How a Proposed Car Tax Change Could Hurt Groton

Gov. Dannel Malloy’s proposed biennial budget would deny municipalities the ability to tax motor vehicles valued at $28,571 or less, which would have a “significant” impact on Groton, the Town Council was told this week.

The proposed state budget would give towns and cities the choice of whether to stop taxing motor vehicles below that value in July 2013. But the budget would require the taxing to be stopped in July 2014 if the spending plan passes.

“This will have a huge impact in shifting the tax burden to businesses and residential taxpayers,” Town Manger Mark Oefinger said in a memo to the Town Council.

The grand list associated with motor vehicles in Groton is about $190 million.

“A breakdown of vehicles over and under $28,571 is not readily available, but it is anticipated that the lost tax revenue will be significant,” Oefinger wrote.

Groton’s grand list for 2012 was recently finalized, and has declined 1.3 percent, or about $49 million, the memo said.

According to the Connecticut Conference of Municipalities, which completed a preliminary analysis of the impact of the state budget on towns, Groton would neither be harmed nor hurt by the governor’s overall budget proposal.

Some grants, such as the PILOT grant for state-owned real property, the Mashantucket Pequot & Mohegan grant and the manufacturing transition grant would decline or be eliminated. But others, such as the education cost sharing grant, would increase.

Malloy has also proposed a “hold harmless grant” for the coming fiscal year that would provide $1.4 million to Groton, resulting in a net loss of zero.