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Consolidate Property Tax Collection

by: huntsu

Wed Jul 12, 2006 at 01:41:23 PM EDT

The Governor would like the state's municipalities to consolidate services in order to reduce the cost of providing local government to people. Often times people take that to mean small things like co-purchasing gas, combining leaf pickup, but there are really good ways to save money without impacting services at all.

"You don't have to be a genius or a rocket scientist" to see that having 566 municipalities and 616 school districts is not the most efficient way to run a state, Corzine said.
"I hope we use this opportunity to really go at trying to get a more efficient way, a more productive way, to deliver the fundamental services that people want," Corzine said.

One of the most efficient ways that could save municipalities six figures every year would be to consolidate property tax collection at the county level.

huntsu :: Consolidate Property Tax Collection

Today municipalities are responsible for collecting all property taxes within their borders, whether for the town, schools, county, fire district, whatever. That means that every single town is mandated to collect the taxes, maintain the records of who gets what, negotiate with banks for accounts to hold the cash in escrow, disburse the money and mediate disputes. The personnel costs alone are high â€“ for many towns the tax-collector alone makes $65,000 plus benefits â€“ but there are also mailing, banking, storage and other costs.

On top of those costs, municipalities are required to pay 100 percent of what other taxing entities (schools, county, etc.) budgeted for even if the tax collections are not high enough to pay that money out. This means that even though the town is doing all the work, they have to bond or find some other way to make up any shortfalls while the other taxing entities get all their money.

To buffer against a catastrophic shortfall, state law requires that every municipality overbudget the amount of taxes that were not collected the previous year. That means that if tax collections were at 91 percent â€“ a pretty normal rate â€“ then the town has to put an extra 9 percent of all the taxing entities in their next year's budget. (This also screws the other taxpayers in town, because they make up the 9 percent for the people who don't pay).

So instead of just budgeting what the town needs to provide its services, it has to budget an additional amount to ensure the schools and counties get their 100 percent. That increases municipal property tax rates, and municipal property tax collections.

There are political repercussions for this, as well. Most people blame the Mayor for high property taxes in whatever town they live in because the tax bill always comes from the town. They don't know that most towns make up significantly less than a third of the total tax bill. Still, the Mayor and Council take the heat while the school boards and Freeholders keep raising taxes and raising taxes without the public saying much. Hell, the public gets to vote on school budgets and we only get seven percent turnout.

But combining tax collection at the county level would offset most of these issues. Instead of 15, 17, 21 or however many tax collectors a county would need there could be five, seven or 12 tax collectors. That alone would save seven figures a year in many counties on wage, benefit and pension costs.

Next add in the reduced costs from group purchasing of printing and mailing the tax bills, using one bank account to hold the money, single point of record storage, one unified computer billing system, etc. Throw in tax assessors and suddenly you are talking millions of dollars a year in savings in every county.

The cost savings are huge, and the towns, schools and counties maintain their home rule to set their own budgets. It's a win win.

Tags: Jon Corzine, taxes, budget, consolidation, (All Tags)

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Consolidate Property Tax Collection | 6 comments

Question... (0.00 / 0)

This all sounds hunky dory. And while I would hate to see a bunch of people loose their jobs, I think my tax bill is a bit more important. Call it egocentric or Darwinistic or whatever.

Are the Tax collectors unionized? Cuz that would throw a bit of a real wrench into any consolidation scheme.

Media In Trouble

by: Media In Trouble @ Wed Jul 12, 2006 at 20:11:20 PM UTC

by: you @ soon

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Not Unionized (0.00 / 0)

Tax Collectors are generally not unionized.

by: huntsu @ Wed Jul 12, 2006 at 23:07:08 PM UTC

[ Parent ]

It's not that I'm against consolidation ... (0.00 / 0)

.... I just think the inertia that underlies the present system will be near impossible to overcome. Keep in mind that this tax system is specifically written into the Constitution of 1947, and I don't think the politicians of today have concerns greatly diferent from those of 59 years ago.

Today municipalities are responsible for ... and mediate disputes.

And who better to help you when you challenge your assessment? The tax collector lady at town hall, who knows your neighborhood, or some stranger eight towns over? And who you gonna yell at when they do a reassessment? Your mayor and council, or the freeholders?

