State of North Carolina Department of State Treasurer

Transcription

1 RICHARD H. MOORE TREASURER State of North Carolina Department of State Treasurer State and Local Government Finance Division and the Local Government Commission Memorandum #959 ROBERT M. HIGH DEPUTY TREASURER April 25, 2002 TO: FROM: SUBJECT: County Officials and Certified Public Accountants T. Vance Holloman, Director Fiscal Management Section Management of Cash and Taxes Counties For the Fiscal Year ended June 30, 2001 This publication provides comparative cash and investment and tax levy information of county governments for the fiscal year ended June 30, As in the past, we have added the county assessment-to-sales ratios and have calculated effective tax rates. (Note: the effective tax rate is calculated by multiplying the county-wide tax rate by the assessment-to-sales ratio.) Providing the effective tax rates should result in a better comparison of tax rates between counties, given those counties are at different points on their revaluation cycles. In addition, the average unit-wide effective tax rates for the last five fiscal years are presented. The statistics provide a range of highest and lowest items within a grouping and the mathematical average. Tax collection percentages and average tax collection percentages are presented for all property, all property other than motor vehicles, and for motor vehicles only. This analysis presents information for the State as a whole and the following population groupings: 100,000 and above; 50,000 to 99,999; 25,000 to 49,999; and 24,999 and below. County officials are encouraged to compare their own performances to similar counties and to statewide averages. Such comparisons may identify opportunities for improvement or may indicate improved performances from previous fiscal years. For those counties with below average tax collection rates, collection procedures should be reviewed to determine if more effective means of collection are available. An improvement in tax collection rates provides numerous benefits to counties. It provides more revenues to finance programs, generates additional funds for the investment program, and allows the property tax rate to be lower than it would otherwise have to be. Section 50, Tax Assessment, Billing, and Collection in the Department of State Treasurer Policies Manual, provides information on collection procedures. If you have not ordered a copy of this publication, please contact Margo Pope in our office at (919) Also, the Institute of Government at the University of North Carolina at Chapel Hill offers courses in tax collection that may benefit tax collectors in carrying out their statutory responsibilities. Given the role assumed in recent years by the counties in billing and collecting motor vehicle taxes for all residents, including those within municipalities, local officials should strongly consider consolidating the property tax functions of counties and municipalities. Again Section 50, Tax Assessment, Billing, and Collection in the Department of State Treasurer Policies Manual, contains a discussion on consolidated 325 North Salisbury Street, Raleigh, North Carolina Telephone: (919) Fax: (919) Website: An Equal Opportunity/Affirmative Action Employer

2 Memorandum # 959 April 25, 2002 Page 2 property tax functions. In addition, Memorandum #692, Consolidating County and Municipal Property Tax Functions and Memorandum #929, Results of Municipal and County Survey on Consolidating and Billing of Tax Functions, which discuss joint arrangements utilized by many counties and municipalities, are available from our office. Consolidating the property tax functions should provide more economical use of equipment, office personnel, supplies, and postage. A single tax billing and collection office would simplify taxpayers efforts to pay and inquire about the status of their taxes. Also, especially for smaller units, a consolidated office should be able to enforce tax collections (attachment and garnishment, levy and foreclosure) at a lower cost. To be most effective, county tax collectors should periodically provide a listing of delinquent municipal taxpayers to the appropriate municipal officials. Local municipal officials may be able to provide employment information about the delinquent taxpayers to the county tax collector. The local municipality may also have bank account information obtained when the delinquent taxpayer paid a water or electric bill with a check. A cooperative sharing of information should allow the municipality to increase its tax collections. If the county is paid a percentage of the taxes collected, the revenue to the county also increases. The county tax collector also will have information which may be used to collect delinquent county taxes. Certainly, the smaller the local government, the more effective this cooperation is likely to be. All official actions on behalf of municipalities should begin with the county tax collector who is acting as the municipal tax collector and who should be named in the order of collection. Debt Setoff Program In the latter part of the 2001 calendar year, the North Carolina Association of County Commissioners and the North Carolina League of Municipalities finalized the framework allowing local governments to submit debtor information to a third party clearinghouse. The clearinghouse will attempt to match the debtor information with North Carolina state income tax return information in an effort to intercept income tax refunds on behalf of the local government unit. In summary, a county may submit a claim for a debt of $50 or more to the NC Local Government Debt Setoff Clearinghouse. The debt must be owed to the county by an individual and have occurred because of contract, subrogation, tort, operation of law or some other legal theory. Delinquent property taxes may be submitted for setoff, as well as delinquent water bills or other amounts owed to a local government. General Statute 105A contains the State laws authorizing and regulating the Debt Setoff Program. The statutes require that a county must inform a citizen in writing that the county intends to use this program to collect the amount due. An appeal process must be available to the citizens wishing to protest the proposed debt setoff. No debt may be submitted to the clearinghouse until 60 days after the debt has been declared delinquent. The submission must include the full name and the Social Security number of the debtor. Each successful debt setoff match will be charged a $15 recovery fee, which cannot be charged to the debtor. There is no cost to the county if no match is made. For example, for the successful collection of an $80 property tax bill, a county would receive $65, and the collection expense of $15 would be recognized. The delinquent taxpayer s account would be credited for the full $80. See the illustrative journal entry below. Cash $65 Collection expense 15 Accounts Receivable $80

