HomeMy WebLinkAboutAgenda - 11-06-2002 - 5e 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: November 6, 2002
Action Agenda
Item No. 5-
SUBJECT: North Carolina Debt Setoff Program
DEPARTMENT: Commissioners/Revenue/ PUBLIC HEARING: (Y/N) No
County Manager
ATTACHMENT(S): INFORMATION CONTACT:
10/30/02 Revenue Director Memo Moses Carey, 933-8494
Resolution Approving Debt Setoff Jo Roberson, 245-2727
Program Participation Rod Visser, 245-2308
Memorandum of Understanding and TELEPHONE NUMBERS:
Agreement with Five Star Computing Hillsborough 732-8181
PowerPoint Explanation of Program Chapel Hill 968-4501
(under separate cover) Durham 688-7331
List of Current Participants Mebane 336-227-2031
(under separate cover)
PURPOSE: To approve a resolution authorizing staff to include Orange County in the North
Carolina Local Government Debt Setoff Program.
BACKGROUND: During the 1997 legislative session, the North Carolina General Assembly
approved legislation that authorized local governments to participate in the State's income tax
refund debt setoff program. Local governments can now work to satisfy debts owed to them by
collaborating with the Department of Revenue to receive portions of State income tax refunds
that may be due to taxpayers who owe money to local governments.
If the Board approves the County's participation in this program, staff proposes to focus initially
on the recovery of overdue property taxes for registered motor vehicles. Since the local
government chooses which debts they desire the vendor to pursue on their behalf, staff would
pursue this effort on a pilot basis, and if successful, would consider expanding it to collect other
severely delinquent accounts. Orange County is currently among the top three counties in the
State in terms of current tax collection percentage at 98.7 percent for FY 2001-02. The debt
setoff program, used judiciously and in a targeted way, could provide one more tool to sustain
or enhance the excellent collection rate that underwrites the County's ability to provide its
program of services to citizens.
The North Carolina Association of County Commissioners and North Carolina League of
Municipalities worked together and last year developed an arrangement with Five Star
Computing, Inc. of South Carolina to assist local governments in receiving debts owed them by
diverting income tax refunds that would otherwise be sent to debtors. Revenue Director Jo
Roberson would be Orange County's designated point of contact for this program and would be
the County official empowered to consider appeals from debtors under the due process aspects
of the debt setoff program.
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The accompanying resolution would authorize the Manager and staff to participate in this
program, as outlined further in the attached memorandum of understanding.
FINANCIAL IMPACT: Staff estimates that participation in this program could lead to the receipt
of$20,000 (and perhaps more, as the program matures in Orange County) annually that would
otherwise go uncollected. Experience from other jurisdictions indicates that it is likely that the
County would receive most of this revenue from payments made after debtors receive a letter of
intent to attach an income tax refund, and before ever having to file a claim with Five Star.
Many debtors apparently choose to pay their overdue accounts in full rather than having their
income tax refunds attached.
RECOMMENDATION(S): The Manager recommends that the Board approve the resolution
authorizing Orange County's participation in the debt setoff program and, subject to final review
by staff and the County Attorney, authorize the Manager to execute any agreements or other
related documents pertaining to participation in the debt setoff program.
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ORANGE COUNTY REVENUE DEPARTMENT
200 SOUTH CAMERON STREET
P.O. BOX 8181
HILLSBOROUGH,NORTH CAROLINA 27278
Telephone (919) 245-2725, 919-245-2726
Fax (919) 644-3332
Email irober co.orange.nc.us
Jo Roberson, Revenue Director
TO: Orange County Board of Commissioners
FROM: Jo Roberson, Revenue Director
SUBJECT: Additional Information on Local Government Debt Setoff Program
DATE: October 30, 2002
When we initially presented to the BOCC the County's possible participation in the North
Carolina Debt Setoff Program, there were several questions and requests made of our office for
clarification. I am addressing those, and several other questions raised since, in the following
memorandum.
• Question: What is the definition of a debt under the requirements of the Debt Setoff
Program?
Answer: Under GS 105A-1, a debt submission must equal no less than $50.00. Both the
NCACC and the League of Municipalities have issued the opinion that this means each
individual debt of an individual, not a sum of all debts owed by an individual. For example,
if someone has four delinquent registered motor vehicle billings, three of which are more
than$50.00 and one of which is $35.00, our submittal for collection would only be those
three over$50.00 each.
• Question: Can the North Carolina Department of Revenue determine the income level
of the debtor prior to the execution of the attachment?
Answer: The Department of Revenue advises there is no mechanism in place to
accommodate a request to only execute an attachment if the individual income is above a
certain amount.
• Question: What debts exactly does Orange County propose to target?
Answer: The Revenue Department proposes as a pilot program to submit delinquent
registered motor vehicle taxes for collection through this program. If we find this to be a
sufficient collection tool consideration could then be given to pursuing other types of
severely delinquent accounts owed to Orange County.
