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Future of local tax collectors up for school board discussion

January 13, 2013

Susan Mitchell, Punxsutawney Borough tax collector, is pictured processing paperwork at her office located in the Mahoning East Civic Center. (Photo by Larry McGuire/The Punxsutawney Spirit)

PUNXSUTAWNEY — Your friendly neighborhood tax collector may be going out of business, if the Punxsutawney Area School Board decides to change the manner in which tax collectors are compensated.

"We're going to discuss the tax collection commission analysis, which is something that can only be adjusted every four years," Susan H. Robertson, Punxsutawney Area School District business manager, said at last Tuesday's school board meeting.

Robertson said it has to be done in an election year for the tax collectors.

"If the board decides to make a change, it must be done prior to Feb. 15, so that anyone interested in running for the office of tax collector will know what their commission will be," she said.

Robertson said the district currently pays a 2-percent commission on the tax amount collected and $3 for second and third real estate tax installment payments.

She said the current method of tax collector compensation fluctuates with changes in assessment and gaming revenue reductions.

"If a particular taxing area has a large business close or shut down and not pay their taxes; a building is torn down; or a large commercial property is added to a particular taxing area, then the collectors see a large increase," Robertson said, adding that gaming revenues have an impact on commission rates.

She said last year, the school district received $1.1 million in gaming revenues directly off the real estate taxes, which reduces the tax bills and changes the collectors’ commission.

"What this does is, you have 16 municipalities in our school district, and each collector ends up being paid different rates for doing the same work," she said.

Robertson said she worked in the tax office many years ago, and as the tax bills would come in during mid-July, the tax collectors would have numerous address and name changes in their areas.

"We would go through and make our manual corrections that needed to be made to those bills," Robertson said.

She said workers also had to pull out the names from escrow accounts that are provided by the banks and send it to the escrow department.

According to Robertson, most tax collectors have a computer program or the manual books they put the tax payment information into for a taxpayer’s payment.

Robertson said if the taxpayer is using the installment plan, additional notices will be sent out.

"Once the calendar turns into December, those who haven't paid the tax collector (receive) a second notice," she said.

Then the tax collectors finish up their collections at the end of December and the first week of January, before finalizing their books and turning them over to the district, Robertson said.

"From mid-July to the first of January is the work period for a tax collector," she said. "Every time they handle a tax bill, whether it's for $2 or $64,000, you're doing the same amount of work.”

Brookville, for example pays $5 per bill collected and $1 for installments; Clearfield Area School District pays $7.75 per bill collected; Clarion Area School District pays $5 per bill collected and no extra for installments, Robertson said, adding that Punxsutawney tax collectors receive, with the 2-percent commission, anywhere from 12 cents on a $6 tax bill to $1,293 on a $64,675 tax bill.

"So, in essence, we are paying from 12 cents to $1,293 to process a tax bill in the same manner," she said.

Robertson said per capita, the range of commission for a tax collector is 20 cents on a $10 tax bill to $1.40 on a $70 tax bill.

She said if the school board wants to change the manner in which tax collectors receive their compensation there are several options:

Per Bill Commission Options:
• Remain at a 2-percent commission on all collected taxes.

• Reimburse tax collectors a flat dollar amount for each bill when collected, which is what the majority of school districts do, Robertson said, adding that a tax collector works with a lot of tax bills that never get collected.

• Provide a flat dollar amount of compensation for each bill when mailed and collected. This provides compensation during each work phase of the tax process.

"Instead of a tax collector doing all of this work to send out 1,000 tax bills and only 700 of those come back, they are getting paid at least for their work in mailing them out and your work in collecting them and each time you collect them," Robertson said.

If the school board would change the compensation to $3.50 per collected bill and $3.50 per installment — similar to the other districts — strictly on collected and $3 per capita for each of the 16 districts, that would work out to a savings of $70,353.47 over the current 2-percent commission system, she said.

Robertson said under the other proposal, where a tax collector would receive reimbursements of $2 per mailed bill, $2 per collected, $2 per installment and $1.50 per capita mailed and $1.50 per capita collected, the savings would be $55,876.47.

