Municipal leaders in the region are again pushing state lawmakers to address the impact of property-tax exemptions for nonprofit agencies.

At a meeting last week, the Southeastern Connecticut Council of Governments adopted a 2019 legislative agenda that includes eight items, five of which were recommended by a council task force that analyzed tax exemptions and the effect they’re having on municipalities, particularly cash-strapped cities like New London.

On Monday, the council presented the agenda to members of southeastern Connecticut's legislative delegation.

The task force, formed earlier this year after Norwich Assessor Donna Ralston denied tax exemptions for dozens of nonprofits, prompting a review, calls on the General Assembly to establish a moratorium on new property tax exemptions and to amend state law to prohibit the granting of any new property tax exemptions without “concurrence” from municipalities directly affected by the new exemptions.

Another recommendation seeks a review of existing tax exemptions, an analysis of their cost to municipalities in terms of foregone revenue and a review of whether they’re justified.

“Exemptions that are not justified shall be phased out/eliminated,” the recommendation states.

The task force also calls for the state to encourage nonprofits to rent rather than purchase property by enhancing reimbursements for rental fees or “by providing some other practical motivation for state nonprofit contractors and landlords.” It recommends that municipalities be allowed to tax newly acquired exempt properties for which no PILOT (state payment in lieu of taxes on hospitals, colleges and other state-owned property) is being received.

SCCOG recommends that the state be required to fully fund the PILOT program, which officials concede is highly unlikely.

“Sen. (Cathy) Osten reminded us what the reality is,” James Butler, SCCOG’s executive director, said Tuesday, referring to the Sprague Democrat who co-chairs the legislature’s Appropriations Committee. “The state cannot fully fund PILOT. … We’re being funded at a small percentage.”

Butler said municipalities around the country increasingly are grappling with the loss of revenue due to property-tax exemptions.

“It’s gotten to the point where it’s a crisis,” he said.

New London Mayor Michael Passero, who chairs SCCOG’s executive committee and served on the task force, declined to go that far Tuesday but acknowledged that his city has had to cannibalize funding for services to offset the revenue it annually loses to property-tax exemptions for nonprofit agencies and institutions.

He pointed to the example of the Light House, a nonprofit provider of services for the disabled, which purchased property on the city’s Shaw Street this year, removing the property from the city's tax rolls.

“They really provide a critical service for people throughout the area, but the way the state has set it up, New London takes all the hit,” Passero said. “We’re losing more and more (taxable) property.”

The task force’s report shows that New London’s has 7,258 properties, including 389, or 5.4 percent, that are exempt from taxes. In terms of area, 40 percent of the city’s land is exempt. New London’s top 10 exempt properties include two parcels owned by Connecticut College; Lawrence + Memorial Hospital; the Coast Guard Academy; the city-owned Ocean Beach Park; three city-owned schools; a magnet school owned by LEARN, the regional educational service; and State Pier.

Based on 2017 data, New London had to do without nearly $37 million in foregone tax revenue, according to the report. In Norwich, where 20.9 percent of the land is tax exempt, the foregone tax revenue totaled $22.4 million.

If all the exempt properties paid full taxes, New London’s tax rate could have been reduced from 43.17 to 24.34 mills and Norwich’s from 40.67 to 29.85 mills, the report says.

“It’s why the cities are failing,” Passero said of the burden associated with property-tax exemptions. “It’s the General Assembly’s fault. I can see the public policy behind subsidizing them (nonprofit agencies and institutions) but not behind putting it all on the taxpayers in New London, Hartford (and other cities).

“Two years ago, we went up there (to the legislature) to ask for a moratorium on exemptions and we got nowhere," he said. "The silence was deafening.”

In its legislative agenda, SCCOG also expresses continued support for the Mashantucket Pequot and Mohegan tribes’ plan to develop a third casino in the state as well as the legalization of sports wagering “and other advancements in the gaming industry that keeps Connecticut competitive with neighboring states.”

SCCOG’s agenda also “opposes any legislation that would hinder the Connecticut Municipal Electrical Energy Cooperative in performing its mission …”

The agenda was adopted less than a week after five CMEEC officials were indicted on federal corruption charges, prompting state Sen. Heather Somers, R-Groton, to call for “a complete overhaul” or elimination of the agency.

b.hallenbeck@theday.com