TOWN OF REDDING
BOARD OF FINANCE SPECIAL MEETING
WEDNESDAY, 4/8/2020
1:00PM ZOOM MEETING
Filed subject to approval.
Present:
Dr. Kimberly Yonkers, Chair; Ward Mazzucco, Vice Chair; Jamie Barickman; Rob Dean; Jenifer Wyss; Ed Miller
Also Present:
Steve Gniadek, Finance Director; Pat Moisio, Tax Collector; Wes Higgins, Treasurer; First Selectwoman Julia Pemberton; Scott Reiss, Region 9 Finance Director; Margaret O’Donnell, Selectman; Michael Thompson, Selectman; Mike D’Agostino, Region 9 BOE Chair; Chris Parkin, BOE; Cheryl Graziano, Region 9 BOE; Members of the Public
Chair Yonkers called the meeting to order at 1:02PM.
1. PUBLIC COMMENT
Chair Yonkers opened the floor to Public Comment.
Dan Souza discussed unemployment and the economic impacts of Covid-19. He asked the BOF what is going to be done for FY 2021 if residents cannot pay property tax.
Chair Yonkers responded that financial projections for FY 2021 will be presented later at this meeting, but the overall focus of this meeting is the current FY.
2. EXECUTIVE ORDERS UPDATE
First Selectwoman Julia Pemberton addressed the BOF.
Executive Order No. 7S provides two programs that provides taxpayers that are affected by unemployment. The BOS needs to adopt at least one of these programs to help citizens that are affected by Covid-19. The two programs are as follows:
Reducing the annual interest rate on taxes that are due on 7/1/2020 and cannot be paid by the home owner, from 18% to 3%. This interest rate would not apply to any taxes the resident already owes as well.
Providing a 90-day grace period to pay the 7/1/2020 tax payment. No interest will be applied during these 90 days but taxpayers would need to pay the entire amount to the town after the grace period.
Chair Yonkers asked FS Pemberton about who qualifies for tax relief. FS Pemberton said that these proposed tax programs are conditional. The resident must an affidavit demonstrating a reduction in income of 20% or more as a consequence of Covid-19 (eg. was laid off).
Mr. Barickman asked about the deferment option for taxes. FS Pemberton said there is a deferment program where residents could defer their tax payments by 90 days. She said that this would create many issues for municipalities in terms of funding.
Chair Yonkers asked why asking for an affidavit is unreasonable. She said the Senior Tax Credit requires an affidavit. FS Pemberton said that the rules for this tax relief do not require verification after the affidavit is submitted. She said that there is no means test for this.
Mr. Dean said that seniors that receive the tax credit remove themselves from the qualifications for the state tax credit.
Mr. Dean said that the 3% interest rate penalty is a one-time situation and could help residents.
Mr. Gniadek asked if this is a 3% reduction from 18% or does it go straight to 3%. FS Pemberton said the interest charged on late taxes will only be 3%, as opposed to the normal 18%.
Mr. Barickman asked about the statutory regulations around tax interest. FS Pemberton said the executive order allows for municipalities to reduce interest to 3% or less if they choose to do so.
FS Pemberton said the State needs notification of the Town’s decision on Saturday, 4/25/2020. The BOS meets on Monday, 4/20/2020.
Chair Yonkers said that even with these tax relief programs, there will be residents who cannot pay their taxes on 7/1/2020. Mr. Barickman said this discussion would overlap with the Quarterly Tax Billings.
FS Pemberton said Redding could do three tax bills as opposed to quarterly tax bills.
Mr. Barickman asked Ms. Moisio about the 2008 Recession and how that affected tax bills. Ms. Moisio said the Town met its’ budget needs with tax collections for that year. Mr. Barickman asked Ms. Moisio to produce the data concerning late taxes.
Ms. Moisio said that banks will pay property taxes and add it on to a resident’s future mortgage payments if mortgage payments aren’t being made.
Mr. Higgins said collected taxes in 2008 were 99.4%. He said the lowest number of collected taxes was 97.3% in 2011. Mr. Gniadek said tax collections rebound in future years after a recession.
