By Kevin McNabola
Orange Board of Finance
Kevin McNabola
I recently had the opportunity to attend the spring Connecticut Government Finance Officers Association meeting, which included a keynote by state Comptroller Sean Scanlon. I was pleased to hear and commend Scanlon for leading the charge in Hartford and taking property tax reform head on.
His proposal focuses on addressing the “inherent unfairness” of the current system, with the goal of making Connecticut more competitive.
Whether you are a leader within the corporate world or government, your main objective is always the same: how do you achieve competitive advantage?
One of the main drivers of why Connecticut needs to reform the current property tax structure is that Connecticut has lost ground nationally over the past two decades. It is no secret that Connecticut is no longer competitive nationally. In several recent national surveys, Connecticut received mediocre-to-poor ratings for its business climate, economy, cost of living and property taxes.
A recent CNBC poll ranked Connecticut 38th on the economy, 44th on the cost of doing business and 37th on cost of living. Connecticut also ranks third highest in the country for property taxes, behind New Jersey and New Hampshire.
This has become a growing challenge for Gov. Ned Lamont. All in all he has done a great job, with six straight years of budget surpluses and paying down over $12 billion in pension debt while delivering three years ago on the first state income tax rate cut since the mid-1990s.
However, today’s reality for Connecticut taxpayers doesn’t really feel like things are better than they were six years ago due to significant cost increases for electricity, gas, health insurance, home heating oil and significant federal cuts to Medicare. The state is now faced with having to fund the shortfall while still trying to maintain the state’s $4.3 billion rainy day fund.
Property tax reform is a heavy lift, and reforming it will not be easy. But Scanlon taking on the challenge tells me a lot about his character as a leader. He is one of the few in Hartford who truly understands the future viability of Connecticut and is comfortable with working to change the trajectory of the status quo.
Property tax reform has been discussed for decades in Connecticut, but no one in Hartford wanted to address it because it is a laborious task that has many moving parts. If not done correctly, it could significantly impact future revenues.
So what does Scanlon’s reform plan look like?
The “fairness” credit (statewide property tax credit). The centerpiece of the plan is a statewide property tax credit aimed at the middle class and lower-income families. The goal is to offset the high cost of local property taxes by providing a direct credit against the state income tax. The plan is “needs-based,” ensuring that the relief reaches those whose property tax burden is highest relative to their income.
The proposal includes a credit of up to $600 per child (capped at three children). While not a direct property tax cut, the argument can be made that this is the most effective way to help families offset the crushing burden of local property taxes.
Overhauling the PILOT program. There is the need to fully fund and stabilize the Payment in Lieu of Taxes program. Many of Connecticut’s cities (like Hartford, New Haven and Bridgeport) host large amounts of tax-exempt property (hospitals, universities, state buildings). This forces the remaining taxpayers to pay higher mill rates to cover city services.
The plan advocates for a more reliable, tiered reimbursement system where the state more accurately compensates cities for the revenue they lose from these tax-exempt properties, theoretically allowing those cities to lower their mill rates.
Expanding the property tax credit. Scanlon has supported broader efforts (often aligned with Lamont’s budget) to increase the existing state income tax credit for property taxes paid. He would move the credit from $300 to $500 (or more depending on budget surpluses). He would also expand eligibility so more middle-class residents qualify for the credit, helping to blunt the impact of high local mill rates.
Structural reform: reducing reliance on local levies. Connecticut is an outlier nationally and not competitive due to its heavy reliance on local property taxes. Scanlon’s proposal should allow municipalities to explore other revenue streams beyond just property taxes, which would allow towns to lower their mill rates.
A key part of his reform platform involves the state taking on a larger share of education funding (through the Education Cost Sharing formula) to prevent towns from having to raise property taxes to cover school costs.
Based on the recent federal passage of the One Big, Beautiful Bill Act in 2025, one has to also factor in analyzing how federal tax changes – such as the $40,000 state and local tax deduction cap – interact with state relief.
While federal changes may provide temporary relief for some, the state needs its own permanent “circuit breaker” programs to protect residents from future volatility. Connecticut needs a system where property taxes are capped at a certain percentage of a household’s income, ensuring that seniors and low-income homeowners aren’t taxed out of their homes.
Restructuring Connecticut’s property tax system is long overdue. I believe what Scanlon has proposed is a great start, and I am sure it will be discussed further in the coming months.
However, it is important that the state legislature supports Scanlon’s proposal so that it can include cutting taxes across the board in order to make Connecticut more affordable and competitive nationally. Affordability and competitiveness are key in order to attract corporations/major taxpayers and expand the overall tax base. This is truly the only way Connecticut can gain future economic viability and be competitive nationally.
Kevin McNabola is the chief financial officer for the city of Meriden and a member of the Orange Board of Finance.