Housing, energy, rent: Why is CT so expensive and what can be done?

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Despite their best efforts, state legislators have been unable to solve one of the biggest problems facing Connecticut: affordability.

As one of the most expensive states in the nation, Connecticut is known for high electricity prices, expensive rents and mortgages, and high taxes.

In a potential special session before Halloween and in the next regular session that starts in February, lawmakers will try to at least partially resolve some of the issues facing citizens in the Nutmeg state. The problems are not easily solvable and Democrats and Republicans often disagree on the solutions

Affordable housing

For decades, Connecticut has been known as an expensive state for renters and homeowners. The problem is driven in part by the state’s housing shortage. Experts estimate the state has a shortage of between 100,000 to 350,000 units, which makes it difficult for both renters and buyers to find housing and drives up the prices on available stock. Affordable housing for the poorest residents is particularly lacking, experts say.

Lawmakers tried to chip away at the problem this year, but could not come to an agreement; Gov. Ned Lamont vetoed the housing bill that was passed by the Democratic-controlled legislature. As soon as Lamont vetoed the bill on June 23, top leaders committed to immediately start working on a compromise that would address Connecticut’s housing crisis without taking away too much local control — the objection of mayors and first selectmen that sank the first bill.

But no deals were reached over the summer, and Republicans say they have still not seen a draft of the latest bill. Republicans and Democrats have clashed sharply over the bill in recent weeks with Republicans saying they have been kept out of the loop and Democrats saying that Republicans have not offered solid solutions to actually solving the housing affordability crisis.

Lamont told reporters recently that the progress had been slow in recent months as drafts were passed back and forth in a process that was delayed.

“It’s not my usual way,” Lamont said on Sept. 22. “I like to get around a table and hash it out. I think 10 days ago we presented our language that I think would make the bill work with towns taking the lead, and we’re still waiting to hear back from the legislature on that.”

But the two sides are now talking about an updated version, and they are scheduled to meet later this week to analyze the latest updates in an effort to finalize a deal for a special session before Halloween.

While lawmakers are trying to solve the problem, House Republican leader Vincent Candelora of North Branford agreed with Lamont that the progress on the bill has been slow.

“This housing bill has become an Abbott and Costello skit,” Candelora said. “I’m being told that CCM and COST are 99% there, and then I meet with CCM and COST, and they haven’t seen the bill and they have their own proposal. The governor’s proposal is closer to what CCM and COST are interested in, and I’m continually told we’re almost there. But nobody knows who’s on first.”

But House majority leader Jason Rojas, an East Hartford Democrat, said that Candelora and other top Republicans have his cell phone number if they wanted to seriously tackle the problem.

“Imagine if he actually talked to the person who knows the most about the bill,” Rojas said after hearing the Abbott and Costello comment. “I think this is part of the political game that the Republicans and he want to play on a very serious issue on housing. It’s really hard to take them seriously.”

After Candelora told The Courant that he had not seen a copy of the bill, Rojas posted a photo on social media of a draft of the bill as he sat at a picnic table along the Connecticut River. That set off another round of back-and-forth on social media.

While declining to reveal the exact details of new bill since it is not finalized, Rojas said an area of compromise is that the original bill called for eliminating mandatory minimum parking requirements in developments with 24 units or less in order to make it easier to build more housing. The number 24 might be too high, and that could be changed in the final version, he said. Another change, he said, will be made to the controversial “fair share” portions of the bill that Republicans have opposed.

“I’m open to ideas,” Rojas said of Republicans. “As we saw the last time that I met with the ranking [Republicans] in August is they come out and lambaste the bill and in some ways, lambaste me, and then they want to talk about having a seat at the table. I don’t see the logic in doing that, if that’s the way they’re going to engage in negotiations or conversations about housing policy.”

For years, Republicans have been concerned about local control, particularly in Fairfield County where much of the opposition to “fair share” housing is based. On X, formerly known as Twitter, state Sen. Ryan Fazio of Greenwich said the legislature needs to reform 8-30g, a highly controversial law that was designed to promote affordable housing but has turned into a bitter point of contention in many towns.

But the two sides cannot even agree on whether the vetoed bill took away local control.

