Trumbull’s first selectman backs tax deferment plan for property owners
TRUMBULL — Every Trumbull resident will be eligible for a 90-day grace period to pay property taxes due April 1 and July 1 under a municipal relief plan proposed by First Selectman Vicki Tesoro, who made the announcement in an April 15 message to residents.
The Town Council has scheduled a special meeting April 21 to adopt municipal tax relief as mandated by Gov. Ned Lamont. The executive order, issued April 1, requires communities adopt either a tax deferment program or temporary reduced interest on late tax payments. The programs also can be applied to the entire community or to those who have suffered financial hardship because of the COVID-19 pandemic.
“Many of our homeowners and businesses are struggling now due to this crisis,” Tesoro said. “Therefore, it is my recommendation that the Town Council approve the tax deferment program that gives all of our taxpayers, residents and businesses the ability to defer their local property taxes.”
If the Town Council approves the plan, real estate taxes due April 1 — which normally would begin accruing interest beginning in May — would not be considered late if paid by July 1. Residents would then have until Oct. 1 to pay their quarterly tax bill that is due July 1. Residents who pay their taxes through their mortgage lender are not eligible for the deferments.
Landlords also would be eligible for the deferments if they can demonstrate financial losses from COVID-19 and that they have extended associated rent forbearance to their tenants.
But one issue with deferring tax payments is the financial impact it would have on the town, which still has bills to pay and is facing a significant revenue shortfall already due to coronavirus. Tesoro pointed out that she had submitted her $180.1 million budget proposal to the Board of Finance on March 2, just six weeks ago.
“Unfortunately, all of our lives have changed dramatically in every way since then,” she said. “Our town budget has also been impacted by this crisis. The town is now facing a significant revenue shortfall in the 2020-21 budget and other major issues.”
If a significant number of residents opt to defer their tax payments, it could create a cash-flow problem, she said. Tesoro said the town likely would have sufficient room in the budget to cover a short-term revenue gap.
“This isn’t tax forgiveness, it’s deferment, so we will get our money,” she said. “It all depends on how many people choose to defer their payments.”
Since the program would not apply to banks, people whose taxes are paid out of a mortgate escrow account would still have their taxes paid on time. The prospect of having to make multiple property tax payments in a relatively short period of time, while also possibly having to pay delayed state and federal income taxes at about the same time, would likely discourage people from deferring their taxes unless it was a necessity, she said.
The town also is prepared to issue tax anticipation notes if necessary, she said. Similar to municipal bonds, the notes are short term — typically less than one year — and allow the town to maintain services while waiting for tax revenue to come in.
Another revenue problem is not related to property taxes, but it is virus-related. The revenue projections Tesoro built into the 2020-21 budget proposal included interest on the town’s fund balance. For the current year, the projection six weeks ago was that the town’s accounts would generate about $1.2 million in interest. Tesoro also used a similar number in calculating next year’s budget. But the drop in interest rates because of coronavirus has made such projections unrealistic.
She said the town is reviewing “all possible options” to minimize the impact, but had no further information. She plans to host a second Town Hall community meeting next week.
In addition to the financial toll on residents and the town, COVID-19 continues to be a health problem in Trumbull and across the state. There have now been 156 confirmed cases in town, with 13 deaths.
“Now more than ever, I can’t emphasize enough the importance that all our residents, adults and children, respect the restrictions and closures in our community and practice strict social distancing if you have to leave your home to purchase food and other essential items,” she said. “Please wear a face covering and gloves in public if you have them.”
All pharmacies in town are now delivering, and residents should not go to pick up their medications if they feel sick.
The Trumbull Food Pantry continues to operate and remains in need of food and monetary donations. Residents can call 203-452-5136 to learn how to donate, or visit the Food Pantry’s web page here.