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Unpaid taxes increase with decal change

By MELINDA WILLIAMS

melinda@southwesttimes.com

Since the town of Pulaski decided to transition to a permanent auto decal in 2009, the value of delinquent personal property taxes has almost doubled.

Sherry Boyd, finance director, said she attributes the increase in delinquencies largely to the switch from an annual to a permanent automobile registration decal.

When residents were required to place a new decal on their vehicle each year, they weren’t able to purchase a decal until their personal property taxes were paid in full. However, in 2009 town council decided to switch to a permanent decal and place the auto registration fee on the tax bill.

Since then, a report prepared by Boyd shows that the value of delinquent personal property taxes has increased from $15,373 in 2009 to $28,142 in 2011. Delinquent auto licensing fees have increased from $33,657 to $49,066.

“In viewing the fiscal year 2013-2014 budgetary needs, I strongly recommend the reinstatement of the annual decal. This will help in collections of the decal fees, as well as the personal property taxes,” Boyd told council and Town Manager John Hawley in the report, which was submitted to them in October.

At that time, Boyd was asked to check into using a “DMV Stop” program to enforce the collection of taxes and licensing fees. The program allows a locality to put a stop on tag renewals through Virginia Department of Motor Vehicles until the taxes and fees are paid in full.

Boyd said she has not participated in the program through DMV because it is time consuming and she doesn’t have the staff to manually enter the required information or lift the “stops” when fees and taxes are paid.

In a new report given to town council Tuesday night, Boyd points out there are numerous steps involved in using the DMV program. She said the original tax ticket serves as first notice to the citizen. A delinquent notice has to be mailed 30 days after the due date has passed, then a third notice has to be sent stating the final due date.

After the final due date, the DMV “hold” has to be “keyed in manually to DMV,” then released “immediately” when all payments have been made. Boyd said town and DMV records have to be reconciled monthly.

Boyd pointed out Tuesday that of 5,361 personal property tax tickets mailed out recently, about 1,000 were returned due to incorrect mailing addresses. She attributed the incorrect information to the fact citizens have moved without notifying DMV of their new address.

She said correct addresses would have to be determined before the town could proceed with using DMV Stops.

“In view of all of the manual labor involved in the process, the town currently does not have the labor force necessary to utilize the program,” Boyd said.

In response to a request by council, Boyd contacted other area localities to find out whether they have permanent or annual decals and whether they use the DMV program or some other form of collection of delinquencies.

Three of the seven localities contacted, Christiansburg and Roanoke City, use the DMV program, Boyd said.

She reported that Pulaski County does not use the program because it is “very involved” and the treasurer’s office doesn’t have the manpower to administer it.

“They are currently adding the personal property delinquencies to the Set-Off-Debt submissions. However, since the elimination of the (county) auto decals, their submissions have more than doubled,” Boyd said of the county’s report to her.

Most of the localities reported seeing a drop in collections after eliminating annual decals, according to Boyd’s submission to council. She said some localities have hired a collection agency to address the problem of delinquent accounts, but the city of Galax reverted back to annual decals after experiencing increased delinquencies.

Boyd said Evelyn Powers with Roanoke City recommended Pulaski outsource collections rather than using the DMV program because it would be difficult to use without the required personnel.

She said she was told by Powers, “It is not an easy process, requires a lot of work and, unless we were automated, all information would need to be entered manually.”

After speaking with other jurisdictions, Boyd said, “I am still of the opinion that the most efficient and cost savings method of increasing revenues from delinquent personal property taxes is through the issuance of annual decals.”

She said town police are “more than willing” to return to enforcing expired decals as they did prior to the 2009 change.

If council decides to stay with permanent decals, Boyd recommended outsourcing collection of the delinquent accounts. She noted council will need to make a decision by March for her to have time to order the decals if the town reverts to annual decals.

Councilman H.M. Kidd said he would like to see Boyd obtain additional information on outsourcing collections. He has said he hates to see the town go back to annual decals.

Vice Mayor Joseph Goodman agreed additional information is needed on outsourcing collections. However, he said he would like to see real estate tax delinquencies added to the collections.

Hawley said the town once contracted for tax collections, but the firm cancelled the contract because the value of annual taxes needing collection wasn’t enough to meet the firm’s requirements.

Councilman Jamie Radcliffe said he dislikes auto decals, but, as a law enforcement officer, he thinks they are the simplest method of ensuring taxes and licensing fees are collected. Besides, he added, other problems (law and ordinance violations) are often addressed when a stop is made for an expired decal.

Goodman said one of the common complaints council hears is that citizens don’t like have to scrape off the decals every year.

To that, Boyd suggested the town could probably find a high school student willing to stand in the municipal building parking lot to scrape off citizens’ old decals for tips.

 

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