Fayette uses most costly method of collecting taxes
Editor’s Note: This is the second in a series of articles examining tax collector compensation in Fayette County.Compared to surrounding counties, Fayette County uses the most costly method of collecting real estate and per capital taxes, a 3.5 percent commission rate paid to the county’s elected tax collectors. Basically, the Fayette system pays 39 municipal tax collectors $3.50 for every $100 of county taxes they collect and forward to the county coffers.
Fayette paid $285,602 to the county’s tax collectors in 2002 to collect $9.4 million in taxes, according to Jeanine Wrona, the county’s chief deputy controller. Although that amount equates to roughly 3 percent, Wrona said that since county Treasurer Robert Danko’s office collects county taxes for Uniontown and Connellsville cities and Ohiopyle Borough, no commissions were paid for those areas.
If those three municipalities were added to the mix, another $45,000 in commissions would boost total tax collector payments to $330,342, which comes in at 3.5 percent of taxes collected, said Wrona.
Fayette’s 2003 budget earmarked $237,600 for tax collector commissions, with another $18,176 added for tax collectors’ FICA (Social Security) benefits. That means the county plans to spend $255,776, slightly more than a quarter-million dollars, on tax collectors in order to collect this year’s real estate and per capital taxes.
But an analysis of four neighboring counties found that Fayette, the poorest county under many barometers, appears to offer the most lucrative method of compensating its tax collectors. In comparison:
– Washington County, a fourth-class county like Fayette, doesn’t even use tax collectors to collect county taxes. The job is performed internally by the nine-person county treasurer’s office, which has a yearly budget of $413,138.
– Greene County, which is smaller than Fayette, also completely bypasses using tax collectors and farms the job out to a five-person county treasurer’s office, which has a yearly budget of $160,063.
– Somerset County, also smaller than Fayette, has ditched the percentage commission system entirely. It pays tax collectors a flat $2.25 fee for every tax parcel bill collected. If that system were employed in Fayette, the yearly cost would be $175,175, assuming a 100 percent collection rate instead of the traditional 85 percent on which Fayette budgets are predicated.
– Westmoreland County, larger than Fayette, pays commissions to tax collectors on a sliding scale ranging from 1.2 percent to 0.53 percent, with the percentage falling as collections rise. But Westmoreland’s highest commission rate of 1.2 percent, paid on the first $400,000 collected, is nearly three times lower than the 3.5 percent Fayette pays on all its tax collections.
While the county commissioners in any given county can’t abolish tax collectors, a position mandated by state law, they do have options that can reduce the cost of collecting taxes, according to Michael Weir, project manager for the Pennsylvania Economy League’s western division.
“Tax collectors can be paid three ways: by (each) bill, by commission and by salary,” said Weir. A fourth option, used in Washington and Greene counties, is to have that work absorbed into the county treasurer’s office.
Jerry Cross, a Pennsylvania Economy League central division researcher, said Fayette’s 3.5 percent commission rate is “huge.” While smaller than the maximum 5 percent allowed by law, Cross said his section of the state has “very few high-commissioned tax collectors.”
As an example, Cross pointed to Lancaster County, which pays tax collectors a flat rate of only 75 cents per tax bill. That’s considerably less than the $2.25 per bill paid in Somerset County
“Obviously, each county is different (in how it handles taxation),” said Cross.
Diane Rossini, Fayette’s chief deputy treasurer, said that changing the county’s 3.5 percent tax collector commission rate has been “brought up every year for a number of years.” She said that Danko’s office collects county taxes for Uniontown and Connellsville cities because they do not have elected tax collectors.
“It’s part of the county code, actually,” said Rossini, who noted, “I’m not sure how Ohiopyle (Borough) got thrown into this, but we’ve been doing it (for them) for 12 years, at least.”
Greene County chief clerk Gene Lee said his county is one of a handful in the commonwealth that uses the treasurer’s office to handle its tax billing, which includes 32,000 to 33,000 real estate parcels.
“We’re probably one of eight or 10 counties that does it that way,” Lee said. “I think it’s fairly cost-effective, and I think we do a pretty good job at it.”
The Greene County treasurer’s office has five full-time employees and a budget of $160,063, while the Fayette County treasurer’s office has five full-time workers and a $152,509 budget. However, Fayette has a larger population and 77,830 taxable real estate parcels.
Washington County deputy treasurer Claudia Hargrove said her office just finished mailing 108,000 tax notices. The staff includes eight full-time employees, plus Treasurer Francis L. King, and has a budget of $413,138.
“We collect every county tax,” said Hargrove, who noted that “(counties) have that option.” Added Hargrove, “We have no county tax collector agents, and we never have.”
Westmoreland County finance clerk Angela Matson said her county pays its tax collectors on a sliding scale: 1.2 percent for the first $400,000 collected, 1.0 percent on the next $200,000, 0.6 percent on the next $200,000, and 0.53 percent on all collections more than $800,000.
In Somerset County, Treasurer Donna Schmitt said tax collectors are paid $2.25 per tax bill that they collect. “If you don’t collect, you don’t get paid for it,” said Schmitt. “It used to be $2 per parcel, collected or uncollected.”
Schmitt said that in Somerset County, highly paid tax collectors simply don’t exist. “If we have any that make $10,000 or $15,000 in total, we’re lucky,” she said.