Return to timeline: Pre-June 2002
JOHN T. ATKINSON, City Treasurer: Keep sticker, add fee to property tax
To decal or not to decal is the question, but to collect or not collect taxes is the task.
A justice of the U.S. Supreme Court once wrote in defense of the extreme collection powers granted to tax collectors that taxes are the lifeblood of government, and without them government ceases to exist.
City decals are no less a pain for the treasurer's office than they are for our taxpayers. I would lead the charge to eliminate them, if there were no personal property taxes to collect. Unfortunately, that won't be the case for at least a few years to come.
When I became treasurer in 1978, there were tens of thousands of people who did not pay their taxes on time, and thousands didn't pay at all, because there were few consequences for non-payment. That was the year that the City Council passed a law requiring payment of personal property taxes on a vehicle prior to a decal being issued for it. It worked so well, they later changed the law to require payment of all personal property taxes prior to issuance of any city decal. It was and still is the simplest and most cost-effective way to collect delinquent personal property bills. No ticky, no laundry.
No one defends the present process of selling 285,000 decals and collecting $7.5 million in previous year's taxes during the cold months of January, February and March of each year. It does identify 285,000 vehicles to tax, 40,000 others owned by members of our armed forces that shouldn't be taxed, and identifies 10,000 that shouldn't be taxed. That's a lot of verified data for $320,000.
My job as city treasurer is to maintain a level playing field among taxpayers by collecting from everyone the taxes they owe. The more I collect, the less we have to pay. My experience is that no one would pay any taxes if there were no penalties associated with non-payment. My office uses many tools to collect, but most are slow and expensive. We know the longer the delay in pursuing delinquent accounts, the less chance we have of collecting. We also know that delaying a delinquent the right to operate their car is the most efficient and cheapest way to collect property personal taxes. That's because the delinquent comes to us asking for something we have. The "no decal" plan also has the feature, but it's run from Richmond.
In Virginia Beach, decals are a $7.8 million problem, but they are responsible for collecting $18 million in delinquent taxes. Most progressive localities in Virginia have eliminated the separate process of selling decals in cold months and have combined them on the personal property bill that is due in June. They have found that in so doing they have far less delinquency, an accelerated cash flow, and fewer staffers working on collections. It's simple. Sixty days before the deadline, they send you a bill for what you owe. If you want to continue driving trouble free, you pay the bill on time. They send you a decal. Some even send decals that won't fade and that will come off easily.
The current process and the "no decal" plan places no urgency on people to pay on time. Both require slow, expensive and bureaucratic processes to follow up and attempt to collect. This was evident in 2001 when Virginia Beach had 86,000 delinquent bills in July after the 70 percent credit was applied from the state of Virginia.
So, which is the most efficient and cost-effective method of collecting $25.8 million in decal fees and delinquent taxes?
Under the combined-bill plan, Virginia Beach would have a one-time cost of $150,000 to set up the system, and an annual operating cost of $13,000 for decals.
Under "no decal" in 2001 the city would have paid DMV $320,000 per year to collect the decal money, and $1.6 million to mail 86,000 notice letters. The city would then have to collect the $1.6 million from the delinquents and wait in some cases for up to 24 months for the state renewal to catch up with a delinquent.
This delay will increase uncollectibles by delaying collections, and dump redundant penalties on the backs of the poor, the unsophisticated and the thousands who get trapped with bills that have to be reduced.
It's no ticky no laundry, but it costs more, it's slower and it thrusts a foreign nonresponsive governmental agency into the middle of a very complicated transaction where many delinquent bills are not owed.
I believe our citizens will be best served by combining personal property and city decals on the same bill.