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Talk about a “TAN” in spring or summer and most (if not all) will assume you’re scheduling time to bask in the sun. Talk about it in fall or winter and most will presume you either bought tickets for a very southern vacation or purchased some time in a “bed” that douses you with ultraviolet rays.
To economic wonks and government reporters, the three letters aren’t a word, they’re an acronym for Tax Anticipation Note — a wonderfully inoffensive name for a common gimmick that should offend. It makes most eyes glaze, but if you hear your municipal, school district or county officials discussing a TAN, your brain should tune in for a simple reason: They are talking about costing you more in taxes.
And unlike the myriad other spending governments do, this cost happened solely because you don’t pay taxes soon enough.
Just kidding.
It’s a case of said government officials being unable or unwilling to plan for a short stretch of the year when they know money will be tight.
Put it in terms of your mortgage (or rent). You know when it’s due, you know the cost, and (let’s assume) you have a good idea of how much money you will be getting on a regular basis. You need to spend/save your money in a way that assures you always make that required payment. Having a place to live ranks high on most priority lists.
If it looks like you are going to need more money to stay sheltered, you cut spending or seek ways to earn more money. The alternative is to take out a loan or run up credit card debt; do that annually and soon you are broke and homeless.
Authorizing a Tax Anticipation Note is roughly the government equivalent of using a credit card to pay rent or mortgage. The name says it all — well, except for the “Note” part, which sounds like they are just jotting down a reminder that tax is anticipated. It would be more accurately called TAD, for “Tax Anticipation Debt.”
Governments pass budgets for a fiscal year, but there are usually a few months between when they start spending and when tax dollars start rolling in. If you own your home, you see this in your school district property tax bills. By state law, the district fiscal year starts July 1, yet you can typically pay your taxes as late as the end of October without a penalty. If you wait that long, the district is paying its bills for four months before you pay yours. Thus the need to borrow money to cover costs until taxes pour in.
(Interesting side note: most banks probably won’t loan you money based solely on anticipation of your expected paychecks. They’ll ask for more tangible collateral; When you get a mortgage to buy a house, they take your house if you default on the mortgage).
For many governments that rely heavily on once-a-year property taxes, taking on TAN debt is an annual ritual. A story in Wednesday’s paper pointed out that Luzerne County has authorized an annual TAN for as long as anyone can remember. County Controller Walter Griffith calculated that the county has spent $554,223 in interest on these short-term loans in the last 13 years.
Which is why County Manager Romilda Crocamo’s Tuesday announcement that the county would not need a TAN for 2025 was such a big, huge, really meaningful deal. This should not be something lost “in the weeds” of government finances. This really is something important to everyone who lives here. The county is saving you money.
“This decision is not just a number on a balance sheet,” Crocamo said in a media event in the Courthouse rotunda. “It is a testament to our collective commitment to fiscal responsibility and prudent financial management.”
She is right, and every taxpayer in the county should appreciate it.
After all, it means you have a few dollars more to use working on your tan.