March 21, 2011

REPS. BERGER & LARSON EXPECT BUDGET FIX
ON MANUFACTURING PILOT FUNDS
$44 million in town aid at stake

After meeting with Governor Dannel P. Malloy’s staff and legislators from towns that lose funding under the governor’s proposed elimination of the Manufacturing Machinery & Equipment (MME) tax exemption reimbursement to municipalities, State Representatives Jeffrey Berger (D-Waterbury) and Timothy Larson (D-East Hartford, South Windsor) predicted the problem would be fixed before a state budget is approved by the General Assembly and becomes law.

Of the $44.2 million proposed cut of the MME Payment in Lieu of Taxes (PILOT) program, Larson’s hometown of East Hartford would lose about $3.6 million, the largest loss of any town in the state. Larson said it is in large part due to the presence of United Technologies’ Pratt & Whitney division. Waterbury, the home of Berger, stands to lose about $2 million. South Windsor, also located in Larson’s district, would lose just over $1 million.

“If we are to stave off the impact of the governor’s proposal to eliminate these funds for our cities and towns we must come up with viable solutions,” Berger said. “Creating a special fund with dedicated revenue may make sense because we’re dealing with a problem that impacts specific municipalities.”

One option being discussed by a working group of legislators led by Berger, who is House Chair of the legislature’s Commerce Committee and member of the Finance Committee, is to establish a dedicated fund from a combination of revenue derived from proposed increases in sales, real estate conveyance and hotel taxes to help towns affected by the MME PILOT loss.

“It’s not like we can simply send a $3.6 million tax bill to UTC to make up for the loss,” said Larson, a member of the Finance Committee. “I was encouraged by our meeting with the governor’s people and there are a lot of legislators committed to getting this problem fixed before voting on a budget.”

The MME program provides a 100% exemption of local property taxes due on qualified, newly acquired manufacturing machinery and equipment, with the state reimbursing municipalities for a portion of the lost tax revenue. Elimination of MME disproportionately impacts heavy industry cities with larger manufacturing bases.