The Car Tax Driving Force The Citys old software has reached the - - PowerPoint PPT Presentation

Vehicular Personal Property Tax Billing

“The Car Tax”

Driving Force

The City’s old software has reached the end

• f its useful lifetime.

New technology will meet the City’s needs and our citizens’ requests but cannot handle

• ur unique billing methodology.

Goals

• Provide information to the public on

transitioning from the City’s unique Annual Cycle Billing to Standard Billing in preparation for new technology

• Prepare citizens to take an active role in

providing feedback to City Council

Topics

• Background
• Where we are now
• Where we wish to be
• How we get there with the least negative

impact on our taxpayers

Background

• All Virginia localities

have personal property taxation: Includes cars, trucks, motorcycles, RVs and such

Who Does What

• City Council: Sets the annual billing cycles

and due dates

• Commissioner of the Revenue: Assesses

the value and maintains the tax roll

• Treasurer: Collects the revenue

Where We Are Now

• In 1993, City Council adopted unique

Annual Cycles, in which each vehicle has its own 12-month tax cycle

• Vehicle is assessed as beginning of cycle,

billed at the end of its cycle

• The City had to write custom

software to handle this billing

Where We Are Now

• The software has had no new

development in recent years

• The City has wanted to spend as little

money as possible on an old product

Where We Are Now

• The software is increasingly showing signs
• f failure
• There is no known commercial software

capable of handling our unique process

• Creating new custom in-house

software is not feasible

Where We Want to Be

• Uniform, known billing dates
• Option to pay in semi-annual installments
• Comprehensive billing statement with all

vehicles & amounts due

• Online services
• Ongoing development to carry us

into the future

• Reliable technology

How We Get There

• Major software conversion takes 2-3 years

(funding, review & selection, configuration, final conversion)

• This gives us time to help minimize the

negative impact to taxpayers in converting to standard billing cycles

Standard Billing Cycle

• All vehicles fall under a uniform Tax Year

cycle, with the same starting and ending date to the tax year

• Standard billing cycle may follow the

calendar year (Jan 01 – Dec 31) or may follow the fiscal year (Jul 01 – Jun 30)

Standard Billing Cycles Across Virginia

Our Non-standard Cycle Billing

• Vehicles fall in one of thirteen annual

billing cycles based upon when the vehicle first became taxable in the City

• Twelve cycles correspond to each month
• “Grandfather” standard cycle

Our Non-standard Cycle Billing

Impact of an all-at-once conversion to standard billing

• “Catch up” billing per vehicle of anywhere

from 1 to 12 months additional billing (Overall one-time one-year 53% tax payment increase)

• Windfall to the City but devastating to
• taxpayers. Estimate of over $3.5 million

Confused?

How many vehicles do we have?

We have about as many vehicles as we do citizens (~ 27,000)

• Almost 70% of our accounts have
• ne vehicle
• About 20% of our accounts have two

vehicles

How many vehicles do we have?

How often do we buy/sell/move?

• Almost 60% of our vehicles have been

added within the past three years

• Beyond that the turnover rate slows

The Average Taxpayer

• One vehicle
• Assessed at about

$7,000

• Pays about $200

annually

Transition Options

• 1. Do nothing
• 2. Perform a one-time all-at-once conversion

from Annual Cyclical to Standard Annual

• 3. Perform a gradual transition over a three-

year period. Four variations (A, B, C, D)

Option 1

• Do nothing: Not feasible for the long run

as our aging software slips toward increased failure and farther away from the features our taxpayer reasonably expect

Option 2

• Perform a one-time all-at-once transition

upon conversion to new software:

– Challenging to implement – Provide a one-time one-year revenue windfall to City, but a devastating burden on our taxpayers

Option 3

Perform a gradual transition from Annual Cyclical to Standard Annual billing cycles:

• Add a new 14th billing cycle
• Vehicles removed from the tax roll cycle off

the non-standard billing

• Vehicles added to the tax roll enter

standard billing

Option 3

Perform a gradual transition from Annual Cyclical to Standard Annual billing cycles:

• Vehicles could also transition by owner

request

• Upon final conversion to new software,

remaining vehicles incur one-time transition to Standard Annual

Option 3A & 3B

Standard Annual Billing with one annual payment date

• Requires least amount of programming

expense on old software

• Desirable really just for the 3-year

transition period

Option 3A – “Annual December”

Standard Annual Billing with one annual payment date of December 05

• As in 41% of Virginia localities
• Bills generate in mid-October
• Least costly option ($20K in

current FY budget)

Option 3B – “Annual October”

Standard Annual Billing with one annual payment date of October 05

• As in 8% of Virginia localities
• Bills generate in mid-August
• Modest cost ($35K to be

budgeted)

Option 3C-3D

Standard Annual Billing with semi-annual payment dates

• As in 31% of Virginia localities
• One-time Council decision for the long-

term

Option 3C-3D

Standard Annual Billing with semi-annual payment dates

• 69% with 1 vehicle: eases payment

burden

• 20% with 2 vehicles: payments

comparable

Option 3C-3D

Standard Annual Billing with semi-annual payment dates

• Most expensive option ($75K to be

budgeted)

Option 3C – “Semi April”

Standard Annual Billing with semi-annual payment dates of April 05 and October 05

• As in 8% of Virginia localities
• Bills generate in mid-February and

mid-August

Option 3D – “Semi June”

Standard Annual Billing with semi-annual payment dates of June 05 and December 05

• As in 25% of Virginia localities (including

Frederick County)

• Bills generate in mid-April and

mid-October

Questions & Comments