Bill To Eventually Eliminate State's Car Tax Draws Support In Committee | CT News Junkie (2025)

HARTFORD, CT — A proposal to reduce, then eliminate the state’s vehicle tax drew strong bipartisan support in the state’s Finance, Revenue and Bonding Committee Tuesday.

Senate Bill 1554 would begin to phase out the vehicle tax in 2029, and would be paid for with savings earned from pension payments, Sen. John Fonfara, D-Hartford, explained.

“[The source] is the savings from ADEC, which is our Actuarially Determined Employer Contribution for the 40 or 50 years or so of not paying our debt for pensions for state employees, retirees, and teacher retirees,” he said. “That amounts to about $3.3 billion right now in our annual budget. Whatever we deposit from excess in the budget reserve fund, most years that lowers our ADEC obligation. This bill would capture those savings and move back to a fund that would go to offset and reduce car taxes until they’re eliminated.”

During the committee meeting, members supported the measure 25-10. Voting was held open though for 17 members that did not cast a vote during the meeting.

The original version of the bill also drew funding from the increase in the threshold for the volatility cap, but that language was removed due to concerns about its potential impact on the fiscal guardrails. Fonfara said with the volatility cap funding, the vehicle tax could have been eliminated within five years. Without it, he said the process would be slower, taking perhaps as long as 25 years.

If the bill were to become law, it would place Connecticut on the path to joining neighboring states New York, New Jersey, and Rhode Island in having no property tax on vehicles.

State Sen. Ryan Fazio, R-Greenwich, said he and many other Republicans support the intention to reduce vehicle taxes in the state, calling them “a burdensome tax, an annoying tax, a stupid tax.” However, he had concerns about the process through which the state would maintain an offsetting funds account to collect the lost revenue for municipalities.

“There’s a lot of good ideas in this bill and I think if there were some changes, a lot of Republicans, who might be a no today, could get to a yes,” he said. “I think the specific change we would want to see to get to a yes is by taking the savings from ADEC and making it a line item in the general fund, rather than creating a separate account.”

Fazio said he was concerned that the bill, and others which would come up on Wednesday, would create separate accounts as a way to potentially get around the fiscal guardrails that govern spending in the General Fund. He indicated he would vote no on the bill, but remained optimistic that changes could help the bill move forward through the general assembly.

Rep. David Yaccarino, R-North Haven, also expressed concern about holding the money in an account outside the General Fund, saying that it could someday put municipalities in a tough spot if ADEC savings didn’t materialize.

“I like the concept, but I am concerned that we might run out of funds,” he said. “I think it makes more sense, in a perfect world, putting it in the General Fund because at least we can budget for that.”

Fonfara said in years where there are no savings from ADEC payments, municipalities would not reduce their vehicle tax rate and would receive their revenue through the tax.

Not all Republicans were critical of the bill. State Rep. Joe Polletta, R-Watertown, expressed his intention to vote for the bill to move out of committee.

“I plan on supporting this bill today because the idea that we are actually going to realize the benefits from our good fiscal policy the last five years is very appealing to me,” he said. “For a number of years we’ve heard a lot of people in this building, particularly those people on my side of the aisle, say that we should return some money to people that are perhaps paying too much, that have been overtaxed. One way to return that money is starting to have the conversation to reduce the car tax.”

Polletta also praised what he called the bipartisan success of the good fiscal policy which has led the state to pay down a significant portion of its pension debt.

“If we can realize some savings from that good fiscal policy, then why not give it back to the taxpayers?” he said.