“They continue to hide behind the argument of local control,” Rojas said of Republicans. “It’s really a vapid kind of argument. There is really no substance to it other than it is politically easier to say home rule or maintain local control. The bill doesn’t take away local control.”

Senate President Pro Tempore Martin Looney, a New Haven Democrat, said the answers to the state’s housing problems were contained in House Bill 5002, but Lamont vetoed that legislation.

“That was a good bill, a reasonable bill, that provided some incentives and requirements,” Looney said.

Since affordable housing is often available in the cities, Looney said that the state needs to help increase the population of its cities in order to make them stronger. In addition, the state needs to provide more incentives to build affordable housing near bus terminals and train stations as part of transit-oriented development, he said.

“Housing development should be looked at as economic development,” Looney said.

In addition, the state should work with towns to construct sewers and public water connections so that more housing can be built in areas where there is little housing now, he said.

“The state has to be a partner in building that infrastructure,” Looney said. “There hasn’t been a mechanism to really provide leverage to get affordable housing built in areas where there is resistance to it.”

The state, Looney said, has had no major, transformative housing bills since 1989 when a measure known as 8-30g was passed. The still-controversial law calls for cities and towns to have at least 10% of their housing as affordable. If the towns do not reach that goal, then the town is strictly limited in reasons it can legally deny a housing proposal. Normal zoning concerns such as density or compatibility aren’t sufficient; rather, towns must prove that a proposal would create health or safety concerns significant enough to outweigh the community’s need for affordable housing.

“For towns that are making progress toward their 10% goal, there should also be a reward by giving them an incremental increase in their school construction reimbursement percentage as they make progress toward that 10% goal,” Looney said. “That should be recognized by an incentive reward.”

Electricity

Connecticut’s electricity prices traditionally rank among the top three states in the country — often behind only Hawaii and California. A mix of factors drive up the state’s energy prices, including reliance on natural gas that must be imported through pipelines over long distances and price spikes in conjunction with demand.

Earlier this year, lawmakers passed Senate Bill 4, a comprehensive measure with bipartisan legislative support that lawmakers said will provide some relief to ratepayers. While estimates vary widely, lawmakers said that residential ratepayers would save about $100 per year and small businesses an estimated $1,200 per year, depending on the amount of usage per customer.

While saying the bill was a positive step forward, lawmakers said the measure did not go far enough. In an age of deregulation, the state needs more sources of power, and Gov. Ned Lamont has pushed for additional nuclear power and natural gas to eventually increase the supply of electricity in the hopes of lowering the cost.

One of the issues of major complaints has been the “public benefits charge” that is placed on customers’ bills that Republicans say should instead be paid for in the state’s $27 billion annual budget.

Candelora estimated that only about 15% of the public benefits charges were switched to state bonding programs by the legislature, meaning that 85% still remain on customers’ electric bills. One of the problems, he said, started during the coronavirus pandemic when the utilities were blocked from shutting off a low-income customer’s electricity due to a lack of payment as part of a shutoff moratorium.

“We’re paying for other people’s electric bills,” Candelora told The Courant. “That is still happening. That program has to be refined. It should be put into the general fund, not in our electric bills. [State utility regulators] actually extended that.”

Looney said the next step will be building on the progress of the bill, essentially in phase two, with many of the same top negotiators who worked on the original version.

“The Republicans, I think, are completely disingenuous when they say the things that are in the public benefit charge should be taken out of it and voted independently and statutorily,” Looney said. “None of them would probably be willing to vote for any of those things because many of them are benefits to low-income people or environmental programs or things of that nature. There’s an element of a lack of candor in the Republicans’ statements about taking the public benefits out of the rate structure and having them voted on separately as policy programs.”

He added, “Obviously, the Republicans are going to try to grandstand on everything we do on energy, but I think we do need to continue to move forward on the initiative that we passed with SB 4 and build upon that.”

Republicans have held numerous press conferences on electricity, and they have charged that Democrats have no energy strategy other than complaining about the utilities.

Beyond the public benefits, electricity is expensive because Connecticut imports much of its electricity under deregulation that was passed more than 20 years ago. Besides seeking more nuclear and natural gas, Lamont has been a strong supporter of wind power as the state poured millions into the State Pier in New London. But President Donald J. Trump has rejected wind power and stopped construction of the Revolution Wind project off the Connecticut and Rhode Island shorelines before a court order recently restarted the project.

