Derby Finance Director Agata Herasimowicz speaks during a virtual meeting held Dec. 20.
DERBY – The city’s budget is short by about $1.2 million in revenue because the city budgeted for a state “distressed municipalities” grant it did not receive, members of the tax board learned during a meeting Dec. 20.
“State grants were overestimated in the 2022 budget,” said new Derby Finance Director Agata Herasimowicz.
How This Happened
In Derby, the tax board (Board of Apportionment and Taxation), an elected body, votes on the city’s revenue and expenditures, and sets the mill rate.
Including the $1.2 million grant for distressed municipalities was a gamble when the budget was crafted last spring.
The Derby budget, which relies heavily on state money, was created in May before the state adopted a budget.
The money had been included in Gov. Ned Lamont’s proposed state budget, but did not survive the budget that was adopted by the state legislature.
Brian Coppolo, now an Alderman, warned the tax board that the $1.2 million was at risk just before the Derby budget was adopted on May 18.
At the time, Mayor Rich Dziekan and (now former) tax board chairwoman Judy Szewczyk said they had different info than Coppolo.
The Valley Indy reached out to the Valley’s state delegation during that May 18 meeting for clarification, but only state Rep. Nicole Klarides-Ditria responded, saying she had not heard about a change in distressed municipality funding for the city.
(The Valley Indy published a podcast examining this issue on May 24. It was titled “Is Derby Getting A Million Bucks Or Not?” The Valley Indy emailed state Sen. Jorge Cabrera a second time on June 30, who confirmed Derby was not receiving the distressed municipality grant.)
The Valley Indy later learned that Cabrera, state Rep. Kara Rochelle, and state Rep Mary Welander had all warned Derby in an email May 18 about relying on the governor’s budget for data.
“While we continue to work toward making sure Derby receives its fair share of funding we cannot say, at this point, with any degree of certainty, what the final level of funding will be until the legislative session adjourns on June 9,” the email read. “Therefore, we respectfully recommend that you do not use the Governor’s proposed budget when crafting Derby’s budget. A more accurate reflection (though not a final number) of municipal aid is what came out of the Appropriations Committee, which has yet to be confirmed by the full legislature and may still be adjusted through the budget negotiation process.”
The $47.4 million budget Derby adopted May 18 lowered the tax rate by five mills.
At the time, the Dziekan administration said that even if the $1.2 million didn’t come through, the city was anticipating additional federal aid that could make up the difference.
What Now?
Herasimowicz said the revenue shortfall could pose a fiscal challenge to the city. The city is halfway through the fiscal year.
“Last year we ended really strong, but with the current budget we may need to start really thinking and planning ahead as to how we can close this gap on a shortfall with revenue,” she said.
She said tax collection is also a concern. The city lowered its mill rate, which means there’s less money to collect, and she said she is not certain the city will collect taxes at the 99 percent rate predicted in the budget. That could result in additional revenue shortfalls, though it remains to be seen.
The city is currently without a permanent tax collector (and the finance department is understaffed), which complicates the matter.
On the somewhat bright side, Herasimowicz said found a mistake in the current budget. The city counted debt service twice. Catching the mistake brings spending down by about $400,000. The city is also collecting more in supplemental motor vehicle tax revenue, and there are a few smaller grants the city is expecting to receive that were not included in the current budget.
At the moment, the city could be looking at a roughly $600,000 hole in the budget by June, but that remains to be seen.
“There are more grants coming in, smaller ones, not anticipated in the current budget,” she said. “At this point we need to plan and figure out where we may have shortfalls or where we can have savings.”
Reaction
A few of the members of the Derby tax board were just elected in November, so this is their first go around with the city budget. They asked questions Dec. 20 trying to understand how Derby budgeted for money it wasn’t going to receive.
Derby Town/City Clerk Marc Garofalo warned the board about making assumptions.
“The city was told we were not going to get the million dollars. The election’s over, so we just have to move forward,” Garofalo said. “But I raised it, and it was raised by others because it was said we were not going to get that million dollars. So basically we included a million dollars in revenue that we knew we were not going to get. And that is the stuff that gets you into trouble. That’s the kind of decision making that gets us in trouble.”
During the meeting, Mayor Dziekan said state lawmakers, including Cabrera, told him the money was coming.
