At their meeting last week (April 21), the members of the Board of Selectmen voted to approve a tax deferment program for FY 2021. They did so following an executive order issued by Gov. Ned Lamont in response to the COVID-19 health crisis.
His order directed towns to adopt a Property Tax Relief Plan, and they could do so using one or both of two options: a Tax Deferment Program and a Low-Interest Rate Program.
- Tax Deferment Program: allows a 90-day deferral of any taxes on property to eligible taxpayers–individuals, businesses, non-profits, and landlords–who have been significantly impacted by the COVID-19 crisis. To be eligible, individuals would have to have had a 20% reduction in household income and since March 10 has either been furloughed without pay, had a significant reduction in hours or has become unemployed; for businesses or nonprofits to be eligible, they must expect to see a revenue decrease from March-to-June 2020 by 30% compared to the same period last year; and landlords must have experienced the same significant revenue loss or offer a similar allowance to their tenants.
- Low-Interest Plan: offers a 90-day 3% interest to any taxpayer who is delinquent on property taxes, either current as of July 1 or as of March 10, whether or not they have experienced a negative impact. Any taxpayer – would be eligible for the 3% low-interest option.
First Selectwoman Lynne Vanderslice explained how each of the programs would impact the town’s revenues and its ability to meet budgeted needs, noting that the low-interest plan “creates greater risk to the town.”
“An 18% interest rate is to make sure people pay their taxes. So for 90 days the governor [would be] allowing anybody to not pay their property taxes and pay a 3% interest rate, which could be a very attractive interest rate if you are a business or even if you’re a resident,” she said, adding, “that creates greater risk to the town.”
The concern, she explained, would be that a significant portion of the town’s taxpayers would take advantage of the low-interest rate. Based on the expectation that the town will start FY 2021 with $24 million, it would be able to cover three months worth of expenses. If no one paid their taxes for that first 90-day period, Vanderslice said the town would “pretty much break even.” While that worst-case scenario is unlikely, she still recommended the deferment plan.
Vanderslice noted that she presented the situation to the Board of Finance at its meeting earlier that evening, and they also supported the deferment plan.
She said the deferment plan not only minimizes the risk to the town but is also more targeted to taxpayers who have had a negative impact. Selectman Ross Tartell agreed.
“It’s very important that as we think about this, that we’re trying to take care of the people who are most in need. The town has limited capacity in a sense to do that. But this is an area where we can step up,” he remarked.
Second Selectwoman Lori Bufano asked whether the deferment plan is easier for town systems and personnel to implement; CFO Anne Kelly-Lenz confirmed it was.
Vanderslice said the town has the option of requiring anyone who applies for the deferment to show documentation that they meet the eligibility requirements.
“I just think it’s a prudent thing to do is to ask people to provide some documentation,” she said.
Vanderslice read a resolution that was drafted by Wilton’s town counsel Ira Bloom for the board to consider; after doing so, the only change that was suggested was to amend language in a phrase about requiring documentation. The phrase initially said, “Eligible residents, businesses, nonprofits, and taxpayers are those that attest to or document significant economic impact by COVID-19.” The selectmen agreed to replace the word ‘or’ with ‘and’ in order to make documentation of need a requirement.
The resolution passed unanimously 5-0.