Lock box has city in the money
$27 million in accounts compared to $9.6 million at this time last year
What a difference a year makes.
At this time last year, many taxpayers were wondering whether the city would ever cash their checks, or that their check had been lost. And city coffers, like reservoirs after a heavy rain, are usually full a month after the first quarterly payment July 15.
But last year, the tax assessor’s office couldn’t keep up with the deluge of payments. The processing of checks fell so far behind that, in some cases, it was two and even three months before they were deposited.
The further behind the city fell in processing payments, the more calls there were from taxpayers, which stole more time from the processing and further slowed things. It did more than that. Tax deposits trickled in and, at one point, chief of staff Mark Carruolo said Tuesday, the administration considered borrowing funds to meet payroll and stay current with vendors. It didn’t come to that.
“Last year, whatever was in the checking [account], that was it,” said City Treasurer David Olsen yesterday.
There were no reserve accounts. Usually, he said, with the incoming flow of payments, there was enough to “play the float” between the incoming taxes and the outgoing expenses. The money was put in certificates of deposit and money market funds to earn about 1 percent in interest. But there were no “extra” funds last year. That’s when Olsen thought there had to be a better way and he explored “lock box” services.
Early this spring, the City Council awarded Citizens Bank, which handles the city’s accounts, a $152,000 bid to operate a lock box for tax payments for two years. Citizens subcontracted the job to Fidelity in Boston. The company deposits payments within a day of receipt, sending a report to the city for the posting of the account.
“We’re in great shape,” Mayor Scott Avedisian said Tuesday when asked how the system is working and what the city has in its accounts.
The numbers tell the story.
As of mid-September last year, the city had $9.6 million in its various accounts. That compares to $27 million as of yesterday.
Not everybody can report their tax payments have been speedily processed. One caller to the Beacon reported he still has not seen a check clear for a payment made in July.
Carruolo was incredulous. He speculated the check was lost in the mail and vowed to follow up if provided the name and address. Olsen offered a couple of possible explanations. Many taxpayers continue to mail their payments to the city’s post office box listed on last year’s tax bills, not the Massachusetts address listed on the current bills. More frequently, amounts sent in don’t coincide with payments due, requiring the tax collector’s office to reconcile payments before being posted.
When the lock box system started, there was a backlog of these payments. Now the office is going online daily to download and reconcile these payments, Olsen said.
But it hasn’t been clear sailing either.
A conversion of systems by the city’s tax invoicing and accounting software provider, Munis of Tyler Technologies, resulted in several snafus, including the non-billing of 250 fleet vehicles; the omission of more than 1,500 senior exemptions; some veteran exemptions; omission of tax delinquency notices; and the improper coding for some properties, resulting in the application of the improper tax rate. In all, said Carruolo, eight or nine problems were identified.
Carruolo said the issues are being addressed; that Munis has been cooperative; and that the company is picking up the cost of revisions to the software.
“If anything, I would like it to go faster,” he said.
The plan is to have the revisions made and tested by late October.
“What we’re working on now is that it won’t happen again,” he said. “So that we don’t have these problems next year.
As for this year, the tax collector’s office has been issuing revised tax bills to payers who failed to get their exemptions. Initially, these were hand-calculated. Carruolo said adjustments are being manually entered to generate a revised bill. He couldn’t say whether this will be completed by Oct. 15, when the second quarterly payment is due.
Avedisian and Carruolo credited Olsen with pulling things together.
They both said the backlog in the tax collector’s office has been cleared up. The office also conducted a tax sale for unpaid taxes and utility bills that brought in $1.5 million. The mayor said Olsen has looked to cross-train employees so that they can handle a variety of tasks.
“Munis,” he said of the software, “has been our biggest issue. If that had been brought to light, we could have gotten on the track a lot sooner.”
The city did not learn of the omission of exemptions from some tax bills until they were mailed in June.
Olsen said his goal is to further automate the tax notice and collection process. And, going forward, he wants to maintain the lock box system as well as promote payments by credit card. While credit card payments cost the user a fee, he said the city is averaging about 15 payments by credit card a day.
The volume surprises Olsen, as he expected the fee would be a deterrent. But seeing that people want to use it, he thinks it may become a factor in payment plans going forward.
And a lock box, he added, should be a part of the contract when the city seeks bids on banking services in two years.