Local cities and towns decide on deferment or low-interest program for property taxes due Jan. 1

Dec. 30—Following an executive order Gov. Ned Lamont signed Dec. 16 allowing eligible taxpayers to defer personal property, real estate and motor vehicle tax payments from Jan. 1 to April 1, municipalities are deciding whether to stick with the same program they selected earlier this year or make changes.

This is an extension of an executive order Lamont signed April 1, which applied to property taxes due July 1 and required towns to opt into the Deferment Program, Low Interest Rate Program, or both.

The Deferment Program allows residents, businesses and nonprofits that can attest to significant economic impact from the COVID-19 pandemic to defer payments for three months with no interest. The Low Interest Rate Program instead sets an interest rate of 3% per annum, or 0.25% per month. For both programs, the new executive order applies only to taxes due Jan. 1, not taxes that are already delinquent.

Along with deciding on one or both programs, municipalities also had to decide whether to require people to apply for deferment or to make it automatic, though landlords must apply by Feb. 1 either way.

For those who must apply, the application states that proper eligibility means a 20% reduction in income for residents, or for businesses and nonprofits, expected revenue loss of at least 30% for the fourth quarter of 2020.

Those interested in tax deferment can check their city or town's tax collection website to see whether an application is required and when it is due; Stonington's application, for example, is due Jan. 29.

In April, New London, Stonington, East Lyme, Waterford, Ledyard and Preston went with the deferral program; Norwich and Montville opted for the low-interest program; and Groton went with both. All of these municipalities are keeping the same system for taxes due Jan. 1, 2021, as for those due July 1, 2020, except for East Lyme.

The East Lyme Board of Selectmen held a special meeting Tuesday night to vote on a change: The town would stick with the deferment program but make the deferral automatic instead of requiring an application. First Selectman Mark Nickerson said Tuesday night that it passed.

Nickerson said Tuesday morning that he thought a system without an application would be easier, supplemental taxes are a small part of town revenue anyway, and the late date of the executive order left little opportunity to get information out.

"We don't think many will take advantage of it; most of the banks automatically pay and they're set up to pay automatically," he said. But he said for those who are distressed, "hopefully this deferment will relieve some of the anxiety."

For municipalities sticking with the same program, the state Office of Policy and Management said no approval from the local legislative body or board of selectmen is required, but some are voting anyway.

For example, the Norwich City Council voted unanimously last week to extend its use of the low-interest rate program for property owners delinquent on the second installment of property taxes due in January and on utility bills to the city-owned Norwich Public Utilities.

The city will reduce interest on overdue property tax bills to an annual rate of 3%, rather than the normal annual rate of 18%. Interest rates will be charged on bills paid starting Feb. 1.

Waterford First Selectman Rob Brule said his town's Board of Selectmen will be voting on extending the tax deferment program in a special meeting Thursday morning.

Per the new executive order, each municipality shall be deemed to be participating in the same program(s) as previously selected unless it notifies OPM of a different choice on or before Wednesday.

Municipalities not seeing much impact from July deferment

Multiple tax collectors noted that not many people took advantage of the program for taxes due July 1 and the programs didn't have much of an impact on tax revenues.

New London Mayor Michael Passero said revenue and cash flow will be closely monitored through the deferment period, but the city has a healthy fund balance and did not run into any cash flow problems during the first deferment period. He said there was no remarkable drop in tax revenues during the first deferment.

Montville Mayor Ron McDaniel said this shouldn't have a large impact on the budget, as the town had a very good collection rate in the first half of the fiscal year and expects the same in the second half.

Norwich Comptroller Josh Pothier reported that the city's property tax collection rate was only 0.63% lower than at the same point last year.

East Lyme Tax Collector John McCulloch said the collection rate this year is actually ahead of last year: 63.27% as of Monday, compared to 62.14% the same time last year. He said East Lyme got only 25 to 30 applications for deferment past July 1, mostly from individuals.

"We didn't have many people apply in July for the programs," Groton Tax Collector Melissa McGuire said. She noted the town had 19 applications: three hotels, six landlords, six businesses and four owner-occupied properties.

Groton is the only municipality in southeastern Connecticut that opted for both programs in April; McGuire explained that if a landlord doesn't qualify for a deferral, he or she may qualify for the low-interest program.

McGuire said her office is trying to get the word out by putting information on its website and Facebook page and on Groton Municipal Television.

Stonington Tax Collector Linda Camelio said despite her extensive efforts to publicize the July deferral, just 36 entities applied, among them three hotels, one restaurant and a few landlords. She said all 36 made monthly payments and paid in full by Oct. 1, thereby avoiding interest penalties.

Camelio said the town selected the deferral by application method instead of allowing all taxpayers to defer their taxes because town officials were concerned about the impact a blanket deferral would have on tax revenue and the budget.

But because there were so few applicants, there was no impact on revenues to fund the town budget. In fact, Camelio said revenues were up $1 million this fall as some taxpayers unsure about their future situation paid their entire 2020-21 bill instead of paying in two installments.

So far, Camelio said just three entities have filed applications for the deferral of the second half of their taxes. She said she is reaching out to the previous 36 to make sure they know about the extension of the program.

Day Staff Writers Joe Wojtas, Claire Bessette, Sten Spinella, Greg Smith and Amanda Hutchinson contributed to this report.

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