3 Memorandum # 959 April 25, 2002 Page 3 At the time of this memo, the Debt Setoff Program has only been fully operational for a short period. However, early feedback from officials of counties and municipalities provides some additional information which county tax collection officials may want to consider. One county, working with the local newspaper to publicize the program, found some citizens welcoming the chance to catch up on their back taxes and avoid any temptation to spend their tax return on other items. From experience, one participating coastal community believes that their debtors have left the local area but have not left the State, thus making collection efforts on a statewide basis potentially more effective. A county planning to participate should consider such factors as who their debtors are, are they likely to be receiving NC income tax refunds, does the unit have the debtor s Social Security number, etc. This program is currently available only to counties and municipalities. Any county that is contemplating asking for Social Security numbers for possible future use should be aware that currently, no clear legal precedent exists for the gathering of Social Security numbers from North Carolina citizens. If counties do have this information, counties should take every precaution to protect the Social Security numbers from unauthorized use. Local governments collecting this information may want to consult with their local attorney to ensure that the county is not in violation of the State Privacy Act [G.S ] which prohibits denial of any right, benefit or privilege provided by law to an individual because that individual refused to provide his Social Security number. G.S requires a disclosure statement on any application form requesting the Social Security number. The disclosure should list the statutory authority for the collection of this information, whether this is a voluntary or mandatory disclosure, and what purpose this information will be used for. Additional information on the program is available from the NC Association of County Commissioners, and the North Carolina Local Government Debt Setoff Clearinghouse, Statistical Data The statewide and population grouping tax collection percentages over the last five fiscal years are as follows: Average Current Year Tax Collection Percentages Population Grouping Statewide 96.53% 96.59% 96.53% 96.53% 96.44% 100,000 and Above ,000 to 99, ,000 to 49, ,999 and Below The statewide tax collection percentage for was slightly lower from the previous year. The high tax collection percentages over the last five fiscal years are good indicators of the quality of county financial management; however, in some individual cases there is still room for improvement.

4 Memorandum # 959 April 25, 2002 Page 4 An overall trend that can be noted is that tax collection percentages for counties vary according to population, with the largest counties having the highest tax collection percentages. This trend is consistent for the four preceding years and continues to be so. Within each population grouping, there may be substantial variation in collection rates, meaning that not all small counties have lower tax collection rates and vice versa. Average Tax Collection Percentages Population Grouping Excluding Motor Vehicles Motor Vehicles Statewide 97.67% 86.95% 100,000 and Above ,000 to 99, ,000 to 49, ,999 and Below The fiscal year was the first year collection rates for motor vehicles and property other than motor vehicles were separately reported. These figures are included in the report because the methods of billing and collecting taxes differ between motor vehicles and other classes of property. The same trend noted for all property is noted for motor vehicle taxes also. Tax collection percentages for counties vary according to population, with the largest counties having the highest tax collection percentages. We spoke with tax collectors from those counties that had the higher collection percentages for motor vehicles. Those tax collectors indicated that they send out multiple late notices for vehicle taxes. Some of those counties also aggressively attached and garnished the wages of a delinquent taxpayer. Units that rely solely upon the block upon subsequent year registrations placed with the Division of Motor Vehicles should eventually collect a high percentage of motor vehicle taxes, but their current year collection percentages of motor vehicle taxes will probably be lower. The statewide and population grouping statistics on the unit-wide property tax rates over the last five fiscal years are as follows: Average Unit-Wide Tax Rates (per $100) Population Grouping Statewide $.6696 $.6658 $.6591 $.6671 $ ,000 and Above ,000 to 99, ,000 to 49, ,999 and Below The averages shown above for all five fiscal years are calculated on a dollar-weighted basis. For most counties the tax rate is lower in the fiscal years immediately following revaluation. Tax rates usually increase as a county moves through the revaluation cycle, reaching a peak immediately before revaluation. Except for a slight increase in the year , the overall trend shows a decrease in tax rates.

