Board of Finance talks budget changes, tax relief, may seek no mill rate increase
As unprecedented shutdown due to the coronavirus continues to impede many Darien residents and businesses from continuing life as usual, the town’s leaders took another look at the budgets, budget process and tax relief this week.
Some of this revisiting is due to executive orders from the governor.
The budget process
The Town of Darien’s budget process usually includes a discussion and approval of the budget on the town side by the Board of Selectmen, and the same on the schools side by the Board of Education. Both of these are usually done by February and the budgets are passed on to the Board of Finance for a review during March. That board usually approves by April and sets a tentative mill rate. The Board of Finance then passes both to the Representative Town Meeting for final approval in May.
Gov. Lamont issued two orders regarding town-level budgets. One gave the towns an additional 30 days to the deadline for approval. He also waived a rule — to ease the burden of passing municipal budgets — by eliminating a requirement that the public vote to approve the annual budget in the roughly two-thirds of municipalities that do so.
Darien is one of a few towns in Connecticut that has its budget approved by an RTM. Other towns in Connecticut have a public referendum. Westport, Groton, Fairfield, and Greenwich are among other towns that have an RTM.
First Selectman Jayme Stevenson said that because Darien’s budget and mill rate are set by a vote of the Representative Town Meeting, not a town-wide referendum, Darien’s process was a bit more complicated. She consulted with Town Counsel Wayne Fox.
The end result is that the RTM will virtually meet on April 27 to delegate the Board of Finance the authority to set the budget and the mill rate.
On Monday, the RTM’s Rules Committee met and discussed the budget process as well as set how to conduct its virtual April 27 meeting. The RTM’s individual committees will coordinate with the Board of Finance on the various aspects of the budget in a “buddy system” process.
Because the state has given the towns a 30-day budget extension, at its Tuesday virtual meeting, the Board of Finance set meetings in early May to discuss parts of the budget piece by piece before final approval. The set schedule of meetings by budget department, May 5, May 7 and May 12, will be publicly posted on the town of Darien’s website, and the public is encouraged to weigh in and get involved. The RTM would have been set to vote on the budget in June had that delegation of budget authority not been planned for.
Because of the change in process, Board of Finance Chairman Jon Zagrodzky said there is an additional need for transparency given the change in process this year. He echoed the “buddy process” that had been discussed at the RTM’s Rules Committee meeting with the RTM’s Finance & Budget Committee chaired by Jack Davis. The chairs of the RTM committee will appoint a representative to be part of the budget work.
The meetings will also be “aggressively publicized,” Zagrodzky said.
Greenwich is proceeding with the RTM vote for its budget. Read more here.
Reducing the budget
Zagrodzky said he has been in conversations with First Selectman Jayme Stevenson and Board of Ed Chairman Tara Ochman about reducing the proposed budgets.
Currently, as they stand, the town budget was approved at a modest decrease from the previous year, down about .01%. The Board of Education approved a 3.4% increase.
“Certainly I’ve heard from a number of taxpayers, given the current difficult times — the uncertain times — have asked the very good question —which is whether we should be raising taxes at all. And shouldn’t we be trying to cut these budgets back so at least there’s no increase from the current fiscal year to the next fiscal year?” he asked.
He added that Stevenson is “very much in tune” with this concept and is asking her fellow selectmen and department heads to see if “judicious cuts” can be made to the town side of the budget. Zagrodzky said Ochman is mindful of these concerns “but I think, rightfully, she is looking to us as the Board of Finance, for some guidance.”
At the meeting, Town Finance Director Jennifer Charneski provided an estimated amount by which the combined budget requests would need to be reduced to achieve a zero mill rate increase — $2.4 million. Zagrodzky said Wednesday morning that that number was preliminary and didn’t take into account the prospect of reduced revenues from canceled programs, lower state grants, lower collection rates and other factors.
Following the Board of Finance meeting, First Selectman Jayme Stevenson sent an email to town officials, which The Darien Times has reviewed, formally requesting the Board of Finance to “endeavor to limit this year’s mill rate to a 0 % increase in light of the extraordinary circumstances we find ourselves due to the COVID-19 crisis.”
“For many reasons, it will be very difficult for taxpayers to receive increased tax obligations this year. Even if held flat, some may struggle to meet their obligations,” she said. Stevenson added that she will be asking her board “to reevaluate other projects under our purview for their essentiality at this difficult time.”
Ochman said she reported to the Board of Education on Tuesday night that the Board of Finance was reviewing the budget.
“As part of this review, given our current unprecedented public health and economic situation, the BOE should anticipate a request for modification to our proposed budget,” she said.
“Chairman Zagrodzky and I have been in communication, and the BOE looks to continue these prudent conversations with the BOF and participating RTM members,” Ochman said.
At the Operations Planning Council meeting on Wednesday morning, which is a meeting of the town’s board heads, Ochman reinforced that any reductions to the budget would not have an impact on student’s education quality for the district.
The state has also asked towns to consider tax relief alternatives for residents made possible through the governor’s executive orders.
On April 1, Gov. Lamont said municipalities must either allow impacted taxpayers to defer paying property taxes or provide a greatly reduced interest rate for taxpayers who are delinquent.
Board of Finance Chairman Jon Zagrodzky said that currently, those who are delinquent in paying taxes are charged an 18 percent annual interest rate on outstanding balances. The proposed relief program would reduce this rate to 3 percent for all taxpayers. The Board of Finance also discussed the deferment of taxes for those whose income had been impacted by the pandemic and were determined eligible by qualifications outlined by the Office of Policy and Management.
Another difference is the lower interest rate program would have applied to all residents and the deferral only applies to those who meet the plan’s criteria.
The Board of Finance opted to recommend the deferral option, but not the lower interest rate option, as members felt too many taxpayers might opt to delay paying taxes with the reduced rate, which could impact the town’s liquidity.
The deadline for a town adopting one of these two plans is April 25, but the RTM meeting isn’t until April 27 to approve. The town has asked for an extension for that decision.
Zagrodzky said he expects the bulk of those making use of the tax deferral will be commercial tax payers —especially landlords who might be having a tough time getting rent from their commercial tenants. Landlords must present evidence to the town that they have been forgiving with their tenants’ rent in order to make use of the deferral program.
Because about 30 percent of residential taxpayers with mortgages pay their personal property taxes via escrow through their mortgage holder. He and Charneski also said they didn’t expect the tax deferrals to impact the town’s liquidity.
At the OPC meeting Wednesday morning, Stevenson said she had been in constant contact with the town’s businesses and that many said they were up to date for March, were mostly getting no pays or forbearance in April, and May and June were uncertain.
Zagrodzky told The Darien Times the Board of Finance and finance department intend to flesh out the various scenarios in more detail and come back for a special meeting next week for the finance board.
He also said he plans on writing a piece to be published in The Darien Times in the next day or so that will outline further details for residents and to encourage them to be involved.
For more information, visit DarienCt.Gov.