• Question: Why would we need to use the Debt Setoff Program to collection registered 4
motor vehicle bills? Are there not provisions in the current laws governing the renewal
of tags with outstanding tax owed?
Answer: Under NCGS 105-330, vehicle tags are blocked when the tax.reaches the eighth
month of delinquency. Tags cannot be renewed until the tax is paid and the block is
removed. However, due to loopholes in the system, there are some vehicle owners who just
go buy a new tag each year and therefore do not have to deal with the issue of their
delinquent taxes. There is also the issue of the transient population that exists in Orange
County with the University and RTP. Individuals that register a car within North Carolina
and then move out of state often take the position that because they no longer reside in North
Carolina, they should not be obliged to pay property taxes on their vehicles. It can be
extremely difficult to collect delinquent taxes from someone living in another state when
they have no physical presence or property in North Carolina. Currently for the year 2001
we have over 500 vehicles for which taxes have not been paid and the tag has reached
expiration.
• Question: How are other Counties, which have participated in the program finding the
system as a collection tool?
Answer: Pasquotank County originally sent out letters of notification on approximately
$800,000 worth of back delinquent registered motor vehicle billings. Bill Stevens indicated
from those letters that they received $100,000 plus in payment, with promises to pay
additional billings before the year closed. They actually submitted $458,132.87 in debt to the
Department of Revenue. In conversations with Mr. Stevens recently he indicated that they
had collected substantially more from the letters of intent than from actual attachment of
returns. Both Pete Rodda with Forsyth County and Jeff Neibauer with Pitt County also
indicate that their success in collection has been greater with the letter of intent.
• uestion: Currently the way the NC Debt Setoff law is written the Entity (Orange
County) submitting the debt must pay a $15 fee for each return that is attached. Is it
really wroth the effort?
Answer: Effective January 1, 2003 a legislative change will take effect which will make
the $15 processing fee payable by the taxpayer. This means that the County will have no
fees involved in the interception of refunds for state income tax.
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ORANGE COUNTY BOARD OF COMMISSIONERS
A RESOLUTION APPROVING ORANGE COUNTY'S PARTICIPATION IN THE
NORTH CAROLINA LOCAL GOVERNMENT DEBT SETOFF PROGRAM
WHEREAS, North Carolina General Statutes Chapter 105A, the Setoff Debt Collection Act,
authorizes the North Carolina Department of Revenue to cooperate in identifying debtors who
owe money to local governments and who qualify for refunds from the Department of Revenue;
and
WHEREAS, the law authorizes the setting off of certain debts owed to local governments
against tax refunds; and
WHEREAS, the North Carolina Association of County Commissioners and the North Carolina
League of Municipalities have jointly established a clearinghouse to submit debts on behalf of
Orange County, as provided by law;
NOW, THEREFORE, BE IT RESOLVED that the Orange County Board of Commissioners does
hereby indicate its intention that Orange County will participate in the debt setoff program and
does hereby designate the Orange County Tax Collector as the officer to hold hearings and
conduct necessary proceedings as established by law.
BE IT FURTHER RESOLVED THAT the County Manager is hereby empowered to execute
such agreements and related documents as may be necessary to implement Orange County's
participation in the debt setoff program.
This, the 6th day of November, 2002.
Barry M. Jacobs, Chair
Orange County Board of Commissioners
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Addendum A
Memorandum of Understanding and Agreement
NC Local Government Debt Setoff Clearinghouse Program
This agreement is entered into this_6th_day of–November—, 2002 by and between the
County of Orange_ ("CLAIMANT AGENCY") and the North Carolina League of
Municipalities and the North Carolina Association of County Commissioners acting as the North
Carolina Local Government Debt Setoff Clearinghouse ("CLEARINGHOUSE")
RECITALS
WHEREAS, the Setoff Debt Collection Act, ("ACT"), Article 1 of Chapter 105A of the
North Carolina General Statutes, authorized the North Carolina Department of Revenue
("DEPARTMENT"), and claimant agencies to cooperate in identifying debtors who owe
money to the State or to local government and who qualify for State income tax refunds;
and established procedures for setting off against any refund the sum of any debt owed to
the State or local government; and
WHEREAS, pursuant to NCGS 105A-3, CLEARINGHOUSE has registered with
DEPARTMENT to submit delinquent debts on behalf of a local agency and has thereby
become authorized to submit delinquent debts on behalf of a local agency under the ACT;
and
WHEREAS, CLAIMANT AGENCY is a local agency authorized to submit a debt owed
to it pursuant to the ACT; and
WHEREAS, CLAIMANT AGENCY desires to enter into this agreement with
CLEARINGHOUSE in order to participate under the Setoff Debt Collection Act to
increase the collection rate of delinquent debts owed to CLAIMANT AGENCY; and
WHEREAS, CLEARINGHOUSE has agreed to submit delinquent debts on behalf of
CLAIMANT AGENCY.