5 Memorandum # 959 April 25, 2002 Page 5 Average Unit-Wide Effective Tax Rates (per $100) Population Grouping Statewide $.5888 $.5797 $.5696 $.5787 $ ,000 and Above ,000 to 99, ,000 to 49, ,999 and Below The above table shows the effective tax rates. The effective tax rate equals the property tax levy divided by the estimated market value of assessed property. The averages in the above table are also dollar weighted. The above table shows an overall decline in effective tax rates. Sources The statistics presented in this report were gathered from various sources. The investment earnings, cash and investments, tax collection rates, and uncollected tax amounts were compiled from the 2001 Annual Financial Information Reports (LGC-36 or AFIR) submitted to the Department of State Treasurer. In some cases, this information was obtained from the audited financial statements of the unit. The assessed valuation, tax rate, and last year of revaluation for each county were compiled from the Assessed Valuation and Property Tax Levies for the Fiscal Year Ended June 30, 2001 Reports (TR-1-00) submitted to the Department of Revenue. The N.C. Department of Revenue calculates the assessment-to-sales ratios annually for each county. This ratio is based on a sample of selected real estate transactions within a county and equals the assessed valuation divided by the actual sales price. The county populations were provided by the Office of State Budget and Management and are certified estimates as of July 1, The tax rate equivalents and effective tax rates were calculated by the staff of the Department of State Treasurer. The average tax rates in this year s report are calculated on a dollar-weighted average basis. All data included in this report are the most recently available information. If you have any questions concerning this memorandum, please contact John Herron at (919)

6 County Governments in North Carolina Summary of Cash and Investments and Property Tax Levies For the Fiscal Year Ended June 30, 2001 Latest Yr/ January 1, 2000 Assessment Percent Collected Cash & Investment Tax Rate Next Yr of Re- Assessed Tax -to-sales Effective Percent Excluding Motor Vehicles Tax Tax Rate County Population Investments (1) Earnings (1) Equivalent Valuation (2) Valuation (3) Rate Ratio Tax Rate Collected Motor Vehicles Only Uncollected Equivalent 100,000 and Above Alamance 131,398 33,485,377 2,719, / ,589,914, , Buncombe 207,152 62,732,051 4,538, / ,425,249, ,481, Cabarrus 131, ,973,224 4,656, / ,353,820, ,690, Catawba 142,318 78,232,523 5,484, / ,904,402, ,470, Cumberland 303, ,842,503 8,577, / ,628,049, ,517, Davidson 147,754 33,712,408 2,304, / ,724,150, ,560, Durham 224,490 57,148,014 6,169, / ,860,658, ,318, Forsyth 307,116 57,456,157 4,168, / ,033,493, ,854, Gaston 190,735 38,825,315 2,712, / ,697,033, ,440, Guilford 423, ,843,096 13,502, / ,010,127, ,870, Iredell 123,446 30,782,290 2,171, / ,817,388, ,815, Johnston 123,074 57,731,987 3,203, / ,805,342, ,314, Mecklenburg 700, ,621,794 16,071, / ,784,745, ,747, New Hanover 161, ,873,484 5,770, / ,008,537, ,939, Onslow 149,698 55,700,314 3,453, / ,212,734, ,295, Orange 118,854 41,694,190 2,770, / ,369,881, ,076, Pitt 134,480 53,562,481 3,280, / ,987,372, ,792, Randolph 131,095 37,914,700 4,888, / ,088,877, , Robeson 123,794 40,498,166 2,941, / ,633,962, ,948, Rowan 130,802 24,935,797 1,887, / ,542,379, ,210, Union 124, ,667,665 7,152, / ,920,994, , Wake 633, ,084,485 26,618, / ,373,927, ,094, Wayne 113,524 38,808,588 2,314, / ,193,219, ,565, Total $ 1,948,126,609 $ 137,359,248 $ 339,966,264,216 $ 63,702,098 Group Statistics: 100,000 and Above Range: Lowest Highest Average Page 6

