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State Tax Programs Have Less of an Impact Than Anticipated

Although the COVID-19 pandemic has caused financial strain for many in the communities of Chester, Deep River and Essex, tax collection rates thus far come close to those of the prior fiscal year, according to town officials.

With uncertainty on exactly how the COVID-19 pandemic would affect taxpayers this year, Governor Ned Lamont asked municipalities under Executive Orders 7s and 7w to adopt one of two programs that would potentially ease any financial burden.

The options included a deferment program that would extend the grace period from the due date of the tax, offering taxpayers a longer period to pay without interest. The other option, a low-interest-rate program, would charge an interest rate of 0.25 percent per month or 3 percent a year from the due date of the tax instead of 1.5 percent a month or 18 percent per year, for three months only.

Chester

Despite offering the deferment option, “the Town of Chester did very well in July collecting the current year taxes,” said Tax Collector Madaline Meyer.

Although the town was “down 15 percent from last year as of July 31, looking at the grand total of numbers,” the collection in August more than made up for it, according to Meyer.

“We continued to collect a large sum of money in August and it was over $200,000 more than last August,” said Meyer. “So, we are very close to having only 7.5 percent more to collect to equal the numbers from last year.”

Approximately 38 percent of the town’s real estate accounts are paid by a bank through an escrow account. Meyer reports that there have been no bank delinquencies and fewer than 200 real estate accounts have not been paid as of Aug. 31.

“Knowing that quite a few people are out of work or are on reduced hours, we do think there will be less money coming in overall, but we don’t think it will be too high,” said Meyer.

Meyer says it’s unclear whether any financial stressors from the pandemic will affect the community’s ability to pay when the next installment of real estate taxes are due in January.

Under the deferment program, the deadline for eligible taxpayers to pay without interest is Thursday, Oct. 1.

After this date, the interest rate on overdue taxes will revert to the standard rate of 1.5 percent or 18 percent per year from the July 1 due date of the tax.

Deep River

The Town of Deep River’s tax collection rate for this fiscal year is about two percent behind last year’s numbers, according to First Selectman Angus McDonald.

“We’re in very good shape,” said McDonald. “There was no way to know for sure, which is why we made all those contingency plans.”

In the spring, the town chose to offer taxpayers the lower-interest-rate program. This program does not extend the grace period for when taxes are due, but taxpayers pay less interest if they pay late (for three months only).

In anticipation of a delay in tax revenue, the town’s Board of Selectmen adopted a resolution that was also authorized by the Board of Finance, to borrow up to $4 million in a tax anticipation note (TAN).

“We’re in great shape comparatively at this point, so there is not a need for us to think about the tax anticipation note,” said McDonald. “Everything looks really good. I’m hopeful that January brings the same kind of response.”

Essex

Essex saw an increase in the rate of taxes collected in July of this fiscal year compared to last fiscal year.

The year-to-date total tax collections for the month of July increased from 47.68 percent in 2019 to 49.14 percent or $11,468,645, in 2020.

“Those are good numbers,” said Tax Collector Megan Haskins. “The Town of Essex is very happy.”

At the town’s Board of Finance meeting on Aug. 20, Finance Director Tracey Celentano reported a 90 percent increase in payments made by credit card compared with the same period the prior fiscal year, from $332,596 in 2019 to $632,537 in 2020.

Essex, which chose to offer the lower-interest-rate program to eligible taxpayers, made preparations this spring for up to $5 million in cash flow borrowing, or a TAN.

“As of right now, I do not believe we will need to do a tax anticipation note,” said First Selectman Norman Needleman.

Needleman said that he’s hopeful that the high rate of tax collection continues.

“It’s still so early in the game,” said Haskins, who also noted that August is “another busy month for us.”