Chair Yonkers said the BOF should attend the BOS meeting concerning the decision on what type of tax relief the town should apply. She said the executive orders may make the tax billing decision irrelevant.
Mr. Dean said the economy is in a self-imposed state of decline. He said the recovery from this situation could be very different from the 2008 recession.
Mr. Barickman says the BOF should continue to model different scenarios and options so that there are a variety of options to tackle this challenge.
Mr. Miller said there should be more hard data available to base these decisions on. FS Pemberton said there is a lack of concrete information currently and the town must decide with the data available.
Mr. Barickman said that Mr. Higgins’ analysis is a good example of what the BOF should be discussing.
3. CASH FLOW FORECAST
Mr. Higgins addressed the BOF.
Mr. Higgins showed the difference in revenues generated with three payments versus biannual payments.
July is a month where there is higher than usual expenditures. This is due to one-time payments for insurance and other contracts.
Mr. Higgins projected a 2% tax shortfall. He said that he could do projections with higher shortfalls.
Mr. Gniadek said September is the month with the most risk. He said the Town and the Schools could defer payments on Payables to reduce this risk. Mr. Miller said the Town should start deferments now. Mr. Barickman said that the Town could renew terms with major Vendors to allow for deferments.
Mr. Gniadek said the HSA payment needs to happen on time. He said that the executive order concerning insurance payments may allow the Town to defer LAP Coverage and Workers’ Compensation.
Chair Yonkers said a 2.5% reduction in taxes is $1.2M. This is a conservative estimate. Mr. Barickman said the estimate needs to be pessimistic and have projections with larger shortfalls.
Mr. Higgins said the Mortgage Service companies may pay their taxes early as opposed to later.
4. QUARTERLY TAX BILLING UPDATE
Ms. Moisio said the executive order that allows for tax payment deferral does not allow escrow accounts to delay.
Chair Yonkers said the BOS should make the decision on tax billing.
5. 2020 YEAR END EXPENSE AND REVENUE FORECAST
Mr. Gniadek addressed the BOF.
Mr. Gniadek said the Town will net $425,000 by the end of FY 2020.
The State of CT owes the Town of Redding $90,000 for ECS payments.
Mr. Gniadek does not have information for the BOE or Region 9 expenditures/revenues.
Mr. Mazzucco asked Mr. Gniadek about the Communications Project and Road Reconstruction. Mr. Gniadek said these are Capital Projects that historically have been funded by BAN (Bond Anticipation Note) or Bond. He said that projects have been currently funded by the Unassigned Fund Balance these are being paid by the Capital accounts the Town has. The timelines for these projects have not been determined. He said that the Road Reconstruction has been delayed and the Communications Project is still underway.
FS Pemberton said she spoke with a Norcom rep. She said the project can be put on hold. The equipment needs to be purchased from Motorola and installed. The Fire Departments have purchased their equipment and their warranties are running.
Jenifer Wyss joined the meeting at 2:10PM.
Mr. Barickman said a payment schedule should be laid out for Capital Items so the Town can determine the affordability of those payments. FS Pemberton said some payments are one-time as opposed to multi-part.
FS Pemberton said the Town should focus on the Community Center exterior project. Mr. Gnaidek said the Road Reconstruction and Communications Project were the two Capital Projects that have been approved.
Mr. Barickman asked if the executive order allows the BOF to approve the funding for these projects. FS Pemberton said the BOF can approve how to fund them.
Chair Yonkers asked the BOF if the Town should be embarking on large Capital Projects at this moment. Mr. Barickman said a road map needs to be laid out for Capital Projects. FS Pemberton said there are only two projects that have been approved and need funding, Road Reconstruction and the Communications Project. Any new projects will be delayed till FY 2022.
Mr. Miller asked FS Pemberton about LoCIP (Local Capital Improvement Projects) funding. FS Pemberton said that the State has not issued an executive order concerning LoCIP funding.
Chair Yonkers asked Mr. Reiss about the revenue forecast.
Mr. Reiss said in April he provides the Boards with his forecast of end-of-year expenditures and revenues. They direct him to how any savings should be allocated.
