Allyn Cries Foul at Loss of PILOT Funds

Ledyard Mayor Fred B. Allyn Jr. said this week he understands there will be pain to go around as the state wrestles with a $3.2 billion deficit. He said he understood when it was announced that the Small Town Economic Assistance Program would no longer be funded.

“It was nice while we had it,” Allyn said of the STEAP grant program, which will finance a makeover of the Ledyard Center green later this year. “But they were designed to provide additional help to small towns, so that’s not the same as taking away from our cash flow.”

Not so with a proposal to eliminate a 20-year state program that provides property tax exemptions to manufacturing companies and replaces the lost revenue to towns with PILOT (Payment In Lieu of Taxes) money. Under Gov. Malloy’s plan, the companies will still get the tax credit, but the towns would no longer be reimbursed by the state.

“And that’s not fair,” Allyn said. “We didn’t create the exemption, the state did. But now the towns will end up paying for it.”

The program, which exempts manufacturing companies from paying taxes on machinery and equipment, was created in 1991. Loss of the program would mean $296,296 in lost tax revenue that Ledyard would not be reimbursed. “Most of it from Dow,” Allyn said.

It could be worse. The city of East Hartford will lose $3.5 million in tax credits not reimbursed by the state. Stratford will lose $2.8 million. Stamford, Malloy’s hometown, will lose $407,894.

Allyn, who attended Malloy’s speech at the Mystic Marriott this week, said he hoped to have a chance to ask the governor what about elimination of the program. He never got that chance. “He took only three questions,” the mayor said.

Allyn said so far the response from the state has been proposals for new taxes to make up the difference. Malloy refers to them as “tools” that towns can use to generate revenue, and they include everything from taxes on boats and airplanes to new retail taxes and taxes on services, such as haircuts.

“That’s a lot of boats and airplanes,” Allyn said. “We’re a bedroom community,” he added, noting that Ledyard has very little retail, not many boats, and no airplanes that he is aware of.

Ally said he supports efforts to provide incentives for manufacturing companies to locate in Connecticut. “I’m all for making Connecticut competitive,” he said. “But all this does is transfer the tax burden from industry onto the home owner.”