Fighting over the conveyance tax

During the past three and a half years, the city has raked in more than $5 million in extra cash from a conveyance tax surcharge that officials reluctantly imposed.
There’s been no effort to repeal it because politicians and finance officials alike are thrilled to have another solid revenue stream that helps them pay for municipal services without hiking property taxes.
But Republican mayoral hopeful Ken Johnson said he would dump the extra tax, a move some real estate experts strongly endorse.
"I will do away with the higher tax," Johnson said, adding that it imposes too high a burden when property trades hands.
City Comptroller Glenn Klocko said, though, that “giving that money back is really an unnecessary and irrational move on the city’s part.”
“The conveyance tax is a very helpful tax for the city,” Klocko said Thursday. “It’s probably one of the most helpful taxes the state has granted to the city.”
Democratic mayoral candidate Art Ward, who voted along with the rest of the City Council to adopt the tax in 2004, said it brings in necessary revenue to fund one-time projects and equipment purchases.
Ward said the money is used for one-time items so it's not built into the city’s yearly spending plan. It just lessens burden on taxpayers, he said.
“It certainly helps us when we make our budget,” city Finance Chairman Rich Miecznikowski said Thursday. “It’s extra revenue that really helps offset rising costs.”
City financial records show that Bristol has collected $1.6 million annually from the extra tax. This year, it’s on track to make at least as much.
Klocko said that the money pays for major purchases, but most of it winds up as end-of-the-year surplus cash that helps ensure the rainy day fund remains secure.
A state law allows “distressed municipalities,” which include Bristol, the chance to impose an extra .25 percent tax on all real estate sales, an option that city officials initially declined but later decided to snatch up.
Because of the extra surcharge, the city’s share of the conveyance tax on a $100,000 transaction would be $250. That’s $140 more than it would get if it used the same tax rate that non-distressed municipalities are allowed to impose.
It adds up to big money. This year alone, Klocko said, the city collected $460,000 in the first quarter of its fiscal year.
Despite the revenues pouring into city coffers, Bristol Realtor Bob Fiorito said that he strongly agrees with Johnson’s position.
“The conveyance tax is a regressive tax paid by homeowners,” said Fiorito, a former president of the Connecticut Realtors Association.
Because it’s based on sale price, he said, it poses a real difficulty for many sellers now in a tough market when many sellers are facing “a lot of hardships” already as they deal with foreclosures, interest rate hikes and other difficulties.
“It’s not about Realtors. It doesn’t affect us at all,” Fiorito said.
Miecznikowski said that he recognizes the extra charge poses a burden to property sellers, but he has never personally heard a complaint about it.
Fiorito said that the state gave distressed municipalities the option of collecting extra conveyance taxes during a budget crisis that is now over.
“The reason for the conveyance tax to be increased to the detriment of homeowners is now gone,” Fiorito said. “And the tax should be allowed to sunset as it was supposed to Fiorito called it “a dubious honor” for Bristol to embrace the distressed town status that allows it to charge more.
“We’re trying to attract people to this town. It’s just a bad idea,” he said.
Johnson said he doesn’t want Bristol to advertise itself as a distressed community.
He said that part of marketing the city to prospective businesses and others is to showcase its strengths rather than grabbing more taxes by lumping itself in with places such as Hartford and New Britain.

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Copyright 2007. All rights reserved.
Contact Steve Collins at scollins@bristolpress.com