NOW THEREFORE, in consideration of the mutual covenants and agreements, terms and
conditions contained herein, CLAIMANT AGENCY and CLEARINGHOUSE mutually agree as
follows:
I. TERM/TERMINATION
This memorandum of understanding and agreement shall remain and continue in full
force and effect from year to year unless modified or terminated in writing by either party
upon 90 days written notice to the other party. Upon termination of this agreement all
sums due and owing from either party to the other shall remain a lawful obligation of the
party and be due and payable. CLEARINGHOUSE will erase all claimant data files from
its debt setoff system upon termination.
Addendum A
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IL REPRESENTATIONS AND OBLIGATIONS OF CLAIMANT AGENCY
A. CLAIMANT AGENCY hereby designates, appoints, and authorizes
CLEARINGHOUSE to process delinquent debts to be submitted to Department.
"DELINQUENT DEBT" is defined to mean a sum that is at least $50 owed to a
claimant agency that has accrued through contract, subrogation, tort, operation of law,
or any other legal theory regardless of whether there is an outstanding judgment for
the sum. To become a delinquent debt a period of 60 days must have elapsed
between the time CLAIMANT AGENCY declares the debt delinquent and the date
the delinquent debt is submitted to CLEARINGHOUSE for collection.
B. CLAIMANT AGENCY shall comply with the provisions of the ACT prior to the
submission of a debt to CLEARINGHOUSE for setoff and shall provide
CLEARINGHOUSE the date of compliance with its debt submission file.
C. CLAIMANT AGENCY shall, upon execution of this agreement file a "participation
form" with CLEARINGHOUSE designating a debt setoff coordinator and a debt
setoff contact. The debt setoff coordinator shall be the designated local government
employee authorized to receive notices and communication from
CLEARINGHOUSE to insure that the requirements of this agreement and the
requirements of the Act are met. The debt setoff coordinator shall supply
CLEARINGHOUSE with any and all information that in the opinion of
CLEARINGHOUSE is necessary for the proper implementation of this agreement.
The debt setoff contact will receive all referrals from debtors.
D. CLAIMANT AGENCY shall use an ASCII file specified by CLEARINGHOUSE to
prepare "debt files" and adjustments to debt files that CLAIMANT AGENCY
certifies to CLEARINGHOUSE are owed to CLAIMANT AGENCY and that
CLAIMANT AGENCY desires to have CLEARINGHOUSE submit to
DEPARTMENT for setoff as shown on the attached "File Layouts for Submission of
Debts from CLAIMANT AGENCY to CLEARINGHOUSE." If, in the opinion of
CLEARINGHOUSE, changes to the file format are necessary to carry out this
program, CLEARINGHOUSE shall timely notify the CLAIMANT AGENCY. The
CLAIMANT AGENCY covenants and agrees that it shall immediately implement
any changes required by CLEARINGHOUSE. Data file structure will mirror
requirements of DEPARTMENT but may include other fields such as date of debt
cancellation. CLEARINGHOUSE will organize capability of date and time stamping
debt for priority setting.
E. CLAIMANT AGENCY shall transmit a debt file to CLEARINGHOUSE in a method
and format acceptable to CLEARINGHOUSE. CLAIMANT AGENCY may choose
one of three methods for data transmission: (1) customized software application
provided by CLEARINGHOUSE; (2) file transfer protocol; and (3) hardcopy
documents (hardcopy will require payment of costs of data entry services).
F. CLAIMANT AGENCY shall comply with the notice and hearing procedures set forth
in G.S. 105A-5 prior to the submission of a debt file to CLEARINGHOUSE. Debt
Addendum A
8
files must be received on or before Friday at 5:00 p.m. in order to be included in the
following week's submissions by CLEARINGHOUSE to DEPARTMENT.
G. CLAIMANT AGENCY shall, after a debt file has been submitted to
CLEARINGHOUSE, advise CLEARINGHOUSE of any debtor repayment or
protests and instructions to delete or reduce a delinquent debt by submitting a new
debt file by close of business on the day the repayment or protest and instructions to
delete or reduce a delinquent debt is received.
III. REPRESENTATIONS AND OBLIGATIONS OF CLEARINGHOUSE
A. CLEARINGHOUSE shall, upon receipt of CLAIMANT AGENCY'S debt file,
compile the information and submit the data to the DEPARTMENT on Monday of
each week.
B. CLEARINGHOUSE shall remit to the CLAIMANT AGENCY funds received from
DEPARTMENT within a reasonable time from the date of receipt from
DEPARTMENT. Thereafter, CLEARINGHOUSE shall provide the CLAIMANT
AGENCY an accounting of funds collected which will include the name of the
debtor, the debtor's social security number, and the amount of the debt setoff as
shown on the attached "File Layout for Submission of Debts from CLAIMANT
AGENCY to CLEARINGHOUSE."