7 County Governments in North Carolina Summary of Cash and Investments and Property Tax Levies For the Fiscal Year Ended June 30, 2001 Latest Yr/ January 1, 2000 Assessment Percent Collected Cash & Investment Tax Rate Next Yr of Re- Assessed Tax -to-sales Effective Percent Excluding Motor Vehicles Tax Tax Rate County Population Investments (1) Earnings (1) Equivalent Valuation (2) Valuation (3) Rate Ratio Tax Rate Collected Motor Vehicles Only Uncollected Equivalent 50,000 to 99,999 Brunswick 73,692 62,914,870 3,428, / ,818,026, ,529, Burke 89,498 18,212, , / ,696,675, , Caldwell 77,575 10,854, , / ,531,072, , Carteret 59,527 13,746,965 1,120, / ,881,075, ,039, Cleveland 96,571 34,688,156 2,307, / ,841,496, ,888, Columbus 54,857 11,357, , / ,459,615, ,624, Craven 91,595 23,941,806 1,727, / ,460,700, , Edgecombe 55,594 18,220,383 1,036, / ,996,546, ,380, Halifax 57,371 11,953,053 1,190, / ,679,170, ,024, Harnett 91,574 38,812,196 2,425, / ,489,906, ,960, Haywood 54,212 13,870, , / ,236,967, , Henderson 89,660 33,576,152 1,782, / ,927,361, ,239, Lenoir 59,699 9,805, , / ,868,909, ,356, Lincoln 64,124 19,725,057 1,765, / ,176,943, , Moore 75,164 18,534,597 1,599, / ,198,857, , Nash 87,669 29,738,268 2,164, / ,256,321, ,205, Rockingham 92,059 31,032,927 1,924, / ,987,136, ,113, Rutherford 63,042 13,347,664 1,137, / ,142,438, , Sampson 60,499 20,734,315 1,033, / ,388,242, ,186, Stanly 58,331 20,879,032 1,470, / ,490,384, , Surry 71,466 15,492,306 1,844, / ,153,943, ,005, Wilkes 65,786 28,884, , / ,711,027, ,076, Wilson 74,027 33,269,681 2,041, / ,380,896, ,391, Total $ 533,593,219 $ 34,517,321 $ 94,773,717,191 $ 27,027,036 Group Statistics: 50,000 to 99,999 Range: Lowest Highest Average Page 7

8 County Governments in North Carolina Summary of Cash and Investments and Property Tax Levies For the Fiscal Year Ended June 30, 2001 Latest Yr/ January 1, 2000 Assessment Percent Collected Cash & Investment Tax Rate Next Yr of Re- Assessed Tax -to-sales Effective Percent Excluding Motor Vehicles Tax Tax Rate County Population Investments (1) Earnings (1) Equivalent Valuation (2) Valuation (3) Rate Ratio Tax Rate Collected Motor Vehicles Only Uncollected Equivalent 25,000 to 49,999 Alexander 33,762 13,130, , / ,384,845, , Anson 25,328 7,282, , / ,543, , Beaufort 45,030 12,659, , / ,650,613, ,197, Bladen 32,376 8,224, , / ,723,994, , Chatham 49,588 22,103,582 1,381, / ,979,307, , Dare 30,154 46,373,752 2,946, / ,056,579, , Davie 35,024 32,962,200 1,090, / ,088,368, , Duplin 49,319 18,593,775 1,345, / ,018,467, ,198, Franklin 47,545 21,837,519 1,297, / ,155,649, , Granville 48,812 19,687,614 1,736, / ,921,618, , Hoke 33,976 8,524, , / ,148,065, , Jackson 33,283 19,595,415 1,775, / ,227,945, , Lee 49,245 15,927,928 1,095, / ,812,492, , Macon 29,968 14,031,368 1,372, / ,606,864, , Martin 25,593 20,216,024 1,452, / ,317,988, , McDowell 42,356 7,275, , / ,797,476, , Montgomery 26,902 10,421, , / ,485,467, , Pasquotank 34,994 8,785, , / ,417,251, , Pender 41,379 17,166,611 1,125, / ,257,989, ,364, Person 35,748 7,156, , / ,641,227, , Richmond 46,592 16,257,054 1,083, / ,723,302, , Scotland 36,036 9,041, , / ,568,429, , Stokes 44,892 4,034, , / ,172,255, , Transylvania 29,429 26,438,626 1,440, / ,415,368, , Vance 43,083 6,123, , / ,943,814, ,433, Watauga 42,827 21,701,027 1,330, / ,171,034, , Yadkin 36,504 13,021, , / ,131,073, , Total $ 428,574,455 $ 27,649,314 $ 59,751,037,220 $ 19,549,435 Group Statistics: 25,000 to 49,999 Range: Lowest Highest Average Page 8

