Town council talks audit, delinquent taxes
STRASBURG — The Strasburg town council met to review the 2014 audit and for its annual review of outstanding tax and utility fee write-offs at its work session Monday night.
James Kelly, an auditor with Robinson, Farmer and Cox presented the findings of the fiscal year 2014 audit to council. Kelly said one good way to check the financial shape of a municipality is to compare the fund balance, which is the town’s savings carried from year to year to the fiscal year’s expenditures.
The town’s end of the year fund balance was $1.49 million, about 28 percent of the town’s expenditures, which was around $5.2 million.
“The town’s policy is to have an unassigned fund balance of 30 percent of general fund expenditures, so you’re about right there,” Kelly said.
Kelly also informed the council about new standards that will apply to the 2015 fiscal year, in which auditors will have to require the difference between how much the town has to fund its pension for workers and how much the town is obligated to pay, as a liability. He said the town’s funding, which is at 90 percent of what it is obligated to, will be much higher than other localities.
“At 90 percent funded, the town is in very good shape,” Kelly said. “This is the first one I’ve seen this year and I’ve done 10 towns so far, where I’ve seen a town at 90 percent funding.”
Kelly estimated the town has a $700,000 difference to make up in order to a have fully funded retirement plan.
Council member Don Le Vine asked if the town should be worried about the 10 percent difference in the pension funding.
“I’ve read a great deal over the last several years about states being overwhelmed in red ink because of their retirement system,” Le Vine said. “Is this something we need to worry about or is it just something that’s just there?”
Kelly said he believes the gap in funding is “more of a paper liability” and does not need any additional funding for the pension.
Kelly also reminded the council the pension issue is “just an estimate based on actuarial numbers” and “would not require any localities to have adjust the funding from a budgeting standpoint.”
Council member Bob Baker asked if the council should “put some money aside to cover the liability or should we let it ride?”
Kelly said the town is in very good shape and the liability is dependent on multiple factors, such as the performance of the investments the town’s pension funds are in.
Council also reviewed the annual tax and utility bill write offs. Under Virginia state law, towns can collect personal property tax for five years before they can be written off, 20 years for real estate tax and the town writes off utility fees after all methods of collection are exhausted every year.
This year the town wrote off $8,126 in personal property tax for the 2009 property taxes, with a 97.30 percent collection rate. In real estate taxes, the town wrote off $39.40 on three small parcels of land. For utilities, the town wrote off $8,921 for the 2009-2010 fiscal year, which amounted to .25 percent of the total amount billed.
Dottie Mullins, the town’s finance director, said there were many reasons for delinquent taxes and why the town was unable to collect them.
“Some of these may be people who moved out of the area and didn’t give us a forwarding address … a lot of these [we] don’t have addresses for,” Mullins said. “We have turned them in to set off debt, so if they received anything from their taxes, we have a lien on that.”
Mullins said the town has also turned information over the Virginia Department of Motor Vehicles, so delinquent tax payers will not be able to renew their tags or driver’s license.
Baker said the town engages in “peer pressure” by posting the names of those delinquent on their taxes by the front desk at town hall and on the town’s bulletin board.
“Their friends, neighbors and relatives will become sufficiently embarrassed and put the pressure on the individuals concerned,” Baker said. “If we conspicuously post it, those individuals will come across and pay it.”
Last year, the town did post names at the front counter, which led to one woman to pay back taxes for her father, Mullins said.
Council also discussed giving the Pride of Strasburg Award to members of the executive committee of Hometown Strasburg.
Contact staff writer Henry Culvyhouse at 540-465-5137 ext. 184, or firstname.lastname@example.org