C. CLEARINGHOUSE will provide CLAIMANT AGENCY an entity version of the
application software system, which will allow CLAIMANT AGENCY to do its own
in-house data entry for transfer to CLEARINGHOUSE. CLEARINGHOUSE will
provide free upgrades of the application software periodically, as needed. The entity
version of the application system will provide both a comprehensive online help
system and a written Installation/Set-up user's guide. A Pentium class computer with
Windows 95 or above is required by CLAIMANT AGENCY using the application
software system.
D. CLEARINGHOUSE will provide a licensed copy of PKWARE'S PKZIP to
CLAIMANT AGENCY. This software provides for compression and encryption for
the security of the data to be sent to CLEARINGHOUSE. CLEARINGHOUSE will
also compress and encrypt the data using PKZIP before returning the data to
CLAIMANT AGENCY.
E. CLEARINGHOUSE will provide a toll free telephone number for use by
CLAIMANT AGENCY to receive technical support and provide information on the
use of software applications and the processing of debts for submission to
DEPARTMENT. Technical support and information shall be available from 8:00
a.m. until 5:00 p.m. EST, Monday through Friday, excluding holidays. Voice mail
and e-mail access shall also be provided as a part of the support/information response
system.
F. CLEARINGHOUSE will provide, at no cost to CLAIMANT AGENCY, technical
support to CLAIMANT AGENCY, including site visits when advisable or
appropriate. CLEARINGHOUSE will provide a first-level of support by telephone to
Addendum A
9
attempt to diagnose the problems. However, if first-level support is unsuccessful, an
on-site visit will be made within four(4)business days.
G. CLEARINGHOUSE will provide, at no cost to CLAIMANT AGENCY, a training
seminar of one to two days each year for CLAIMANT AGENCY'S staff on the use
of the debt setoff application system.
IV. UNDERSTANDING OF PARTIES
A. If CLAIMANT AGENCY is due a refund of more that $50 dollars, DEPARTMENT
sets the tax refund off in the amount of the delinquent debt plus its collection
assistance fees. If DEPARTMENT is able to collect only part of a debt through
setoff, the collection assistance fee has priority over the remainder of the debt.
B. DEPARTMENT has priority over all other claimant agencies whenever it is a
competing agency for a refund. State agencies have priority over local agencies.
When multiple claims among local agencies are submitted for setoff to
CLEARINGHOUSE, the claims have priority based on the date and time each local
agency requested CLEARINGHOUSE to submit debts on its behalf. The date and
time of submission of the debt file shall constitute the date and time to establish the
priority. CLEARINGHOUSE shall use the submission receipt date and time of
original file for priority date and time of specific debt. Any changes to specific
debt—i.e. partial payments to, interest accrued to, penalties—will not change date.
Any "new" delinquent debt for same CLAIMANT AGENCY will have a new
submission date and time, including new debts for a previously submitted debtor.
C. CLEARINGHOUSE shall not accept a debt file that is not prepared as specified by
CLEARINGHOUSE or where a period of 60 days has not elapsed between the time
the CLAIMANT AGENCY declares the debt delinquent and the date the delinquent
debt is submitted to CLEARINGHOUSE for collection. CLEARINGHOUSE agrees
to submit delinquent debts to Department; provided, however the CLAIMANT
AGENCY is solely responsible for complying with the ACT, specifically including
the notice and hearing provisions and other requirements of the act
D. The CLAIMANT AGENCY acknowledges that CLAIMANT AGENCY is
responsible for the notice and hearing requirements of the ACT. CLAIMANT
AGENCY affirms to CLEARINGHOUSE that it will comply with the ACT,
specifically including the notice and hearing provisions required by the ACT prior to
the submission of a delinquent debt to CLEARINGHOUSE for setoff.
E. Successful interception funds will be disbursed through Capital Management of the
Carolinas (Capital Management), the agency that oversees administration of the
North Carolina Capital Management Trust. CLAIMANT AGENCY shall have an
account with Capital Management prior to the submission of a delinquent debt to
CLEARINGHOUSE and shall retain said account for as long as this agreement shall
be in full force and effect.
Addendum A
10
V. COMPENSATION
A. CLAIMANT AGENCY shall make payment to CLEARINGHOUSE of $15 dollars
for each refund that is successfully intercepted. "SUCCESSFUL INTERCEPTION"
is defined to mean the DEPARTMENT matched all or a portion of a debt submitted
by CLEARINGHOUSE against a State tax refund for interception and payment
towards a delinquent debt owed to CLAIMANT AGENCY.
