
DATE: Wednesday, June 11, 1997              TAG: 9706100214

SECTION: LOCAL                   PAGE: B3   EDITION: FINAL 

TYPE: PUBLIC LIFE

A SPECIAL WEEKLY REPORT

SOURCE: BY JON GLASS, STAFF WRITER 

                                            LENGTH:  120 lines

MAKING TAXPAYERS ANTE UP CHASING DELINQUENT PERSONAL PROPERTY TAXES IS AN ANNUAL CHORE.

It may be the most hated tax in Virginia.

And if history is a guide, about 20 percent of taxes owed on cars, boats and other personal property went unpaid by the June 5 deadline - last Thursday - in most South Hampton Roads cities.

Based on past collection rates, most of that delinquent money will be paid during the coming year - voluntarily or not. Overall, there aren't that many deadbeats trying to dodge the tax man, city officials say.

But every year, the region's five cities write off hundreds of thousands of dollars in personal property taxes they are unable to collect.

In Norfolk, for instance, the City Council in April approved an ordinance writing off $267,559 owed since 1991. State law sets a five-year limit on collecting unpaid taxes.

Chesapeake took a 1991 loss of $222,150. Virginia Beach, which writes off delinquent taxes for bookkeeping purposes after three years, expects to lose about $350,000 in 1993 taxes. Both Suffolk and Portsmouth took a hit for more than $100,000 in delinquent 1991 taxes.

In the big picture, officials say, those write-offs are minuscule. The 1991 loss for Norfolk, for example, represents only about one-half of a percent of the city's $509 million budget in 1997-98.

Virginia Beach Treasurer John T. Atkinson contends that delinquent taxpayers actually make money for the city because they have to pay a 10 percent penalty, plus interest, on the unpaid amount.

For the 1993 year, for instance, Atkinson said the city levied $770,000 in penalties on $7.7 million in personal property taxes delinquent after June 5 of that year. The city ended up collecting $720,000 of the penalty money - more than twice as much as the $350,000 in tax dollars written off.

Still, cities feel the impact.

``When you look at a tightly balanced budget, any collections that don't get made put a strain on the budget,'' said Nancy Tracy, Norfolk's finance director.

That $267,559 Norfolk wrote off, for instance, would have covered the new $160,000 library bookmobile the city plans to buy.

It also is a bigger chunk of change than the $250,000 budget increase originally proposed for the library system, until a public outcry prompted the council to boost spending $125,000.

For Jimmie Wilson, president of Ingleside Civic League in Norfolk, the lost money could pave a lot of potholes. In fiscal 1996, the city spent $54,348 on materials to patch 29,011 potholes, according to the Department of Public Works.

In Virginia Beach, schoolchildren could benefit from the $350,000 written off, even if it is just a ``drop in the bucket,'' some residents said.

``When they have excess money, it always goes for fun things,'' said Eleanor Moore of Pembroke Manor in Virginia Beach. ``Then whenever the School Board wants more money they start talking about raising taxes.''

To some extent, all of the cities rely on collecting the previous year's delinquent personal property taxes to balance the budget. Norfolk has budgeted $8.1 million for 1997-98, even though it is estimating to recover only $7.7 million in unpaid 1995-96 personal property taxes in the current year.

For most cities and counties across Virginia, including South Hampton Roads, the personal property tax is their second-largest source of income, ranking only behind real estate taxes, said Betty Long, director of fiscal policy for the Virginia Municipal League.

But for residents, it is one of the most unpopular. This year, Jim Gilmore, the Republican candidate for governor, has staked his platform on eliminating the tax on vehicles worth $20,000 or less.

City treasurers sympathize with taxpayers, particularly newcomers unfamiliar with the tax. The vehicle tax ranges from $3.70 per $100 of assessed value in Virginia Beach to $4.35 per hundred in Portsmouth.

``People are quite often surprised by a bill they can't meet,'' said Virginia Beach's Atkinson. ``It destroys their budget. You take a young couple with a baby and they go out and buy a $20,000 car, and the next thing they know John Atkinson sends them a bill for $700-odd dollars. They could be honest, God-fearing taxpayers and still couldn't pay it.''

Chesapeake doesn't mail tax bills to residents who owe $15 or less in personal property taxes, about 22,500 accounts.

``It's not worth the city's time and effort to collect it,'' Treasurer Barbara O. Carraway said. ``I just don't think we need to Mickey Mouse the people - they were getting billed for ridiculous amounts, 50 cents. I look at it as saving the city money on collection.''

Many delinquent taxpayers wait to pay until they have to renew their city decals. Residents must pay their personal property tax to receive decals, one of the most sure-fire ways to collect from delinquents, treasurers say.

A big headache for treasurers is the mobility of people in the region. Norfolk generally has about 10,000 bills - out of about 210,000 mailed - returned every year by the post office because the residents have changed addresses.

Many people move without paying their taxes, officials said, and it's difficult to track them if they leave Virginia. But local treasurers say they've become increasingly aggressive to collect delinquent taxes.

Typically, if delinquents fail to respond to a ``distress warrant'' warning them to pay, the treasurers' offices will place tax liens on residents' bank accounts or their salaries. In some cases, they'll seize the property.

Carraway said Chesapeake this year has sent delinquent bills dating to 1992 to a collection agency for a six-month trial. So far, the effort has returned about $5,000 at no cost to city, she said. The state allows an additional 20 percent surcharge for collection costs, she said.

Even if residents can't afford to pay off the entire tax bill, treasurers advise paying off at least a portion. Most will work with residents to set up payment schedules.

And in the end, most people do pay. While about 20 percent of personal property taxes regionwide were not paid by the June 5 deadline last year, the number had dropped to about 2 and 3 percent a year later. After five years, the delinquency rate drops to less than 1 percent.

``It is their right to be delinquent,'' notes Norfolk Treasurer Joseph T. Fitzpatrick. ``It's not their right to not pay.'' ILLUSTRATION: Photo

BETH BERGMAN/The Virginian-Pilot

Norfolk City Treasurer Joseph Fitzpatrick with a stack of returned

tax notices. ``It is their right to be delinquent,'' Fitzpatrick

says. ``It's not their right to not pay.''

Graphic

The Virginian-Pilot

A BREAKDOWN BY CITY OF UNPAID PERSONAL PROPERTY TAXES

SOURCE: City treasurer's office in each city

[For complete graphic, please see microfilm]