In a continuance of a long-running saga, the legislature's finance committee voted Thursday to extend the highly controversial real estate conveyance tax for another two years.
In a relatively close 29 to 21 vote that included six Democrats breaking from their party, the committee decided to extend the tax - rather than making it permanent or allowing it to sunset. The measure now goes to the House of Representatives, and the final votes are expected to be held before the legislature adjourns on May 7.
Realtors, who had gathered at the Capitol complex on Wednesday for Realtors Day, have been battling against the increased tax for years and have ratcheted up the issue this year with a series of radio ads. The real estate agents have been battling hard against the lobbyists for the Connecticut Conference of Municipalities, who have supported the increased tax since it was enacted in 2003 to close a budget gap during the tenure of then-Gov. John G. Rowland.
"CCM is pleased,'' said Gian-Carl Casa, one of the organization's lobbyists. "This helps protect about $40 million in non-property tax revenue for municipalities. This has been a five-year battle. We hope to continue to fight to make it permanent.''
But Ken DelVecchio, president of the Connecticut Association of Realtors, said the vote was "very bad news'' because home sellers could have had $40 million in tax relief.
"In these difficult economic times, with home sales slowing, how can legislators dismiss the needs of families across the state, who are struggling to make ends meet?'' DelVecchio asked. "We continue to hear from municipal officials that they cannot get by without the extra revenue. But the tax increases were meant to be temporary, and it is past time to give homeowners of Connecticut a break.''
The two co-chairs of the Democratic-controlled committee, Rep. Cameron Staples of New Haven and Sen. Eileen Daily of Westbrook, voted in favor of the two-year extension. They rejected an amendment offered by Republican Senator Andrew Roraback of Goshen that called for reducing the tax from 0.50 percent to 0.36 percent.
"I don't think we can vote for any reduction in state tax revenue at this point,'' Daily said, referring to fears of a looming recession and the weakening of state tax collections.
Roraback wondered aloud when the legislature would finally resolve the long-running issue. "When is this conversation ever going to come to an end?'' Roraback asked.
"When we abolish the tax or make it permanent,'' Daily responded.
Since the tax is collected on the value of the sales, some of the state's richest towns would lose the most money if the increased rate is allowed to sunset on June 30 - which would happen if the legislature does nothing. Greenwich, for example, would lose $4.3 million, and Stamford would lose $2.98 million if the rates were sunsetted, according to CCM. Hartford would lose $730,000, and West Hartford would lose $562,000 per year.
Republican Pam Sawyer, one of the House Republican whips, said the tax should be rolled back to its 2002 levels.
"I believe it's an unfair tax on the people selling the property,'' said Sawyer, who represents Bolton, Andover, Hebron, and Marlborough. "It's a hefty chunk of change. Most people don't know about it.''