Luzerne County officials are evaluating an auditor projection that the county’s property tax collection rate dropped 4 percentage points last year.
ParenteBeard, the county’s outside auditor, recently told county officials the collection rate was 88 percent last year — a drop from the typical 92 percent. The difference equates to about $3.5 million in property tax revenue, the firm said.
ParenteBeard did not provide council with specifics on how the rate was calculated because the 2012 audit is still being prepared. County officials say the June 30 home rule charter deadline to complete the audit won’t be met due to delays receiving financial information from several county-related entities.
County Treasurer’s Office Manager and Tax Administrator Laura Beers said she conducted her own extensive review of 2012 tax billings and collections and established a collection rate of 91.9 percent. “I’m very comfortable with that number. It’s not 88 percent,” Beers said.
County Manager Robert Lawton also said his research points to a rate higher than 88 percent, though he stressed he looks forward to discussions with auditors about their calculation.
The calculation of collection rates has long been a subject of debate in county government because the percentage depends on how the baseline is set.
The maximum amount of property tax available for collection in 2012 was $105.5 million, based on the tax rate and tax base.
However, several deductions must come off the top to be fair, county officials have said. For example, the $105.5 million must be reduced at least $4 million because the county offers a homestead tax break on primary residences.
The county also has typically reduced expected collections another $2 million to account for properties in Keystone Opportunity Zones and other tax break and tax diversion programs. These deductions would lower the realistic potential tax collection to a baseline of $99.5 million.
The county ended up bringing in $91.1 million in 2012 property taxes last year, which would be around a 91.5 percent collection rate based on the $99.5 million maximum, Lawton said. The amount collected also exceeded the budgeted property tax revenue of $90.3 million, Lawton said.
The county’s back-tax collector did not receive an increase in unpaid county tax bills from 2012 to 2013 — another indication the collection rate did not decline.
The county forwarded $7.96 million in unpaid 2012 county tax bills to tax claim operator Northeast Revenue Service LLC for its collection at the start of this year, compared to $7.98 million the previous year, the company said.
The county plans to switch to in-house county tax collection by the county treasurer’s office next year. Council Chairman Tim McGinley said the hiring of an outside company for county tax collection also remains an option.
The county currently collects its own taxes in three cities: Wilkes-Barre, Pittston and Nanticoke. The fourth city — Hazleton — and three home-rule municipalities — Kingston Township, Wilkes-Barre Township and Kingston borough — collect taxes on the county’s behalf. Elected tax collectors handle collection in the remaining 69 municipalities.
Lawton said he is pleased with the tax collection this year to date. A total of $90.5 million was budgeted this year, and the county received $83 million as of the end of June, he said.