Chair Yonkers asked Mr. Reiss if any savings will occur due to the changes in how the schools are operating. Mr. Reiss said it is too early to say if there will be savings
Chair Yonkers asked Mr. Parkin about the schools and savings. Mr. Parkin said any savings generated this year will most likely be applied to the Self-Insurance Fund.
Chair Yonkers asked Mr. Parkin and Mr. Reiss about specific savings that may be generated by end-of-year. Mr. Reiss said the Self-Insurance Fund would end at $50,000 positive barring unforeseen Covid-19 costs. He said the schools are obligated to maintain their transportation contract in case of schools re-opening. He anticipates savings in overtime, substitute teaching, and transportation.
Mr. Parkin said the Governor is closing in on a decision on when schools will reopen. He said this will influence costs and savings.
Mr. Mazzucco said the situation is uncertain and fluid. He said it should be clear to Central Office where savings and excess costs will arise. Mr. Barickman said this request applies to Region 9 as well as the Redding BOE.
Mr. Barickman said FY 2020 savings will most likely be applied to the Self-Insurance Fund.
Chair Yonkers asked Region 9 about savings and costs. Mr. Reiss said the Region 9 budget is on track. There is no pressure area or extra savings.
Mr. Dean said the experience of self-insurance is finally meeting predictions that were made in the past may be coming to fruition. He asked if self-insurance is the best option. Mr. Reiss said this has been researched in the past and commercial health insurance is still more expensive. He said this year is a bad year for claims.
Mr. Mazzucco asked Mr. Parkin and Mr. Reiss if the request for categories of possible savings will be available soon. Mr. Reiss said this will be provided.
6. LOCIP FUNDS
FS Pemberton said no executive orders have language allowing the Town to access LoCIP Funds without holding a town meeting. She said the BOS will recommend a set number of projects for LoCIP funding.
7. OTHER BUSINESS
Mr. Barickman wants an updated mill rate sheet for the next meeting. Mr. Gniadek said this will be ready for the public hearing. He said state aid is the only information that is unclear.
Mr. Gniadek asked when the public meeting is being held. Chair Yonkers said the public meeting will be on Thursday, 4/16/2020 at 7:00PM.
8. PUBLIC COMMENT
Debbie Gravitte, George Hull Hill Road, asked the BOF about tax relief. Chair Yonkers said the executive orders from the Governor are guiding the Town in its relief effort. She said the BOS will decide if the 90-day grace period and the 3% interest rate for late taxes will be instituted.
Dan Souza thanked Mr. Mazzucco for asking the Region 9 BOE and Redding BOE for possible savings. He asked the Town to conduct a stress test for its financials. Chair Yonkers said a $1M reduction in tax receipts can create problems. She asked the BOF if more models should be created. Mr. Barickman said this should be done. Mr. Dean suggested that Mr. Higgins should look at tax revenue shortfall and differing calendar terms.
Chair Yonkers asked Mr. Higgins if this modeling is possible. Mr. Higgins said that these models should be transparent to the user based on assumptions. He can make a model that would allow for easy input of revenues. The spend rate is far more difficult to change due to contractual obligations.
Mr. Barickman asked about two metrics: the number of taxpayers who’ll take advantage of the 90-day delay, and the number of taxpayers that will default. Mr. Barickman said he assumes a 30% participation rate on 90-day delays and a 5% loss of tax revenue.
Sarah O’Dell, 214 Black Rock Turnpike, said the schools are still operating with distance learning. She said the children shouldn’t be short-changed to find cost-savings.
Peter Bonfanti asked Chair Yonkers about deferring the funding of the two major capital projects. Chair Yonkers said external funding should be obtained for these projects. Mr. Mazzucco said the BAN is currently impossible. He said that if the Town could go to market, they should. Chair Yonkers said the markets may stabilize with a favorable interest rate. Mr. Mazzucco said he will reach out to Mr. Gniadek about the BAN.
The next meeting is Thursday, 4/16/2020 at 7:00PM.
MOTION:
Mr. Barickman made a motion to adjourn the meeting. Mr. Mazzucco seconded the motion. The vote was unanimous, and the motion carried.
The meeting was adjourned at 3:04PM.
Submitted by,
Zachary Smith