We won’t argue with the Schenectady City Council’s decision to stop letting a private collection agency pursue deadbeat taxpayers, which has cost the city $600,000 of what was collected in back taxes this year. The decision especially makes sense given that the city was doing quite a bit of the work involved in getting those taxpayers to come clean, anyway.
But the city was in this position before, acting as its own bad debt collector, and didn’t fare too well: Just prior to 2004, when Mayor Brian Stratton first hired American Tax Funding, the city’s collection rate was just 92 percent. The city couldn’t afford leaving many millions on the table then, and it can’t now. But the city has to show taxpayers, or more specifically non-payers, that it means business when they don’t pay.
That’s what ATF started doing in 2004, causing then-vice president Neil Harreveld to remark, “When push comes to shove, they want to save their house. People just needed to see we were serious.”
The money started flowing in — $20 million in just three years — and it was many more before the company had to foreclose on a single property owner. In late 2010, when ATF was having less luck collecting on the city’s long-outstanding liens and was paying the city less to buy them, the city switched to Tower Capital Management to do its dirty work. But the city found it was still doing that work — mailings, phone calls and foreclosure threats — so why cut Tower in for nearly 10 percent?
As long as it perseveres when property owners don’t pay, the city shouldn’t have to hire a collection agency; nor should it have to sell any liens. With the city work force continually under pressure, this may be a challenge. But there may be no more important function in City Hall if Mayor Gary McCarthy’s goal of collecting the additional $12 million in outstanding taxes is to be realized — and it’s a pretty important goal given the city’s current fiscal condition. As the mayor is fond of saying, his job would be so simple if people would only pay their taxes.