The Town of Bay Roberts is making early gains on overdue tax accounts just a few months after revising its collection policy.
In a report prepared for council and tabled at the May 14 regular meeting, CAO Nigel Black outlined how first-quarter collections went for 2019. The most recent audited financial statement for year-end 2017 showed the town was owed just over $2 million, with almost $900,000 of that considered doubtful for recovery.
For the first four months of 2019, the balance for taxes owed on years, up to and including 2018, declined by $251,538. Most of that decrease was for balances from 2018 ($120,287), with additional decreases recorded for 2017 ($59,252) and all years, up to and including 2016 ($71,999).
In February, the town adopted a revised collection policy that allows for a write-off of interest based on a sliding scale of lump sum payments for balances two or more years outstanding. The hope at the time was this would serve as an incentive for people to settle their tax bill in full.
Of the $251,538 amount, $36,918 was written off from principal and interest to account for businesses that have gone bankrupt and cases where the balance was deemed unrecoverable, leaving $214,620 collected. The interest write-off for lump sum payments applies to the balances owing from 2017 and all years prior, and was not calculated for the report prepared for council.
“A number of large payments of back taxes have been paid that were a direct result of the interest breaks allotted for in the updated policy,” Black wrote in the report. “These payments would have been doubtful without the implementation of those changes; at a minimum they would have been sporadic rather than substantial lump sum amounts.”
According to Black, collection of tax money from outstanding balances helps the town’s cash flow and lessens the likelihood of needing to take on short-term loans.
“It’s not extra money you can spend, but it keeps you from accessing loans,” he said.
In February, council also voted to change the interest charged monthly on outstanding tax balances from one per cent to 0.5 per cent. The town has dedicated additional staff time to working on collecting back taxes and has introduced a phased approach for sending letters on delinquent accounts, starting with commercial accounts that are two or more years overdue. They’ll initially outline an acceptable timeline for arranging payments.
“It basically gives them 30 days to either come in and make arrangements to pay or get themselves on a payment plan or clear up their balance.”
The next step will be letters with a new 30-day deadline and actions the town is allowed to take by law if the taxpayer fails to respond, including interruption of municipal services. The town will proceed similarly with outstanding accounts for residential properties.