Preparing for when the other shoe drops …

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Life has been very different—if not surreal—for all of us through this initial pass of the pandemic. It locked us down in our homes to varying degrees, is impacting our family incomes just as erratically with some making more not working than when they were working, while others have seen their income reduced or totally dried up. It’s been a hell of a ride and we are not necessarily through it yet. 

This fall and winter we can anticipate enduring a second wave of the virus joining the echoing effects of this first round and compounding the effect on how we live and work. Next year may bring a sense of déjà vu—a feeling that we are living through more of the same surreal experience while waiting for life to return to normal. Government at all levels, including public sector unions, needs to be sensitive to the economic stress and collateral damage brought on by the pandemic and ensuing shutdowns.

As the nation prepared for the spread of the pandemic and state-level lockdowns were put in place, the Board of Finance chose to hold the current year’s mill rate flat for the upcoming fiscal year as well, even as costs crept up by 1.83 percent. The consensus was that at this moment in time, a zero percent change in the tax rate was appropriate given the uncertainty in both the lives and incomes of our townspeople.

The real impact of the shutdowns on the overall town budget has yet to manifest itself and will do so to a greater degree in FY21, which begins on July 1, and in the following fiscal year. While the municipal and school business offices will close current FY20 books that reflect an improved financial strength, what we encounter through the upcoming fiscal year will be negatively affected in numerous ways. The impacts the shutdowns had on family and business incomes that impacted their ability to pay taxes for July, and again for January will emerge. 

We can expect to deal with new and unforeseen costs for government, and in particular schools, to reopen. Given the impact on the state budget and its deficit issues, we may be back to seeing municipal aid for schools and roads cut further than the gradual path it has been on in favor of diverting more to the cities and the narrowing of the state deficit . 

FY21 may be a difficult year with pressures from various sources. That will be offset by the fact that Granby is fiscally well positioned to manage this challenge, and in preparation for what may well be another very challenging year in FY22.

While the economy is slowly but steadily reopening, it is not necessarily the case that business revenue and personal income goes back to what they were as if the pandemic never occurred. Some payrolls may rebound quickly and automatically, but the fact remains that some 40 million unemployment claims were filed over the past few months, and not everyone will be called back to work. Unemployment stands over 14 percent now, and even with gradual recovery, that’s one in six out of work, with other people earning less than they had been. For businesses, every day they are closed it is that much more likely they will not be able to reopen. With no revenue and many operating costs still being incurred, with rules about opening at half capacity when they need much closer to full capacity to break even, with the specter of reduced foot traffic when they can’t keep the doors open in the long run at under 85-90 percent capacity—far too many will not be around to reopen—or will reopen only to close within months. Not a pretty picture. What impacts personal incomes and business revenues ends up impacting state, federal and even local tax collections, and the ability to pay.

It is our sensitivity to that sense of the ability and the allied willingness to pay that carry significant weight as we put thought into the following fiscal year. Much of the above leads me to conclude that the people of Granby will have greater difficulty with family finances this year and next than they have seen since the hard times of 89–90 if not the Great Recession starting in 08-09. Given the level of misery we see now and most likely will still be seeing months if not a year from now, this is a shot across the bow that the boards should be contemplating a fairly flat budget overall again next year, the intent being to hold the mill rate flat for FY22 as well. I believe that is a reasoned response given the current environment, and with what we can anticipate over these next few months. 

Given that wages and benefits comprise about 75 percent of the budgets, those contracts coming up for negotiation need to fit the bill as well, as they drive the operating budgets. I’d venture that it is better to be still employed with benefits than joining the one in six who aren’t. As the other shoe drops and the long-term impact of the shutdowns unfolds, this position will be the appropriate response to meeting the upcoming challenges.