Hartford Business Journal

www.HartfordBusiness.com • July 8, 2019 • Hartford Business Journal 13 SPECIAL REPORT: CITIES PROJECT including homeowners, landlords, nonprofits, city unions or businesses. Interviews with those who have been deeply steeped in Hartford's tax challenges say there are no easy fixes. Some say that truly moving the needle will likely require a "grand bar- gain" between many stakeholders. It's been tried, but not successfully. Oz Griebel, former head of the Me- troHartford Alliance and a 2018 guber- natorial candidate, drafted a plan sev- eral years ago that aimed to achieve just such a bargain between the state, the city, and property owners. Seeking to halve Hartford's mill rate over 10 years, the plan called for the state to put its major Hartford office properties back on the tax rolls through sale-leaseback deals, as well as a number of tradeoffs between various property owners. It also de- manded voluntary tax payments from hospitals and colleges — a topic that is a political third-rail in Hartford and many other U.S. cities. The plan ultimately went nowhere, but Griebel remains convinced that a collab- orative approach, where all stakeholders shed some blood, is the right course. "If you're not all in the room and not everybody is willing to give, then you're not going to get to a compre- hensive, sustainable solution," he said. "Everybody has to understand the goal here is to have a higher assessed grand list." While no two cities are the same, Hart- ford's struggles are not entirely unique. Some cities, almost always with the help of their state legislatures, have experimented with policies that might make a difference in Connecticut's Capital City. This week's Cities Project installment looks at several policy ideas that some say could be the most realistic solutions to Hartford's fiscal and tax problems. Solution: Alternative revenue sources could bolster city budget, lower mill rate By Matt Pilon & Gregory Seay I n the midst of the last recession, Massachusetts lawmakers — a place where, like Connecticut, mu- nicipalities rely heavily on property taxes — gave their cities and towns a powerful new revenue-raising tool. Since 2009, by vote of a local select- board or city council, municipalities have been able to tack on 0.75 percent- age points to the state's 6.25 percent sales tax on restaurant meals. Restaurants decried the move, but more than 230 of the Bay State's 351 municipalities have now implemented the so-called "local-option" measure, state data show. In addition, Massachusetts lawmak- ers in 2009 also increased the tax cities and towns could levy on hotel room stays. The local room occupancy tax increased from 4 percent to 6 percent for towns that choose to use it, atop the state's own 5.7 percent occupancy tax. Today, nearly 170 municipalities are re- ceiving local-option lodging payments. Meantime, Massachusetts com- munities with recreational-marijuana dispensaries will soon be collecting revenue from a local-option tax on rec- reational marijuana sales, and the state also just gave cities and towns the op- tion to collect a 3 percent tax on certain short-term property rentals, such as those transacted through Airbnb. From 2010 to the third quarter of fis- cal 2019, Massachusetts cities and towns collected $947 million in meals taxes and $791 million in occupancy room lev- ies — all unrestricted revenue for local operating budgets. The greatest haul, unsurpris- ingly, has gone to Boston, which has received payments averaging more than $23 million a year over the past decade from the meals tax, and $74 million from the hotel tax. In all, the two local-option taxes helped Boston raise $125 million last fiscal year, or about 4 percent of its $3.15 billion operating budget — nothing to scoff at, said Justin Sterritt, Boston's budget director. "While it's not 10 or 15 percent, it is a pretty signifi- cant chunk," Ster- ritt said. "It's one of the few pieces of revenue grow- ing faster than everything else." Fifty miles west, the city of Worcester has raised more than $32 million in meals and hotel taxes over the past decade. Tom Zidelis, Worcester's chief financial officer, came into the job at the outset of the recession in early 2008. State aid projections were trending downward. "What they provided to cities and towns was the ability to capture addi- tional revenues," Zidelis said. "Having any consistent form of revenue sup- Oz Griebel says Hartford needs a "grand bargain" over its tax structure, but such a deal has proven elusive. Former Hartford Mayor, Eddie Perez Justin Sterritt, Budget Director, Boston Stephen Eide, Senior Fellow, Manhattan Institute Continued on next page >> PHOTO | CONTRIBUTED PHOTO | HBJ FILE A Bertucci's restaurant in Massachusetts, a state that allows its cities and towns to levy an 0.75 percent local meals tax. The policy is generating over $100 million a year for local coffers.

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