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CLOSING ARGUMENT MARCH 22, 2021 ¦ 49

EDITORIAL BOARD

related revenue shortfalls significantly impact towns with per capita property wealth between
local budgets, especially cities communities with a $100,000 and $200,000 will receive 40 percent.
large percentage of tax-exempt property. The 37 wealthiest Tier Three towns at more than
In theory, the PILOT program is a fair reim- $200,000 will receive 30 percent of their statutory
bursement system but the problem arises when the PILOT grant, roughly the current rate.
state fails to appropriate enough money to pay the How does this benefit cities? Under current
full reimbursements. In recent years, PILOT pay- practice, a shortfall in the appropriation means
ments have been reduced across the board. Fund- that all towns receive the same pro-rata grant share
ing the full statutory PILOT grants would cost of between 25 and 30 percent, depending on the
$613 million but the state only budgeted the pro- type of property. But under the new law, the lowest
gram at $158 million this fiscal year. This means pro rata grant for a Tier One town’s Private Col-
that PILOT grants are currently leges and Non-Profit Hospitals
funded statewide at an average grant is 38.5 percent (50 percent
of between 24 to 30 percent of of its 77 percent statutory grant).
the statutory amount that cities The tax policy principal behind
and towns are owed. The under- the tiered system is that the PI-
funding has had a huge impact LOT distribution formula should
on cities. For example, New Ha- We continue to endorse reflect the fact that municipali-
ven received only $41 million ties vary widely in their taxing
of its statutory $180 million the long-term goal capacity based on their property

grant this year, while Hartford of full funding of the wealth. New Britain’s net grand
received only $30 million of its list per capita is $50,000, so it
$104 million statutory grant. PILOT program as a key is classified as a Tier One town.
component of property tax Greenwich’s net grand list per
The major structural reform
reform.

in the new legislation revises the capita is $734,000, so it is a Tier
pro rata distribution system in Three town. Tier One towns are
the event of an appropriations given a larger share of the statu-
shortfall. According to the fiscal tory grants than Tier Three towns
note attached to the bill, “If ap- because Tier Three towns can re-
propriations are insufficient to place lost state revenue with local
fully fund PILOT grants, then municipalities must taxes more easily and with less regressive impact on
receive a certain percentage of their fully funded residents than Tier One towns.
amounts, based on a tiered reimbursement system The additional cost of the new PILOT law is
that sets higher reimbursement rates for lower $129 million which Lamont and the legislature
property wealth towns,” provided that no town have committed to including in the state budget.
would receive less PILOT funding under the new We continue to endorse the long-term goal of full
system than it received in the current fiscal year. funding of the PILOT program as a key compo-
Under the new law, towns are divided into three nent of property tax reform. The economic vitality
tiers based primarily on their per capita property of our cities depends on a healthy state-local fis-
wealth. The 29 “poorest” Tier One towns with less cal partnership. We congratulate the elected offi-
than $100,000 per capita property wealth will re- cials who took a big stride forward to improve the
ceive 50 percent of their grant. The 103 Tier Two PILOT element of that partnership.
¦

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