property in communities with high achievement levels.”

A major reason for this condition is the state’s longstanding failure to bear its share of the education costs. “A property tax limitation would heighten already intolerable disparities, making Connecticut’s constitutional obligation to provide a substantially equal educational opportunity especially hollow,” said Yrchik. “We don’t need property tax restrictions in Connecticut. We need property tax relief.”

He said some of the ways to accomplish this – instead of interfering with a municipality’s ability to raise revenue – include: full funding of the Education Cost Sharing formula, more generous funding for PILOT (payment in lieu of taxes), and a state-funded property tax circuit breaker for individuals above a fixed percent of their incomes.