The personnel costs alone are high â€“ for many towns the tax-collector alone makes $65,000 plus benefits

Right. Which makes it a plum patronage job. Every Mayor and council wants to lose one of those and hand it over to the county ...

On top of those costs ... the town has to put an extra 9 percent of all the taxing entities in their next year's budget.

And, of course, the county won't have to do the same ... wrong! Thank you for playing. And why would Princeton Borough taxpayers be any happier about paying for City of Trenton deadbeats than they are about paying for Borough deadbeats? You're spreading the burden of urban centers into the suburbs. This plan is DOA ...

Still, the Mayor and Council take the heat while the school boards and Freeholders keep raising taxes and raising taxes without the public saying much. Hell, the public gets to vote on school budgets and we only get seven percent turnout.

The voting public says plenty about school budgets. Or maybe you've never noticed how the vast majority of school budgets go down to blazing defeat ... that seven percent are mostly senior citizens worried about their fixed income. Do you think THEY want to pay for City of Camden schools? Hell, they don't want to pay for Cherry Hill schools!

It's a win win.

Saving even $50 million isn't that big an improvement when you're billions short, and a consolidation of this sort en masse -- flash cut -- would prove politically disasterous AND extremely expensive to implement. After all, how many years did it take to get EZPass to work right? And property taxes are several magnitudes larger an issue.

Seriously -- find a friendly assemblyman or mayor and ask him or her what they think of this plan. I'm just taking uneducated potshots, but I really think most politicians would run away screaming before they put their backs into an effort like this. Even sharing services such as police and fire has been rarely approved. Handing tax collection over to the county? Ooooh, I dunno ...

Frankly, raising the sales tax to seven percent and putting all into retiring the state debt, including the pension system, was the right answer, but Corzine found out that though he is one of the most powerful governmental executives in the United States, he can't sign a budget the State House won't send him, and he can't leave the state closed indefinitely. It was a damn fine try and I'm proud of him. We need to raise revenue, and not to try to wrest marginal efficiencies from an antique system. Watch where Corzine goes with this. It will be modest and quickly forgotten when he announces "the plan." It just can't be blown up, so it has to be gone around, and the way to go around it is to raise revenue.

by: denniscmcgrath @ Wed Jul 12, 2006 at 23:00:29 PM UTC

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This is one idea (0.00 / 0)

This is only one idea, not the whole enchilada. I can tell you that if my town could save $200,000 it would mean a lot.

By the way, it is the state Constitution that requires taxes be collected this way. The change would not be in the hands of Mayors or Council members, but the Legislature and voters.

Tax Collectors have nothing to do with challenging assesments. That is handled by the tax board, which is already handled at the County level by people appointed by the Governor.

For one, a seven percent turnout is not the voting public saying plenty. It is about 3 percent of eligible citizens participating.

Also, the vast majority of school budgets pass, not fail. When they do fail, often it is not a blazing defeat but a couple dozen votes.

by: huntsu @ Wed Jul 12, 2006 at 23:11:53 PM UTC

[ Parent ]

I'm all for consolidation. (0.00 / 0)

But I disagree with your plan. Urban centers already generally get what they pay for, it's the smaller municipalities that need to enter into consolidation schemes. So rather than administering it at the county level, encourage towns to enter into sharing agreements to service certain population goals (probably about the level of a small city). It's not quite as radical as a county-level distribution scheme, and it allows the overall profile for the consolidated districts to remain the same, rather than forcing urban, suburban, and rural areas into agreements when their interests are radically different.

by: sucopsucoh @ Wed Jul 12, 2006 at 23:16:31 PM UTC

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We've been encouraging (0.00 / 0)

Towns have been encouraged to perform joint services for a couple decades, and we wind up with shared leaf pickup and computer purchasing.

Local officials don't give up their real cost-centers because NJ is all about home rule. It'll have to come from the top.

As for urban centers, I am sure they would be happy to be guaranteed their tax collections and not have to foot the cost for serving the counties and schools.

by: huntsu @ Thu Jul 13, 2006 at 14:55:47 PM UTC

[ Parent ]