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Budget Battle

Small Businesses Face BIg Tax Bite

ANDY HART

May 08, 2008

Last spring, Hartford’s small businesses joined to protest dramatic tax increases caused primarily by the property revaluation process.

They formed a group known as Hartford Small Business and Taxpayer Alliance (HSBTA) and, while no long-range solution was found to the city’s tax woes, the City agreed to phase in the increase due to the revaluation over a five year period as a stop-gap measure.

While the HSBTA worked with City and State leaders over the past year to develop a long-range solution, it was never found.

As a consequence, Hartford’s small businesses now face a one-two punch of having to pay the second installment of the five-year revaluation phase-in plus a tax mill rate increase of almost 10 percent, which was included in the proposed budget released by Mayor Eddie Perez last week.

Perez is recommending a budget of $552,000,000 for the upcoming fiscal year, an increase of $26,379,886 over the current year.

As a consequence, the Mayor is asking that the city’s tax rate be increased from 63.39 mills to 69.71 mills.

Former City Councilman and HSBTA Secretary John O’Connell said that because of the revaluation phase-in and the mill rate increase, most of Hartford’s small business owners will be facing a 25-30 percent increase in taxes over last year.

“In my opinion,” said O’Connell, “some marginal businesses will have to close or move [out of the city].”

He added that some businesses can be moved easier than others, such as those that already have one or more branches in another town and/or rely more on telephone business than local “foot traffic.”

O’Connell said he has yet to fully analyze this year’s proposed budget and while he believes “there is clearly some waste in there,” he doesn’t believe Council has the “political will” to make significant cuts and even doubts that budget cuts in the dollar amounts necessary would even be possible.

“In my own opinion, this city is facing bankruptcy,” said O’Connell, “and one could argue that it is already in that condition since we’re being propped up by the state...if you use the analogy of a family [budget], we’re spending $20,000 and only taking in $10,000 but we have rich uncle that’s giving us the extra $10,000.”

The “rich uncle” in O’Connell’s analogy is the financial aid supplied to the City by the State of Connecticut through various funding programs.

City Council has until May 21 to make changes to the budget. It will then be sent back to the Mayor who will make his final changes.

Council must sign off on the final budget by May 31.