ESSEX — As they presented the Board of Selectmen’s $24.6 million budget proposal for fiscal year 2020-21 to the Board of Finance in a Thursday night teleconference, First Selectman Norm Needleman and Finance Director Kelly Sterner said that the town has not yet seen the financial impact of the coronavirus, but that Essex should take extra steps to prepare for potential losses of revenue.
Board of Finance Chair Keith M. Crehan noted, in opening the remote meeting on Zoom, that Gov. Ned Lamont had suspended in-person public meeting requirements on March 14 in an effort to slow the spread of coronavirus amidst a global pandemic of the virus.
The selectmen’s $24,657,300 budget proposal represents a 1.91 percent increase over fiscal year 2019-2020. The proposal anticipates a 0.3 increase in the Essex mill rate to break even, rising from 21.65 in 2019-20 to 21.95 in 2020-21. The budget and mill rate are still pending approval by the Board of Finance, who could make cuts before there is a vote on a final budget document.
Out of the 2020-21 budget proposal, $16.02 million has been designated for education, about two-thirds of the total town budget — $8.31 million for Essex’s share of Region 4 costs and $7.70 million for Essex’s local Board of Education.
The proposed town government budget would total $7.38 million, plus an additional $1.25 million in debt service payments.
Needleman and Sterner identified major expenses driving the budget, including salaries, fringe benefits, health care costs, pensions, outside service contracts, debt service, support to outside organizations, as well as capital and sinking funds.
“It’s a very responsible budget,” Sterner said in a Friday phone interview. “We take it very seriously, really dig down into the weeds and try to ensure that we’re being as responsible as possible.”
Sterner said that she hopes the public participates in the budget process as it moves increasingly online during the virus outbreak. Information for joining the teleconference meetings is available on the meeting agendas posted onto the town website.
Officials say coronavirus impact on 2019-20 small, but less clear in the coming year
Needleman was asked by board of finance members how the coronavirus and resulting economic downturn could affect the town’s budgeting. He said that the town has historically fared relatively well in economic recessions, and Sterner noted that much of the property tax collection dates for 2019-20 have already passed.
“The big kahuna is property tax and we’re pretty much through collecting the bulk of our property tax [for 2019-20 year] now,” Needleman said during the teleconference. He added minutes later, “Essex is an older town, and there are a bunch of people here who are retired and living on retirement. Their assets may be hit but I’m not sure if we even saw in 2009 an uptick that was material in foreclosures or delinquencies. We pretty much got through.”
Sterner confirmed Friday morning that the tax collection rate in 2009 was 98.72 percent, which was less than usual, but not extraordinarily so. The town’s collection rate is typically around 99 percent, she said.
But Needleman also acknowledged that the town could face some challenges if restaurants in Essex remain closed for long periods of time and a recession could also lead to fewer residents filing for building permits and related sources of town revenue.
Sterner said Friday, “I don’t foresee anything having a big impact this year. It’s when July [tax collection] rolls around — if people are back to work and things are back to normal, it might not be a big deal. But if this is extended for a long period of time and people are feeling a big financial crunch we could see a dip in the collection rate.”
She added that the town will consider additional measures to prepare for an economic downturn but said she considers Essex’s reserves to be strong. The town’s fund balance as of June 30, 2019, was $3,661,555, or about 15.1 percent of the town’s 2019-20 budget.
“We’ve been building our fund balance over the years both dollar wise and as a percentage [of the annual budget] and it’s for these situations that you do that,” Sterner said. “It’s for these unexpected events that impact you that you have no control over.”
Needleman reiterated throughout the meeting that the economic impacts of limiting social gatherings and closing restaurants are unavoidable in the effort to save lives during the COVID-19 outbreak.