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Deep River Lowers Interest Rate for Taxpayers Affected by COVID-19

Interest rates for delinquent taxes are now set at a lower interest rate to help support Deep River residents, businesses and nonprofits that may be experiencing financial hardships due to the new coronavirus (COVID-19) pandemic.

The Deep River Board of Selectmen (BOS) unanimously approved the lower interest rate program at the board’s regular meeting on April 14, which was held virtually by videoconference.

By participating in the reduced interest rate program, Deep River taxpayers who miss the town’s tax deadlines will pay 0.25 percent a month, or 3 percent a year, from the due date of the tax, for a period of 90 days only.

The lower interest rate will apply to payments made after Aug. 3, 2020, which is the end of the grace period for taxes on motor vehicle and personal property tax, due on July 1, 2020. This is a change from the interest rate of 1.5 percent per month, or 18 percent per year, that is typically charged for late payments.

The lower interest rate program would also apply to sewer and sewer assessment bills, or charges coming due between March 10 and July 1.

The program would not apply to taxpayers who pay their taxes through their mortgage lender’s escrow account. Escrow real estate tax payments are due July 1.

The State of Connecticut offered all municipalities the opportunity to participate in measures put forth in Governor Ned Lamont’s emergency orders 7S and 7W, to either defer payment of taxes for 90 days without interest or offer a reduced interest rate on delinquent taxes. A municipality could also choose to implement both measures.

At the April 14 meeting, the selectmen were joined by Deep River Tax Collector Katherine Cryder. In comparing the lower interest rate program with the deferment option, Cryder reported that July is the town’s biggest collection month.

“If we take last year’s $8,208,000 and we take out the escrow money, we are looking at potentially, if everybody says, ‘Hey, great, 60 or 90 more days to pay,’ we could possibly be looking for October for about maybe $6.8 million, maybe more because our Grand List has increased, maybe our mill rate will, too, I don’t know,” she said.

With the lower interest rate program, the town could potentially see an 83 percent reduction in the amount of interest collected.

“In my opinion, Plan B is the way to go,” said Selectman James Olson. “The reduced interest rate is a very small amount of penalty and you don’t have to worry about anybody applying or not applying or being approved [as with the deferment option]. It’s just across the board. With either one you are going to have a delay in getting the money in, but these are extraordinary times and we gotta do what we gotta do.”

First Selectman Angus McDonald expressed appreciation that municipalities were given the opportunity to modify their tax collection efforts due to the impact of COVID-19 on the community.

“My recommendation is to go with the lower interest rate because I think that while it does help citizens who are struggling, it also, I think, it’s the better choice for the town,” said McDonald. “We are a very thin budget. While we have worked hard over the last four years to increase our reserve fund…To Kate’s point…we would need to borrow some money to cover that [delayed revenue]. I don’t know if we’re going to get to that, but the lower interest rate will impact our revenues this year.”

For fiscal year 2019–’20, tax revenue accounts for 82 percent of the town’s adopted operating budget.