You asked when the legislature required towns to adopt the uniform fiscal year and why it did so.

ADOPTION

PA 74-299 required all towns to adopt a July 1—June 30 fiscal year by July 1, 1980. (Subsequent acts postponed the adoption deadline—PA 78-286, to July 1, 1985; PA 83-541, to July 1, 1990; and PA 90-262, to July 1, 1993. ) Prior law allowed them to adopt a uniform fiscal year if they so chose.

PA 74-229 made other changes intended to make municipal fiscal practices and procedures more uniform. It required towns to (1) adopt a uniform assessment year (October 1—September 30) and (2) assess all property at 70% of its fair market value. These changes attracted more attention than the uniform fiscal year when the bill was heard and debated.

RATIONALE

1972 Tax Reform Commission

Requiring towns to adopt a uniform fiscal (and assessment) year originated with the 1972 Governor's Commission on Tax Reform, which Governor Meskill created pursuant to Executive Order 13. The order required the commission to evaluate all local and state revenue sources, including the property tax and how towns assessed and administered it.

The commission stated that towns would do these things more effectively if they operated under a uniform fiscal year. In fact, towns could not effectively implement the commission's other recommendation, the adoption of a uniform assessment year, unless they adopted a uniform fiscal year (The Report of the Governor's Commission on Tax Reform, Volume 2—Local Government: Schools and Property, 1972, p. 104).

But the commission did not elaborate on how the lack of uniform assessment and fiscal years created “special problems of administration. ” It noted only that this lack “becomes particularly urgent when payments are made to towns based on their assessed valuation as of a specific date. ” The lack of uniform assessment years allowed taxpayers to avoid paying taxes on machines, equipment, motor vehicles, and other personal property by “taking advantage of the different dates for recording property. ”

PA 74-299 Legislative History

The legislative record gives little clue about why legislators believed a uniform municipal fiscal year was necessary. Those who spoke on the issue mainly addressed the effects of adopting this change, not the need for doing so. (Most of the debate centered on the adoption of a uniform assessment year and a uniform assessment ratio. ) (Senate Proceedings, April 30, 1974, pp. 2000-06 and House Proceedings, May 8, 1974, pp. 6950-5983).

The local officials who testified at the Finance Committee's hearing on the bill discussed the costs of converting to the uniform fiscal year, not the need to do so (Finance, Revenue and Bonding Public Hearing, November 20, 1973, p. 39 and 46).

Board of Finance Handbook

“The major advantages of changing to the uniform fiscal year are elimination of tax anticipation borrowing and provision for adoption of the budget before the fiscal year beings,” according to the Handbook for Connecticut Boards of Finance (Hill, University of Connecticut Institute of Public Service, 1992, p. 53). These advantages result from the way the uniform assessment and fiscal years are linked. The assessment year starts eight months before the fiscal year. Consequently, a taxpayer does not pay taxes on the value of property set on October 1 (the start of the assessment year) until the following July 1 (the start of the fiscal year).

Between October 1 and July 1, the town prepares the budget for the next fiscal year. Because the assessment year starts before the fiscal year, the finance board can determine the amount of property wealth the town has to fund the proposed budget. This information allows the board to adjust budget proposals and set the mill rate. The mill rate is a percentage derived by dividing the budget to be funded with property tax revenues by the assessed value of taxable property.

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