COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Tax Collector

 

DATE:

3/29/04

BOARD MEETING DATE:

April 20,2004

 

TO:

Honorable Board of Supervisors

FROM:

Lee Buffington, Tax Collector/Treasurer

SUBJECT:

Establish or Increase Fees Associated with Tax Collection.

 

Recommendation

Approve a resolution modifying the compensation schedule for fees associated with Tax Collection.

 

Background

Pursuant to your Board's direction, the Tax Collector's Office was asked to reduce it's Net County Cost (NCC) by 20% for fiscal year 2003-2004; and where feasible, to raise fees to recover costs for services.

California Revenue and Taxation Code Section 2621 authorizes counties to collect a fee for preparing delinquent tax records and for giving notice of delinquency on each separate valuation of the secured roll. Government Code Section 6157 permits the County to charge a reasonable amount not to exceed actual costs for returned checks. Government Code Section 54985 allows a county Board of Supervisors to increase or decrease any fee or charge, which is otherwise authorized to be levied, in the amount reasonably necessary to recover the cost of providing any product or service or the cost of enforcing any regulation for which the fee or charge is levied. The fee or charge may reflect the average cost of providing any product or service or enforcing any regulation.

Discussion

Recognizing the need to recover costs and that Section 54985 of the Government Code permits the Board of Supervisors to increase the amount of fees imposed by law, analyses were performed to determine the actual costs incurred by the Tax Collector to provide the following services. All proposed changes to the fee schedule are based on the following analyses:

  

    1. Processing a Secured Tax installment delinquency notice.

      · Increase the fee on the 2nd installment from $10.00 to $40.00

      · The current allocation of the $10.00 fee on the Secured Roll is to the General Fund

      · The actual cost of processing all delinquencies is approximately $349,499. The average cost, based on 6144 2nd installment delinquencies for 2002/2003, is $56.88 per delinquency.

      · The estimated fiscal impact is new annual revenue to the Tax Collector in the amount of $184,320 (Based on 6144 delinquent parcels @$30.00 per parcel to the Tax Collector)

      · The proposed fee does not exceed the cost of providing this service.

    2. Processing a Supplemental Tax installment delinquency notice.

      · Increase the fee on the 2nd installment from $10.00 to $40.00

      · The current allocation of the $10.00 fee on the Supplemental Roll is to the General Fund

      The actual cost of processing all delinquencies is $231,710.

      The average cost, based on 3050 2nd installment delinquencies for 2002/2003, is $75.97 per delinquency.

      · The estimated fiscal impact is new annual revenue to the Tax Collector in the amount of $91,500 (Based on 3050 delinquent parcels @$30.00 per parcel)

      · The proposed fee does not exceed the cost of providing this service

    3. Processing returned checks (paper and electronic).

      · Increase the fee from $35.00 to $85.00

      Actual cost to process returned checks for roll year 2002/2003 was $55,912.50

      The average cost per check based on 570 returned checks for 2002/2003 was $98.09.

      · The estimated fiscal impact is an increase in annual revenue from $19,950 (Based on 570 returned checks for 2002/2003 at $35.00) to $48,450 (Based on 570 checks at $85.00)

      · The net result is a $28,500 increase in revenue

      · The proposed fee does not exceed the cost of providing this service

    4. Processing the transfer of a tax bill to tax-defaulted property.

    California Revenue and Taxation Code Section 4373 dictates " Each year after property becomes tax defaulted by operation of law, the tax collector shall insert in the abstract list, or prepare an abstract list of, unpaid items from the roll in which the tax-defaulted properties are recorded." The costs of processing a tax bill for Tax-Defaulted Property are directly attributable to the Revenue and Taxation Code requirements for record maintenance and payment collection.

      · Increase the fee from $15.00 to $35.00

      Current Allocation of the $15.00 fee is:

      $10.00 to the Tax Collector

      $5.00 to the State of California

      Actual cost to transfer and maintain 5655 2002/2003 tax bills in Tax-Defaulted Property was $223,469 or $39.51 per parcel.

      · The estimated fiscal impact is new annual revenue of $113,100 (Based on 5655 at $20.00 to the Tax Collector)

      · There is no proposed increase to the $5.00 State portion of the fee.

The proposed fee does not exceed the cost of providing this service.

 

Vision Alignment

This resolution supports the Vision 2010 commitment to responsive, effective and collaborative government, specifically Goal #20: Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.

Fiscal Impact

Using the new fee rates, we estimate approximately $417,420 in new revenue.

The following table shows the current and expected increase in revenue to the Tax Collector

Description of Fee

Current Revenue

New Revenue

Total Revenue

1. Secured Tax 2nd Installment Delinquency

0

$184,320

$184,320

2. Supplemental Tax 2nd Installment Delinquency

0

$91,500

$91,500

4. Returned Checks

$19,950

$28,500

$48,450

5. Transfer to Tax-Defaulted Property

$56,550

$113,100

$169,650

Total Revenue

$76,500

$417,420

$493,920