B. CLAIMANT AGENCY, by the execution of this agreement, authorizes
CLEARINGHOUSE to retain $15 dollars for each successful interception from any
sums due CLAIMANT AGENCY and to reduce the amount of a delinquent debt paid
to CLAIMANT AGENCY accordingly. If CLAIMANT AGENCY submitted
multiple debts under the same delinquent debtor name and social security number on
the same date the entity will only be charged one $15 fee for that successful
interception.
C. CLAIMANT AGENCY may combine individual debts of at least $50 each by
delinquent debtor name and social security number for submission to
CLEARINGHOUSE. Debts less than $50 cannot be combined to meet the $50
threshold.
D. Existing submitted delinquent debts may be adjusted upwards for interest, fees etc.,
and will retain their original priority order,but not a later new delinquent debt, even if
from the same debtor. New debts will be date stamped by CLEARINGHOUSE with
the later submission date and be subject to an additional $15 fee for a successful
interception.
E. In the event of partial payment of a delinquent debt, the CLAIMANT AGENCY may
continue to submit the balance of the debt, if $50 or more, as a part of subsequent
data files. $15 shall be due CLEARINGHOUSE for a successful interception of a tax
refund in a subsequent year.
F. PURSUANT TO THE ACT, CLAIMANT AGENCY CANNOT CHARGE THE
DEBTOR FOR THE $15 MATCH FEE AND IS REQUIRED TO REDUCE THE
DEBT BY THE ENTIRE AMOUNT WITHHELD.
VI. INDEMNIFICATION/REIMBURSEMENT
CLAIMANT AGENCY fully understands and warrants to CLEARINGHOUSE that by
submission of any delinquent debt submitted to CLEARINGHOUSE for setoff
CLAIMANT AGENCY has complied with all of the provisions of the ACT and this
agreement. The CLAIMANT AGENCY shall hold CLEARINGHOUSE free and
harmless and shall indemnify CLEARINGHOUSE against any and all damages, claims,
of action, injuries, actions, liability, or proceedings arising from the failure of
CLAIMANT AGENCY to so perform. CLAIMANT AGENCY shall be responsible for
the repayment of any sums received by it, including interest, penalties and court costs, to
a debtor in the event a court of competent jurisdiction rules that said repayment is due to
a debtor or debtors.
Addendum A
11
VII. NOTICE
Any notice required to be given under this Agreement shall be sent by certified or
registered mail postage prepaid to: (authorized official)
(county/city) (address); and
to: NCLM, P. O. Box 3069, Raleigh, NC 27602-3069 and NCACC, P. O. Box 1488,
Raleigh,NC 27602-1488, in the case of CLEARINGHOUSE.
VIII. ASSIGNMENT
This Agreement is not assignable by either party.
IX. CONFIDENTIAL INFORMATION
In the course of performance of this Agreement, the parties may find it necessary to
disclose to the other party certain confidential information ("Confidential Information").
Confidential Information includes, but is not limited to, information relating to the
parties' employees, trade secrets, customers, vendors, finances, operations, products, and
other business information. The following terms apply to Confidential Information: (i)
the non-disclosing party shall treat as confidential and use the same degree of care as it
employs in the protection of its own similar confidential information, but in no event less
than a reasonable degree of care; and, (ii) the non-disclosing party will only use the
information in connection with its business dealings with the disclosing party, and shall
disclose Information only to employees or contractors having a need to know and who
agree to be bound by the terms of this Section, unless otherwise authorized in writing by
the disclosing party. Information shall not be subject to these terms if. (i) it is in the
public domain at the time of disclosure, or enters the public domain without breach of
this Agreement; (ii) it is known to the non-disclosing party prior to the disclosure, or it is
independently developed by the non-disclosing party; (iii) it is obtained by non-
disclosing party in good faith from a third party not under obligation of secrecy to the
disclosing party; or, (iv) it is the subject of a court or government agency order to
disclose, provided the non-disclosing party gives prompt notice to the disclosing party to
allow the disclosing party to contest such order. The obligations set forth in this Section
survive termination, rescission, non-renewal or expiration of this Agreement.
All information, including but not limited to printed, written, oral or computer-formatted
information, which CLEARINGHOUSE may gain access to during the course of the
performance of this Agreement shall be the property of CLAIMANT AGENCY, shall be
held in the strictest confidence, and shall be used solely for the business purposes that are
the subject of this Agreement. CLEARINGHOUSE shall maintain confidentiality of
such information not only during the course of the performance of this Agreement, but
following its termination.
Addendum A
12
X. MISCELLANEOUS
A. This Agreement represents the full and final understanding of the parties with respect
to the subject matter described herein and supersedes any and all prior agreements or
understandings, written or oral, express or implied. This Agreement may be modified
or amended only by a written statement signed by both parties.
B. The laws of the State of North Carolina shall govern the terms and conditions of this
Agreement. Should any dispute arise between the parties concerning any matter
under this Agreement, such disputes shall be submitted to binding arbitration before
the American Arbitration Association, in accordance with applicable rules.
