OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

sSB-820

AN ACT CONCERNING THE INTEREST RATE ON DELINQUENT PROPERTY TAXES.


OFA Fiscal Note

State Impact: None

Municipal Impact:

Municipalities

Effect

FY 14 $

FY 15 $

Various Municipalities

Revenue Loss

Potential

Potential

Explanation

The bill allows municipalities the option of reducing the annual interest rate they charge on delinquent property taxes. To the extent that a municipality chooses to reduce the interest rate on delinquent property tax, there is a potential revenue loss.

For illustrative purposes, with an 18% interest rate on delinquent property taxes, the Town of Fairfield collected $1.2 million in revenue in FY 12 from interest. At a 12% interest rate, the town would have collected approximately $814,000 from interest on delinquent property taxes (for a revenue loss of $385,000 compared to actual FY 12 revenue). At 6% interest, the town would have collected approximately $396,000 (for a revenue loss of $827,000).

By law, the interest rate on other delinquent taxes is linked to the interest rate towns charge on delinquent property taxes. Accordingly, there would be an additional revenue loss associated with a drop in these other interest rates. This would include 1) sewer system installation and collection assessments; 2) assessments imposed on blighted housing; and 3) fees and assessments charged to residents of certain districts within municipalities.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to changes in interest rates on delinquent property taxes.

Sources:

Town of Fairfield