Tax delinquents make impact in Western Pennsylvania
Real estate tax bills are reaching households this month, but municipalities and school districts that rely on taxable land for operating money know many property owners won't pay their share.
Tax delinquency rates in Western Pennsylvania can reach as high as 25 percent, the Tribune-Review found by speaking to budget and finance officials, a reality that further squeezes the budgets of cash-strapped boroughs, townships, cities and school districts.
“If we were able to collect an additional 10, 5, 7 percent, we'd be in a much better financial condition,” said Philip Martell, director of finance and operations for Wilkinsburg School District, which routinely does not collect 22 to 25 percent of the $13.1 million in property taxes it levies on about 5,000 parcels. “We have to get these numbers up. It's one of the few places that school districts can increase revenues.”
Part of the blame falls on taxpayers, but some goes to taxing bodies, said Kevin Gillen, an economist at the University of Pennsylvania's Fels Institute of Government.
Enforcement should be strict and people should feel they get what they paid for, in terms of police, fire and other services, Gillen said. Uncollected taxes can lead to inefficient government. “There's a very high correlation between delinquency and municipal performance,” he said.
Municipal governments and school districts are not required to report delinquencies to county or state agencies. The Allegheny Intermediate Unit does not track delinquency rates among school districts, and municipal leagues don't track rates for townships and boroughs.
Taxing bodies often give delinquent accounts to private collectors. Some scofflaws end up in court. Districts and municipalities in Allegheny County have sued 1,454 property owners for taxes since this year began.
‘Impacts the budget'
Delinquency rates remain steady over time. Reassessments and property tax increases appear to have little effect on how many people pay taxes, according to tax collectors and budget officials.
Despite a tax increase from 12 mills to 17 mills last year, delinquencies in Youngwood hovered at less than 5 percent, said Diane Derco, secretary and treasurer. The borough of 3,000 residents in Westmoreland County had $20,328 in uncollected taxes out of the $452,080 levied, or about 4.5 percent, Derco said.
“Every amount of dollars impacts the budget, whether it's $2,000 or $20,000,” Derco said. “We factor it in. You have to take a percentage off” when budgeting.
Delinquency rates in Brownsville Area School District, which covers several Fayette County municipalities and West Brownsville in Washington County, ranged from 15 percent in Fayette County communities to 25 percent in West Brownsville, Business Manager Mike Gigliotti said.
Those rates held steady even when the district raised taxes from 13.07 mills to 16.57 mills in 2011, he said. Brownsville schools were owed more than $740,700 in uncollected property taxes in 2012. The district was due to collect $5.18 million during the 2012-13 school year.
Pittsburgh and its school district have about 23,700 delinquent accounts, according to the city's website. Officials did not respond to requests for more information.
In Clairton, the school district expects to collect 68 percent of the tax it should, Business Administrator Charles Lanna said. As of mid-January, the district had not collected $945,000 of $2.9 million levied in property taxes, Lanna said.
A major assessment appeal by U.S. Steel Corp. — the largest taxpayer — lowered the values of six properties in Clairton by a combined $12.3 million.
By contrast, Mt. Lebanon's property tax collections are near 100 percent, Tax Office Manager Mary Abbott said. The municipality collected 97.5 percent of $12.2 million it levied in 2013.
Tax collectors say some accounts are impossible to collect. Odd-shaped lots with no buildings have no addresses to send bills, and some properties are so behind that accumulated penalties and fees are more than the tax owed. Some property owners aren't around to write checks.
“If you want to send them a bill, you'd have to send it to the cemetery,” said Charles Gross, tax collector for Dravosburg and McKeesport Area School District.
Gross estimated about 20 to 25 of the borough's 900 accounts are uncollectable.
Yet, he said, “We have a large amount of senior citizens, and senior citizens are good at paying their taxes. I'm pretty proud of the residents of our town. They feel that it's their civic duty.”
Wilkinsburg and its school district offered tax amnesty for two months last year, letting people pay back taxes without penalty. The school district made $780,000 during the amnesty program in May and June, Martell said. The borough, with delinquency rates around 20 percent, collected about $200,500 in November and December, Finance Director Dave Egler said.
The borough and school district are considering repeating the amnesty program. “It's better to get something, rather than nothing,” Egler said.
But Tom Ginsberg, a project manager for Pew's Philadelphia Research Initiative, says tax penalty forgiveness should be a one-time gift followed by strict enforcement.
“It's a form of kicking the can down the road,” Ginsberg said of amnesty programs. “If you don't enforce, then you're going to have the same problem.”
Staff writer Kari Andren contributed to this report. Aaron Aupperlee is a Trib Total Media staff writer.