C. CLAIMANT AGENCY shall enter into no other contract for similar services with any
other entity so long as this Agreement remains in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the
day and date first above written, all by authority of their respective governing bodies.
NORTH CAROLINA LOCAL GOVERNMENT
DEBT
(City/Town/County) SETOFF CLEARINGHOUSE
By: By:
(Authorized Official) S. Ellis Hankins, Executive Director
NC League of Municipalities
ATTEST:
(Clerk) By:
C. Ronald Aycock, Executive Director
(SEAL) NC Association of County Commissioners
Addendum A
13
ADDENDUM F—COLLECTION OF TAXES FOR OTHER UNITS
(N.C.G.S. 105-354)
NC LOCAL GOVERNMENT DEBT SETOFF CLEARINGHOUSE PROGRAM
County/City of. County of Orange
N.C.G.S. 105-354. Collections for districts and other units of local government. Whenever a
taxing unit collects taxes for some district or other unit of local government, those taxes, for
collection and foreclosure purposes, shall be treated as taxes of the taxing unit making the
collection.
This information does not apply to taxes set by your own governing board for your own special
districts such as fire, water, and rescue districts. (These are already considered a debt of your
unit of government.) In accordance with the above North Carolina General Statute, the above
named local government will be collecting property tax debt for the following district(s) and/or
other unit(s)of government:
Town of Hillsborough
Town of Chapel Hill
Town of Carrboro
City of Durham(for those inside Orange County jurisdiction)
Town of Mebane(for those inside Orange County jurisdiction)
Date: November 6. 2002
Signed: Title: Orange County BOCC Chairperson
Signature
Addendum F
14
NC Local Government Debt Setoff Local Government & Debt Setoff
A program to help NC local governments collect
outstanding debts
Rebecca Troutman,Research&IT Director ➢What It I S
John Ed Whitehurst,Project Manager ➢What we've done
NC Association of County Commissioners
Fred Goebeler,President
Five Star Computing �� ,, ➢What you need to
do
Local Government & Debt Setoff Local Government & Debt Setoff
About Today's Presenters What it is
➢Rebecca to describe ➢Recover taxes,fees,revenues owed
by garnishing state tax refund
program ➢Local governments able to participate
➢John Ed to describe beginning in 2000 via G.S.105A-1
➢Remedy in addition to collection
results methods in place--e.g.property liens
➢Local governments have option to use
➢Fred to describe Y State agencies are compelled to use
technical process ➢Debt&refund must>=$50
Local Government & Debt Setoff Local Government & Debt Setoff
What it is What it is
Notice&protest requirements Setoff Process
➢Written notice to debtor of intent to seek ➢Local gov't submissions aggregated by:
\ setoff by agency ➢NCACC&NCLM local govt clearinghouse
�h ➢Notice states why&how to protest ➢Locals must include name,SSN,address&
\ debt>=$50
➢Debtor may protest by filing written inte,it ➢DoR matches against state refund if refund
within 30 days of agency letter >=$50
➢Local governing body or designee holds ➢DoR sets off refund needed&mails
hearing&decides taxpayer remaining with setoff reasons
➢Debtor may appeal >DoR retains up to$15 for collection assistance
(now at$4.12)
Notice must be completed prior to ➢DoR sends setoff money to Cash Mgt&
debt submission, or repay into to clearinghouse
1
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Local Government & Debt Setoff Local Government & Debt Setoff
What it is What We've Done
Priorities In Competing Claims ➢NCACC&NCLM convened
➢DoR has priority over all group of finance officers,tax
p ty administrators to develop
Collection assistance fee paid first clearinghouse for debt
( � ➢State agencies paid second by date of V submission
registration ➢Contracted with Five Star in SC
➢Local clearinghouse participants next (contractors with SCACo)
by date of data submission(remains ➢Arranged with Capital
until debt retired or cancelled) Management Trust for
disbursement of funds from DoR
to counties&cities since most
locals have existing accounts
Local Government & Debt Setoff Local Government & Debt Setoff
What We've Done What Five Star Has Done
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Local Government & Debt Setoff Local Government & Debt Setoff
What Locals Should Do What Locals Pa
➢Study G.S.105A-1 requirements ➢$15 per successful match
C-. , ➢Execute MOA per debtor per jurisdiction
May wish board approval per year
➢Only 1 contract per jurisdiction a ➢Does not matter if
➢Initiate notification&appeals jurisdiction's data file
process aggregates or separates
➢No debt can be submitted until debtor info
entire process completed
➢Select debt setoff coordinator, Full setoff must be credited
contact,&file transfer preference to debtor
➢NCACC/NCLM signs MOA& $15 fee cost of doing
Five Star contacts local for business
participation DoR fee charged to debtor
Local Government & Debt Setoff Local Government & Debt Setoff
What Other Benefits Have Accrued What We'll Look for in Future
➢Debtors repaying before ➢Legislative authority to
debt submitted for setoff NNW charge debtor$15
➢Henderson&Pasquotank ➢State agencies given
report$100,000s being sect more authority in last
in after notice session
OK➢Greater access to state-
held social security
1� databases
Local Government & Debt Setoff Local Government & Debt Setoff
What Locals Have Done Questions & Resources
P
NCACC
Here's ➢John Ed Whitehurst
John.Whitehurst @ncacc.org
Johnny..... NCLM
/ ➢Tom Medlin
Tmedlin @ncim.org
First in,first priority until debt retired...
