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City revenue shortfall: $2.2M

November 13, 2018

STAMFORD — The first unexpected expense this fiscal year was $700,000 to pay a company to haul away recyclables after the market for them suddenly collapsed, and the city could not earn money from selling them. That was identified in July.

The second was the discovery of mold in school buildings, so pervasive that Westover elementary has been closed and 700 students will be studying in a refitted office building. The estimate for managing the mold problem is — so far — $2.5 million. That came to light in September.

Now the Board of Finance has learned that the tax assessor overestimated the amount of money the city can expect to earn from a levy on business equipment by $2.2 million. Scratch that sum from the revenue side.

It’s a rough first quarter for fiscal year 2018-19, finance board members learned at their monthly meeting last week. Office of Policy and Management Director Jay Fountain told them projections show a $1.66 million hole in the budget.

That’s for city and schools, and just for the first three months of the fiscal year, which began July 1.

Finance board members were not happy to hear about the revenue shortfall. It stems from the “personal property” tax the city charges businesses on machinery, tools, computers, copiers and other plant and office equipment.

Tax Assessor Greg Stackpole said the Grand List — a tally of all the taxable property in the city — included a sizable increase in the amount of personal property.

It was “unusual but not unheard of, and I didn’t foresee any issue with it,” Stackpole told the board. “However, in the last couple of months it came to my attention that a couple of the accounts had to be corrected, which resulted in a reduction in assessment and tax revenue for the year.”

Board Chairman Richard Freedman said the $2.2 million short in tax revenue means Stackpole’s office over-assessed personal property by $87 million.

“So why don’t you explain to us how that happened?” Freedman asked.

Stackpole said thousands of business owners each year fill out forms declaring their personal property, according to 20 or so classifications, including one called “cables and conduits.” Such equipment depreciates at differing rates, according to rules set by state utility regulators, Stackpole said.

“It was an oversight,” Stackpole said. “I take full responsibility. I’ve been creating the Grand List for 21 years and this is the first time I’ve run into a situation like this.”

Board member Kieran Ryan wanted to know the implications for taxpayers.

“We establish the Grand List and then we set the mill rate based on that,” Ryan said. “We assume the Grand List is accurate. Otherwise, the mill rate is not correct.”

The mill rate determines how much tax property owners pay.

“Are we going to have to increase taxes next year?” asked Sal Gabriele, another board member. “What are we going to do about the shortfall?”

Director of Administration Michael Handler, who supervises Stackpole’s department, said the money will be found somewhere in the city’s $564 million budget.

“You’ve got levers you can pull throughout this year that will more than make up for the $2 million. We’re going to have to start pulling those levers,” Handler said. “We are going to find ways on the operating side to cover it, whether it’s raising revenue or reducing expenses. We’re working on both.”

Gabriele asked about Mayor David Martin’s cost-saving moves over the summer, including eliminating the Fourth of July fireworks show, cutting the position of a police officer dedicated to parks, and a now-dropped plan to require residents to bag their leaves this fall.

“Going back three or four months, we couldn’t find the money for fireworks, for park police, for leaf pickup,” Gabriele said. “Now all of a sudden, we are going to find this money?”

The $2.2 million tax revenue shortfall “does not concern me at the moment,” Handler said. “What concerns me is the other shortfall we’re about to have from other issues,” a reference to the mold infestation in school buildings.

School district officials said at the meeting that as of Oct. 29, they’d spent 28 percent of their maintenance allotment cleaning up mold, and they are so far $257,000 over budget.

Superintendent Earl Kim will have to find that money, but the expenses — including $2 million for refitting an Elmcroft Road office building and leasing space there for Westover students until June — will be covered by a Mold Task Force formed by Handler.

The $2 million doesn’t count $500,000 the finance board transferred during the meeting to the Mold Task Force from the contingency fund.

Handler, who also oversees Fountain’s Office of Policy and Management, said he created a separate fund for the Mold Task Force to better track expenditures, school by school.

So far, only 10 of 21 schools have been tested for mold and it remains unknown how much it will cost clean the buildings and replace gutters and roofs, fix foundations and drainage systems, and make other repairs to stop moisture from entering. Four other buildings owned by the district may also need work, Handler said.

The contingency fund is down to a tight $240,000, Fountain said, with money set aside to buy road salt for the winter and cover the cost of union contracts now in negotiation.

Taxpayers may see service cuts and fee increases and, in the spring, tax hikes to cover the events of the fiscal year so far — one in particular, Fountain said.

“The primary problem” with the budget, he said, “is addressing the issue of mold.”

acarella@stamfordadvocate.com; 203-964-2296.

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