What Happened?
The Sangamon County Citizens’ Efficiency Commission shared recommendations for how municipalities could centralize property tax collection functions by shifting responsibilities to county treasurer’s office or a similar body through an intergovernmental agreement. In doing so, the position of township tax collector in each city would be eliminated, making for a more seamless and standardized collection process.
The Goal
Many states and counties are cutting back on the number of tax collectors in place to conduct the process. More states are supporting centralization of property tax collection and electronic processing, as the upgrades reduce costs, decrease time taken by the functions and increases consistency throughout the county.[dw-post-more level="0"]
Analyzing the performance of a more centralized property tax collection system, the CEC discovered most township or country collector offices have a system in place, as well as an intergovernmental agreement with local governments, allowing for a seamless elimination of local collectors. The cost per payment for tax collection at the township or county level averaged less than $1 compared to more than $4 in less centralized systems.
Putting It Into Practice
Optimal results were found in townships that created intergovernmental agreements with county treasurers that calls on the centralized system to collect first installments of property taxes.
Before transitioning to the centralized system, the CEC suggests municipalities conduct research to determine the cost per tax payment collected from a centralized system compared to that of individual collectors.
Other Strategies
For communities unable to extract significant cost benefits from a centralized tax collection process, the CEC also offers alternative plans that improve tax functions with less drastic changes including:
- Transferring first installment collection responsibilities to a county collector’s office while maintaining other services at the local level
- Allocating first installment responsibilities to the county collector’s office from the local collector
- Discontinue local tax collection entirely in lieu of a countywide system
Tax Collection Legislation
Another way municipalities are making tax collection more efficient is through the passing of stringent legislation. Pennsylvania state senator Mike Stack from Philadelphia recently proposed five bills that would provide city officials with more power in collecting tax revenue from residents. The new legislation could help the local school district collect an additional $29 million from delinquent taxes while helping boost the city’s financial performance.
Philadelphia suffers from subpar tax collection performance compared to other cities, and Stack expects the city to collect $249 million in property taxes, $91.5 million in business revenue and $47 million in wage taxes next year from delinquent taxpayers.
To strengthen the city’s ability to collect due taxes, the proposed legislation would allow Philadelphia to:
- Gather unpaid taxes from debtors’ bank accounts without going through the court system
- Garnish up to 10 percent of delinquent taxpayer wages
- Identify which state banks hold funds for tax delinquents through the child-support enforcement system
- Impose liens on properties outside the city limits
Other Monetary Efforts
Gov1 has followed cities that use technology to keep better records of city financials and new tax rate strategies to improve efficiency.[/dw-post-more]