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List of Participants (as of October 16, 2002):
The following have signed the 2001 and/or 2002 Participation Form for NC Local Government Debt
Setoff Clearinghouse Program:
County Participants (42):
• Alexander
• Avery
• Cabarrus
• Catawba
• Chatham
• Cherokee
• Chowan
• Clay
• Craven
• Cumberland
• Davie
• Edgecombe
• Forsyth
• Franklin
• Gaston
• Granville
• Greene
• Guilford
• Halifax
• Harnett
• Henderson
• Iredell
• Johnston
• Lenoir
• Lincoln
• Martin
• McDowell
• Mitchell
• Moore
• Nash
• Onslow
• Pasquotank
• Person
• Pitt
• Randolph
• Richmond
• Rockingham
• Sampson
• Stanly
• Swain
I of 3 10/29/2002 1:47 PM
New Page 1 llu}ldlw W W,lun wu.a+agja wuvapwaw+,,.•••
• Mayne 18
• Yadkin
Municipality Participants (70):
• Albemarle,City of
• Asheville,City of
• Bermuda Run,Town of
• Blowing Rock,Town of
• Booneville,Town of
• Burgaw,Town of
• Carolina Beach,Town of
• Clinton,City of
• Concord,City of
• Dunn,City of
• Edenton,Town of
• Elizabeth City,City of
• Elizabethtown,Town of
• Elm City,Town of
• Fair Bluff,Town of
• Farmville,Town of
• Fayetteville,City of
• Garner,Town of
• Graham,City of
• Granite Falls,Town of
• Greenville,City of
• Havelock,City of
• Hendersonville,City of
• High Point,City of
• Holly Springs,Town of
• Hookerton,Town of
• Jacksonville,City of
• King,City of
• Kinston,City of
• Laurinburg,City of
• Lenoir,City of
• Liberty,Town of
• Lincolnton,City of
• Lumberton,City of
• Marion,City of
• Mars Hill,Town of
• Middlesex,Town of
• Monroe,City of
• Morganton,City of
• Mt Gilead,Town of
• Mt Pleasant, Town of
• Morehead City,Town of
• Morrisville,City of
• Nags Head,Town of
• Nashville,Town of
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httpJ/www.nesctafforg/Parhaipants.htin
• New Bern,City of 19
• Newport,Town of
• Plymouth,Town of
+ Raleigh,City of
• Roxboro,City of
• Selma,Town of
• Shallotte,Town of
• Southern Pines,Town of
• Stedman,Town of
• Surf City,Town of
• Tabor City,Town of
• Tarboro,Town of
• Thomasville, City of
• Troy,City of
• Vass,Town of
• Wade,Town of
• Wadesboro,Town of
• Wallace,Town of
• Weaverville,Town of
• Wendell,Town of
• White Lake,Town of
• Windsor,Town of
• Winterville,Town of
• Zebulon,Town of
Last Update: October 16,2002
3 of 3 10/29/2002 1.47 PM
Money, money, money, money
Budget, reimbursements on minds of commissioners around the state 20
By Todd McGee of nearly$2 billion puts in jeopardy the entire$330 million of reimbursements for repealed
Director of Communications local taxes that are due to local governments,plus the 5200 million or so of state-collected
local taxes,such as the utility franchise tax.
Just like minor league baseball and the blooming of the azaleas,the North Carolina As a result,the Association is expecting Governor Easley's budget for FY'03 to include
Association of County Commissioners'regional meetings are a rite of spring in the Tar Heel a new,local-option half-cent sales tax to replace the reimbursements for next fiscal year.The
state.This year's series of meetings,held across the state in April,gave county govenor is also expected to propose removing the local option on the state sales tax that was
commissioners and managers a chance to learn more about events in Raleigh.The meetings enacted last,October and letting it expire next June.
also gave Association staff members an opportunity to learn more about what is going on in Reaction was mixed to this news.At some meetings,commissioners said they would
county government around the state. have no choice but to enact the sales tax in light of the likelihood that the reimbursements
As might be expected,financial concerns were among the top priorities discussed at would not be forthcoming.Others,however,said they did not think the state should force
counties to raise taxes in order to bail the state out of its budget problems.
