State must fully fund PILOT payments
Spend time talking to any mayor in Connecticut and chances are it won’t be long before complaints about PILOT come up. PILOT stands for Payment in Lieu of Taxes, and it’s a system that has cities eternally playing catch-up as they look to fund themselves. Connecticut’s cities don’t function as the center of civic life as they might have in an earlier generation, but they still provide many services not available in outlying communities. That can mean hospitals, federal buildings, universities or nonprofit providers, all of which fall in the same category, and none of which are taxed the way businesses are, even as they often occupy valuable city-center properties.
How much could cities be taking in if a hospital was instead a shopping center that could be taxed accordingly? It varies, but all those untaxed plots of land, which also include parks, add up quickly. Especially in struggling communities that have seen the loss of manufacturing and other downtown staples over the decades, the missing revenue stings.
The state’s remedy is PILOT, which is supposed to be a chunk of money sent from Hartford to make up what would otherwise be brought in via property taxes. But as any mayor will tell you, PILOT is notoriously underfunded, with state aid to cities coming in at around 25 percent of actual lost revenue. That makes the municipal budget hole even bigger, and puts more of a burden on residents and businesses.
Legislators, including in the suburbs, have long talked a good game about wanting to aid Connecticut cities, taking a “we’re all in this together” approach on the campaign trail. But their actions haven’t always matched those words, and PILOT funding is a good example. Since everyone, no matter where they live, uses facilities such as hospitals and courthouses, the burden of paying for them shouldn’t fall only on cities.
The Legislature has now taken action to remedy this problem, at least in part. Lawmakers have approved an overhaul of the way Hartford distributes aid to communities that are home to tax-exempt colleges and hospitals, at a proposed cost of some $137 million a year. The plan calls for a tiered system that would provide more money to poorer communities while keeping better-off towns’ PILOT payments as they are.
It makes sense, even if it may not go far enough. For a city such as New Haven, where Mayor Justin Elicker has gone so far as to release two budgets to indicate the dire state of his city’s finances, it would be a meaningful lifeline.
Now the Legislature has to ensure those payments are fully funded in its new two-year budget. That’s never a given, as anyone who has followed the longrunning controversy over school-aid grants would know. But with support from legislative leadership, relief for cities in the form of higher PILOT payments looks like it has a good chance of proceeding.
This is not a bailout or a giveaway. This is a step to make an unfair system somewhat more just. For cities that are eternally on the brink, and suburbs looking for a way to do their part, it could make all the difference.
Since everyone, no matter where they live, uses facilities like hospitals and courthouses, the burden of paying for them shouldn’t fall only on cities.