DLS City & Town
Post date: Dec 19, 2019 9:17:43 PM
DLS Website Refresh Underway
Kirsten Shirer - Data Analytics and Resources Bureau Chief
If you’ve visited the DLS website recently, you’ve probably noticed some changes. DLS’s Data Analytics and Resources Bureau has started updating our web pages to make them easier to use and visually more attractive.
On the DLS home page (www.mass.gov/dls) you’ll notice that five of our most requested services are now shown as picture tiles in a block called a “mosaic.” Adding a mosaic lets us display our most important pages higher on the page and frees up space below the tiles for additional content. The tiles will change when we want to highlight a service or specific page – for example, you’ll see a tile for Cherry Sheets whenever we release budget estimates. Many other agencies on Mass.gov are now using mosaics, and we think it’s a great new way to highlight our most popular content.
The primary goal for the website refresh is an improved user experience. We want to provide faster access to the information in our pages, and better results when using search engines like Google, Bing and Mass.gov’s own search tool. Every person looks at a website from a unique perspective, so we’re very interested in hearing what you like and don’t like about the site. Send us an email and let us know at DARB@dor.state.ma.us
Updating Uncollected Property Taxes and Excises
Susan Whouley - Bureau of Accounts Field Representative
David Guzman - Bureau of Accounts Field Representative
The following article is a continuation of our last report on the status of uncollected real estate, personal property and motor vehicle excise taxes as reported by cities and towns to the Bureau of Accounts (City & Town July 20, 2017). The review will update the numbers and data analyses; collection procedures provided in the last article have not changed and can be reviewed by clicking on the link above. The tables used in this article include June 30, 2018 data as received by the Bureau from 57 cities and 292 towns (two towns did not report) on an unaudited basis.
In our July 20, 2017 article, we reported that outstanding real and personal property taxes, tax titles and motor vehicle excise (MVE) taxes for all fiscal years as of June 30, 2016 totaled $805 million.
Since that time:
the statewide real and personal property tax levy increased by 9.0%;
motor vehicle excise tax revenues increased by 7.8%;
the economy has run relatively well; and
interest rates and the unemployment rate have both remained low.
Given all this, has the level of total outstanding property and MVE taxes increased or decreased since June 30, 2016? Let’s take a look.
Uncollected Taxes for Real Estate and Personal Property Taxes
For all Massachusetts communities, the FY2018 real estate and personal property tax levy totaled about $16.5 billion. For most communities, the tax levy represents the largest revenue source of the general fund. Collecting all taxes due within a fiscal year is highly unlikely, despite any municipal Collector’s best efforts. Collection of outstanding amounts, which have a process that Collectors and Treasurers must follow, becomes critically important for improving a community’s free cash position as well as for cash flow.
The Schedule of Outstanding Receivables
As part of the free cash certification process, the Bureau of Accounts receives a Schedule of Outstanding Receivables that matches receivables on the Collector’s and Treasurer’s books with the Accountant’s general ledger showing that proper internal controls are in place. Any property tax variance is a reduction to free cash, but free cash does not replace the variance. Reconciling the variance must still be attempted.
Total Outstanding Property Taxes
Table 1 details total outstanding real estate and personal property taxes for all fiscal years as of June 30, 2018 as accounted for on the Collector’s and Treasurer’s books reported by 349 communities.
Table 1
Source: DLS Gateway (*negatives reported by 9 cities, principally Boston, totaling $25.9 million, indicating amounts due taxpayers)
Current Outstanding Real and Personal Property Taxes by Population
Table 2 reviews outstanding real estate and personal property taxes for FY2018 when population influences higher FY2018 outstanding property taxes to their respective FY2018 tax levies. The data in this Table reveals that:
the median percentage for real estate taxes was less in communities with populations greater than 10,000 than in communities with populations less than 10,000;
as populations decrease, median percentages for real estate taxes increase over communities with populations greater than 10,000; and
as populations decrease, the median percentage for personal property taxes showed less than communities with a population greater than 10,000.
Table 2
Higher real estate outstanding percentages in lower populated communities may be reflective of insufficient time, budget or staff to pursue outstanding taxes, increase in the collection process after June 30, a combination of all of the above or possibly other reasons exclusive to the community.
Tax Titles
Collection of outstanding real estate taxes involves a “tax title” or “tax taking” process.
Tax titles are reported on the Schedule of Outstanding Receivables in total for all fiscal years. Table 3 details tax titles by all cities, all towns and then by 349 cities and towns in the aggregate.
Table 3
MVE Taxes Budgeted vs Received
MVE taxes are estimated receipts of a municipality’s general fund. They are budgeted for by fiscal year typically based upon the amount received in the prior fiscal year. Additional amounts budgeted is by approval of the Bureau of Accounts, usually at the time of annual tax rate certification.
Problematic for all cities and towns is a good budget estimate cannot be determined at budget time. The greatest billing amount is unknown until at least seven months into the fiscal year when the largest commitment is received from the Registry of Motor Vehicles.
In FY2018, almost $799 million in MVE receipts were budgeted and over $916 million were received for 351 cities and towns as of June 30, 2018. Table 4 reports the level of Outstanding FY2018 MVE taxes in relation to FY2018 MVE taxes budgeted and received in FY2018 for 349 reporting cities and towns.
Table 4
Outstanding MVE Taxes for All Fiscal Years
Table 5 shows MVE taxes Outstanding for all fiscal years for 349 reporting cities and towns.
Table 5
Final Tally
Table 6 is a final tally of outstanding property and MVE excise taxes for all fiscal years as of June 30, 2018. Remember, the total as of June 30, 2016 was $805 million.
Table 6
Conclusion
This report has shown that almost $819 million of property and MVE taxes remained outstanding as of June 30, 2018, about $14 million or 1.7% more than June 30, 2016, despite greater increases in both the statewide real and personal property tax levy and in MVE tax revenues from June 30, 2016 as indicated earlier in this article.
These outstanding amounts, if paid all at once, could help solve many local matters. Expect, however, amounts will be collected and abated over time and new amounts will be added and reported to the Bureau as of June 30, 2019.
Our last article presented the following conclusions that are as relevant today as they were then:
Collection of real estate, personal property and tax titles has a process that Collectors and Treasurers must follow in meeting the fiduciary responsibilities of their positions, improving a community’s level of free cash and maintaining proper cash flow;
To ensure the availability of funds for appropriation and proper cash flow, Collectors and Treasurers in less populated communities may have increased responsibilities and/or challenges in collecting outstanding taxes;
The collection process for outstanding personal property taxes requires different methods than for outstanding real estate taxes because there is no similar lien;
Outstanding property taxes, whether placed into tax title or not, remain uncollected and weaken the community’s financial position.
To learn more about the tax collection process, see:
City & Town: April 7, 2016, May 5, 2016, June 2, 2016, July 20, 2017