“Generation is going to come at a cost with New England being an electric cul de sac,” Candelora said. “We have limited sources of power.”

Among the biggest issues for Republicans is that electric rates could possibly be lower if Lamont filled all five positions on the Public Utilities Regulatory Authority board – as required by state law since 2019 – so that the commissioners could focus keenly on solving the state’s electricity problems.

But Lamont said it has been hard to recruit new commissioners because the controversies over Gillett have constantly been in the newspapers.

“All the negatively publicity and lawsuits, so it’s not the hottest ticket in town, but it’s also very important,” Lamont said.

He said that if leaders and lawmakers “have somebody substantive who maybe knows finance and knows regulatory, please send them my way. We’re looking for those people.”

State Sen. John Fonfara of Hartford, one of the leading authorities in the legislature on energy issues, has been widely mentioned as a possible commissioner, but he has not been appointed.

“My understanding is those who are currently serving in the legislature would not be able to fill the need this year, and I think we need to fill the need this year,” Lamont said when asked by The Courant.

Taxes

While Democrats and Republicans often disagree on taxes, both Looney and Candelora said that property taxes are too high.

“The Republicans always say that taxes in Connecticut are too high, but they never point out the reality that none of the taxes directly levied by the state of Connecticut are high,” Looney said. “The tax that is high is the local property tax, and the reason that is high is that the state doesn’t generate enough revenue from the state income tax in order to really provide the high level of municipal aid that would allow municipal property taxes to be lower.”

Since the grand lists and tax rates are sharply different, Looney pointed to homes in Greenwich and New Haven that both pay $24,000 per year in property taxes. The Greenwich home has a market value of $3 million and an assessed value of $2.1 million, while the New Haven home has a market value of only $875,000. But since the local tax rate is higher in New Haven, the two homeowners pay the same amount of annual property taxes.

Republicans, Candelora said, have been concerned about property taxes and have pushed for increasing a popular tax credit that is taken by many homeowners who deduct it from their state income tax.

“It was not the Republicans. It was the Democrats that took away the property tax credit,” Candelora said. “I completely share [Looney’s] sentiment, but I disagree with his argument that Republicans don’t talk about it enough. … I guess I look forward to working with Senator Looney on this issue.”

The credit peaked at $500 per tax filer under Republican Gov. M. Jodi Rell, and the total has gone up and down under the past four governors as it followed the state’s budget fortunes with increases during times of surplus and cuts during years of deficits. By 2022, the credit was reduced to a maximum of $200 with additional cutbacks in eligibility so that only senior citizens and those with dependents were eligible for the credit. The credit and eligibility were changed again with the maximum now at $300 per tax return and subject to certain income limits.

Republicans also say that a small percentage of wealthy residents pay a large percentage of the taxes.

Statistics from Lamont’s budget office show that in 2022 the top 2.5% of tax filers paid 41% of the state income tax. At the other end, the bottom 49% of filers — representing essentially half of filers statewide — paid only 2.9% of the income tax.

Less than 3% of the income taxes is paid by 830,000 filers who are earning less than $50,000 per year in adjusted gross income — for both singles and couples filing jointly. Filers earning more than $100,000 per year pay 85% of the income tax, while those under $100,000, representing 72% of filers, pay 15%, according to the statistics.

The affordability, Candelora said, impacts a wide range of ages and income levels, from recent college graduates trying to make the rent to couples trying to purchase a home.

In his hometown of North Branford, Candelora said that the property taxes on his home were $9,500 per year before a recent revaluation. Now, his taxes are suddenly $11,800 per year, representing a shift to residential property that often happens with a revaluation. The impact has rippled throughout the community in the same way as other towns across the state.

“The housing crisis is a national issue that ebbs and flows, and I think there’s a lot of factors that go into it,” Candelora said. “Homeownership is so unaffordable in Connecticut. It’s not just about purchasing the home. It’s about paying your mortgage after you buy it. … For lower and middle-class individuals, they would point to the property tax as being their problem.”

Christopher Keating can be reached at ckeating@courant.com