9 County Governments in North Carolina Summary of Cash and Investments and Property Tax Levies For the Fiscal Year Ended June 30, 2001 Latest Yr/ January 1, 2000 Assessment Percent Collected Cash & Investment Tax Rate Next Yr of Re- Assessed Tax -to-sales Effective Percent Excluding Motor Vehicles Tax Tax Rate County Population Investments (1) Earnings (1) Equivalent Valuation (2) Valuation (3) Rate Ratio Tax Rate Collected Motor Vehicles Only Uncollected Equivalent 24,999 and Below Alleghany 10,711 3,510, , / ,362, , Ashe 24,441 3,571, , / ,706,138, , Avery 17,333 10,478, , / ,526,377, , Bertie 19,746 6,927, , / ,851, , Camden 6,911 14,183, , / ,094, , Caswell 23,582 10,499, , / ,032,081, , Cherokee 24,394 7,049, , / ,258,757, , Chowan 14,549 33,289,610 2,931, / ,622, , Clay 8,810 2,382, , / ,369, , Currituck 18,289 44,898,961 2,969, / ,313,417, , Gates 10,546 3,336, , / ,878, , Graham 8,009 1,914, , / ,835, , Greene 19,041 5,217, , / ,495, , Hertford 22,602 3,647, , / ,792, , Hyde 5,857 7,197, , / ,076, , Jones 10,392 5,521, , / ,925, , Madison 19,702 4,921, , / ,390, , Mitchell 15,706 1,418, , / ,168, , Northampton 22,105 4,889, , / ,960, , Pamlico 12,958 7,279, , / ,163, , Perquimans 11,392 5,444, , / ,339, , Polk 18,413 2,707, , / ,101,466, , Swain 12,989 2,785, , / ,053, , Tyrrell 4,126 1,580, , / ,627, , Warren 20,094 4,599, , / ,237, , Washington 13,709 3,749, , / ,216, , Yancey 17,831 2,431, , / ,273,761, , Total $ 205,433,354 $ 13,064,081 $ 22,876,460,565 $ 9,808,971 Group Statistics: 24,999 and Below Range: Lowest Highest Average Page 9

10 County Governments in North Carolina Summary of Cash and Investments and Property Tax Levies For the Fiscal Year Ended June 30, 2001 Latest Yr/ January 1, 2000 Assessment Percent Collected Cash & Investment Tax Rate Next Yr of Re- Assessed Tax -to-sales Effective Percent Excluding Motor Vehicles Tax Tax Rate County Population Investments (1) Earnings (1) Equivalent Valuation (2) Valuation (3) Rate Ratio Tax Rate Collected Motor Vehicles Only Uncollected Equivalent Statewide Totals $ 3,115,727,637 $ 212,589,964 $ 517,367,479,192 $ 120,087,540 Range: Lowest Highest Average Explanation of Column Headings: (1) Amounts are net of unexpended debt proceeds and interest earned thereon. (2) Last year in which all real property was appraised; revaluation was effective on January 1 of that year. Counties are required to revalue property at a minimum of every eight years. Except for revaluations made in year 2000, the year shown for next scheduled general revaluation is the year reported by the county in July 2000 (3) Assessed valuation is based on real property values that were determined as of January 1 in the year of revaluation. This number is adjusted annually for discoveries, abatements, improvements, and any other changes that materially affect real property values. Assessed valuation also includes personal property, which is valued annually on a calendar year basis and titled motor vehicles which are valued as of January 1 preceding the date a new vehicle registration is applied for or a current vehicle registration is renewed. Page 10