"I know this is a difficult discussion to have. My job as the business administrator is to provide the school board with financial information," Robertson said, adding that over the past two years, the district has seen the state make huge cuts in the revenue it sends to school districts, in addition to federal cuts.

"During these (past) two years, we've had many discussions on how can the district continue to offer the programs that we offer with the decreased revenue, and how can we do it with the least impact on education," she said. "As I present this, it is nothing against any of the tax collectors. They all do a wonderful job.”

According to Robertson, the administration has had to make other tough decisions on reducing staff.

"Obviously, when you look at other school districts. ours has been generous with the commission as a percentage over the past several years," she said.

"It's just one of those things that I would be remiss if I did not show you this information, and at least make you aware that this is the only time in four years that you can make a change, if you so choose," Roberston told the board.

She said the advantages of changing the commission system are:

• Paying tax collectors for each phase of work;

• Equal payment base for all collectors, which is not affected by property value/reductions or additions;

• Real estate bills can generate $8 per bill commission.

Robertson said the board will discuss the commission change again at the Jan. 23 committee meeting.

If the board decides to make changes, it would do so at the Feb. 5 voting meeting.

Ron Walker, Young Township tax collector, was in attendance at the meeting, along with Susan Mitchell, Punxsutawney Borough tax collector.

Walker said his opinion is to leave things the way that they are.

"These taxes are being collected in a cost-efficient manner now," he said, adding that if the school board does make this drastic change, the district will lose most of the current tax collectors.

"What will happen is the district will lose most of the 16 tax collectors, (and) the people the board will attempt to replace us with won't be as capable of doing what we do," Walker said.

He said the district is already talking about collecting the taxes in house.

"There are a lot of good people working there; those employees will be overwhelmed," he said. "The administration doesn't realize that the easiest part of the job is collecting the money and signing the receipt and handing it back to the taxpayer.”

According to Walker, most of the job of collecting taxes is done off hours.

"However, you can't argue the initial savings of $60,000 that first year," he said. "After the first year, when all of our current terms expire, if it ends up the district collects the taxes in house, their resources will go to the three or four full-time employees the board will pay to collect the money that we do now.

With such a drastic cut in compensation, Walker said he thinks it will be difficult to attact new candidates to run for the position of tax collector.

He also describes in-house collection as a potential “logistical nightmare, due to people going to the Central Office at the middle
school to pay their taxes.”

“What are they going to do when they have taxpayers coming up to the office throughout the day?” he said. “It’s going to cause a problem with servicing them and parking, too, which is very limited.”

Walker also predicts that the initial savings the district will experience will be short lived.

“After the first year of $50,000 to $60,000 savings, the district will be in the hole $60,000 every year after,” he said, because the board will be paying workers’ benefits, including health insurance, sick days and personal days.

In an interview after the meeting, Mitchell said that there's no real expense to the school board, borough and county other than the commission that is paid to the taxpayers.

"The municipalities and school districts provide us with the notices and the stamped envelopes to mail them out," Mitchell said, adding that the tax collectors pay all of their own expenses.

She said the tax collectors purchase their own equipment, office supplies, health insurance and retirement.

She pays temporary workers out of her own pocket to come and assist during the busy times, and she pays rent out of her own pocket to Punxsutawney Borough for her office in the Mahoning East Civic Center.

Mitchell said including her, there are three tax collectors who work in highly populated areas with more easily accessible offices to make it more convenient for the public to pay their taxes.

"If the school board would change the manner of compensation to the tax collectors to $3.50 per bill, (that) would lower my commission by 75 percent," Mitchell said.

If that happened, she said she could not longer pay the rent on her office.

Walker, who works from home, was first elected a tax collector in 1998.

“The reason I’ve stayed in this position for 15 years is due to the flexibility the job offers,” he said.

If collecting taxes was handled in house by the district, Walker is concerned about how it would affect the elderly.

“The elderly people count on me for so many things when I pick up their taxes at their home,” he said.

Walker said that he’ll sit and talk to them for an hour or more.

“One older lady I collected taxes from had a broken wrist and couldn’t tighten her canning jars that final turn,” Walker said. “So, I talked to her for an hour while tightening up canning jars.

“There’s 100 similar stories that I could tell, (but) I’m a humble person. I just want to do the right thing, and I hope the school board does the right thing,” he said.

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