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Tax Collector Policies

January 20, 2002

The treasurer-tax collector's office has recently received increased interest in our bankruptcy claims practices. Lurid headlines have suggested that funds may have been lost, leading some folks to believe that our policies and practices have caused harm to the county's financial situation. The facts show that this is decidedly untrue.

Our office is charged with collecting close to $900 million in various types of taxes. Almost $700 million of this is in the form of secured taxes, so we are geared up to place most, but not all, of our focus on collecting the secured roll. Our efforts have resulted in a consistently high collection rate for current secured taxes. Last year the collection rate was 97%, which ranked us as one of the most productive offices in the state. However, as has been pointed out, there was a part of our operation, namely bankruptcy collections, where we were not as productive.

Following the late 2000 retirement of a staff member, the early 2001 medical leave taken by another key person and vacancies caused by promotions, we were left with the challenge of assigning priorities to the various duties and tasks. We did not have enough people on hand to do each of our regular tasks at the same level that had previously been possible.

The natural question, then, is why did we decide to de-emphasize bankruptcy? We see bankruptcy collections as being important but when compared to other things we do, like processing refunds, collecting and accounting for current collections and fielding taxpayer questions, we felt the priority should be reduced.

I've had people in business tell me that they don't see much value in filing bankruptcy claims. Their perspective is that it doesn't usually pay off to use hard-earned money to go after a person or business that is in such a tough financial situation that they've filed for bankruptcy. One person told me that often the claims are not worth the postage used in mailing them. I think government leaders need to pay more attention to the things that business uses in making financial decisions. This is particularly true with our bankruptcy cases because we are finding that the secured taxes (things like land, houses, and office buildings) are eventually paid, whether or not we file a claim.

The claims that represent our greatest vulnerability in bankruptcy cases are unsecured taxes. This tax type covers boats, airplanes and business equipment. Compared with the secured roll properties, the individual unsecured tax bills are small, commonly less than $500. In the two years before we made the change in covering bankruptcy claims, our average annual unsecured collections received directly through the bankruptcy desk was less than $5,000. In the year with incomplete coverage of this operation, we still collected around $2,100. Thus, we might have received $3,000 less, but we did so while getting the benefit of salary savings of approximately $15,000. In addition, we were able to put our limited resources to work on more productive work. I am satisfied, in retrospect, that we made the right decision.

Let me address one final point of the article. The instructions given to staff back in February 2001 were to de-emphasize bankruptcy claim filings. They were told that, so far as possible, we should still try to get a few filed each month. It turns out that for several months they were not even able to do a few.

In tracking the many areas within my responsibilities as treasurer-tax collector and public administrator, and understanding the small scope of the unsecured bankruptcy work, I had little reason to closely track the claims-filing activity. When we later looked at the 2001 filing history, it was clear that staff hadn't been able to pull away from the other duties to file bankruptcy claims. I must stress, however, that the best facts we have available show that there has been no public harm caused by not filing these claims.

Harold S. Pittman

Treasurer-tax collector

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