"I'm having a hard time justifying that it's good news that we can add a local-option
i,.. half-cent sales tax to take the place of the reimbursements,"said Coy Privette of Rowan
County.Privette was a member of the General Assembly when the legislature promised to
reimburse counties and cities for the repealed inventory taxes.
�'.
Reaction was similarly mixed to Governor Easley's lottery.Many commissioners
>` ` favored putting the lottery to a referendum,but others were concerned that the state would
¢l use the lottery proceeds to fund new initiatives and not to help balance the state budget.
"A lottery is just more money to spend,"said Buster Robertson,a Stokes County
: r
�K More counties join debt setoff clearinghouse
Not all the news at the district meetings was bad.The North Carolina Local
Government Debt Setoff Clearinghouse,a joint effort by the Association and the League
of Municipalities,continues to be a success.
- Sixteen counties and 18 municipalities have begun sending data to the
clearinghouse,and the program has returned more than$170,000 to the entities in its
"* first seven matches.
The program was set up with the Department of Revenue to allow local
governments another vehicle to collect unpaid debts.A total of 91 participants—41
counties and 50 municipalities—have signed up for the program.
A large crowd turned up for the NCACC's Regional Meeting In Mahn County on April 29. For more information on the program,including copies of the forms and resolutions
Commissioners and managers wanted to know the latest news regarding the state budget as well as needed to sign up,please visit our web site(www.neacc.org/debtsetoff.htini).
find out about changes In the risk management markets and other pertinent Information.The
Association held seven regional meetings around the state In April,giving county officials an County Debtors Debts Total Submitted Total Matched Total Returned
opportunity to loam about the latest news In Raleigh and around the state. Avery 177 348 78,538.58 3,955.28 3,685.28
Catawba 1 1 340.35 0.00 0.00
Photo by Todd McGee Craven 1,500 2,905 425,165.53 42,738.17 39,318.17
Davie 200 205 54,428.51 462.00 432.00
every meeting.Commissioners and managers wanted to know the status of ibis year's lost Forsyth 589 1,067 207,632.56 3,451.70 3,181.70
reimbursements,the likelihood of getting next year's reimbursements,the prospects of a Greene 362 483 279,450.81 7,281.95 6,951.95
state lottery,and potential state or federal Medicaid relief. Halifax 370 504 176,655.90 1,113.88 1,038.88
Unfortunately,the concrete answers that could be provided were not good news. Harnett 106 106 48,515.45 422.18 407.18
According to Association Executive Director C.Ronald Aycock,the state's disappointing Henderson 378 479 72,409.43 18,048.68 16 293.68
April personal income tax Nash 14 22 4,212.93 81.02 66.02
collections meant that the Pasquotank 654 932 358,242.92 7,456.74 7,036.74
$209 million in Person 25 26 :24,412.15 0.00 0.00
Sampson 392 494 '< 129,231.70 726.84 666.84
reimbursements and state- Wayne 745 773 621;0I7.06 4,936.13 4,711.13
collected local taxes that Yadkin 16, 16 27,967.05 140.18 110.18
had been taken by Gov. Subtotals 5,529 8,361 $2,508;22093 $90,814.75 $83,899.75
Mike Easley to deal with
the state's$1.6 billion
budget deficit were likely
not coming back. Commissioner."Until you have some cuts,you're not going to get out of this.If we don't
In addition,next year's get our reimbursements this year and next year,we're looking at cutting 25 percent of our
burgeoning budget deficit people.You can't keep on raising taxes.Small,rural counties cannot absorb what we are
losing."
Several commissioners and managers expressed concerns that the General Assembly
and Governor Easley did not fully understand the severity of the crisis that is being felt at
the local government level.The state's sales tax revenues and income tax collections are
down,but counties sales tax revenues are down as well.Some counties are reporting that the
slow economy has caused their property tax collections to go down.
"Our budgets are due July I,"said Rowan County manager Tim Russell."What is the
mood of the General Assembly?When is their plan going to come?Will we get some money
back this year?Will we get any back next year?We can't wait.What is their plan?
"When you go through this kind of time,you lose any confidence and you lose respect
for the people doing it to you.The General Assembly has got to develop a plan.They've got
to develop a solution,and they've got to do it soon,and they've got to take into account
counties and cities."
Another topic that was discussed at virtually every meeting concerned the ongoing
negotiations with the Utilities Review Commission over the use of 9-1-1 funds.The
Association is trying to ease the restrictions on what the monies can be used for,while the
phone companies are trying to tighten the restrictions so that counties can only spend the
money on equipment.
"They(the phone companies)have the idea that the only uses for the funds should be
the equipment to receive the calls,"said JoAnne Burgdorf,the Pitt County attorney who is
involved with the negotiations."What we're trying to do is get it to where you can buy
whatever communications equipment you need to get the call to the center."
May 2002