Overwhelmed and frustrated, Coaldale borough council members struggle to patch together a 2012 budget that won't burden taxpayers with a millage increase.

The borough isn't alone in its quest, and one of the biggest hurdles boroughs and school districts face is making ends meet when property owners can't, or won't, pay their fair share of the tax burden.The consequences include heavier loads on prompt taxpayers, and skimping on services provided by schools and municipalities.The problem is growing, says Ed Knittel, Senior Director, Education and Sustainability for the Pennsylvania State Association of Boroughs."Based on talking with officials, and reading news articles, I would say yes, payments of taxes have fallen down in many cases across the state," he says.Knittel looks at it from a municipal perspective."When a borough does their budget, they are doing their best estimate of the tax revenue they need to run many very basic services, such as plowing roads, buying anti-skid, salt, paying for street lighting, contributions to fire companies, and police services, all paid through tax revenue."There are very, very basic services these taxes pay for. When we see communities going from a 93 percent collection rate to the low 80s, that's a significant loss of dollars," he says.It takes time for a municipality or school district to collect delinquent tax payments."You could be looking at multiple years before you see that money. Delinquency tends to start creating patterns for some people. Tax delinquents are also more likely to fail to pay trash and other fees, and you have less money to run basic services," Knittel says.The delinquents also place a heavier load on prompt payers."The fellow who lives in house A pays his taxes, the guy in house B doesn't, or can't. pay his. The first guy is basically supporting many others who don't pay. The borough then may have to raise taxes for everybody to make up for those delinquent taxpayers. It becomes a vicious cycle," Knittel says.Compounding the problem is a growing number of foreclosures resulting from the recent economic recession."People are just walking away. It has a real impact," he says. "Basic services start to get cut and the tax burden is pushed onto a smaller and smaller group."That's the fear in Coaldale, where the 2012 budget, as it stands now, would levy a 3 mill property tax increase. Each mill generates about $28,000. Last year, delinquencies left the borough short by $96,624 - about 3.5 mills."The citizens of Coaldale who keep us afloat are the senior citizens and the working class," said council president Susan Solt. "It's been said to me that people don't have a problem with paying taxes as long as it's not to make up for those that don't. That's what hurts."Director of Carbon County's Tax Claim Bureau Director Renee Roberts is seeing firsthand a jump in delinquent tax payments."There has definitely been an increase in the number of properties that are delinquent within the last five years," she says. "Also, we have had an increase in the number of properties we are taking to tax sale for non-payment of taxes."The shortfalls often force school districts as well as municipalities to either increase tax rates, or routinely carry higher rates in anticipation of delinquencies."Taxing bodies have to raise taxes more than they need to offset the delinquencies," says David W. Davare, Director of Research Services for the Pennsylvania School Board Association. "The people who pay their tax end up paying more than the people who are delinquent."The Panther Valley School District is feeling the crunch. Under its proposed 2012-13 budget, the property tax would rise by 2 mills on the Carbon County side and 5 mills on the Schuylkill side. The district collects 89-90 percent of property taxes on time, with 10-11 percent delinquent."These delinquents account for about $700,000," says Business Manager Kenneth Marx Jr. That's the equivalent of about 5 mills.The shortfall takes its toll, says Panther Valley Superintendent Rosemary Porembo."When developing the budget, we want to be very accurate so we have to anticipate each year we will not collect about 10 percent of all taxes. This impacts the programs that you can offer to the students in our area, it raises the mills on the taxpayers who meet their obligations and it puts the district into the situation of looking for other methods to collect from delinquent taxpayers," she says. "In these economic times, when less money is appropriated from the state and federal governments for education, it makes the local contribution a high priority."Palmerton Area School District is looking at a $1,013,512.29 shortfall. Business Manager Donna Les says the delinquencies can lead to higher taxes."As delinquencies increase, the district's current collection rate decreases. If this decreased collection rate becomes a trend, the district must budget a lesser percentage of collection, which either lends to a higher millage rate or reductions in educational programs and opportunities which affect students," Les says. "Given the on-going economic downturn, delinquencies will probably continue to annually rise. This trend continues to stress not only the district resources, but taxpayer resources as well."We are cognizant of the impact that our programs have upon the taxpayers in this community. We continue to look for other sources of revenue and reductions in costs to offset millage increases. given the nature of public education and the many state and federal mandates to which we must adhere, defining and implementing cost reduction strategies is extremely difficult," she says. "We will continue to develop programming that meets the needs of our students while attempting to minimize their financial impact on the community."In the Tamaqua Area School District, tax collections have averaged about 91 percent for the past eight years, says Business Administrator Connie Ligenza. That means an annual delinquent tax payment consequence of $812,815, or about 2.9 mills. Each mill generates about $275,000.That 91 percent isn't too bad, according to Davare."Under state law, districts are required to give 2 percent discount for early payment, so, according to the state formula, assessment times the millage rate times 98 percent would be the maximum revenue."But as delinquencies occur, the collection rates begin to decline. The ideal rate is 95 percent or better. Throughout Pennsylvania, some expanding districts hit 102-3 percent because of new construction. But other districts are down as low as 85 percent," he says."Because of that basic equation, in a district at 85 percent, if there is a need to increase revenue by some value, actually the district needs to increase it more because of the delinquencies," Davare says. "In other words, school districts (at the most) get $9 out of every $10 (owed).Local boroughs are feeling the pinch.Jim Thorpe borough has to wait for its tax revenue to fully come in, but it eventually does, says tax collector Terry McElmoyle."Pretty much we collect 99 percent just not all on time," he says. "About 70 percent of the taxes are paid within the discount period. Another 20 percent comes in after that, but by the end of the year. About 8 percent is turned over as delinquent after the end of the year. It's either pay or (if not paid within two years) lose your home, and most people pay it."McElmoyle says losing one's home to back taxes is rare. The homeowner has two years to own up, but also incurs fees as the delinquency continues."There may have been one house last year lost due to non-payment of taxes," he says.Lansford tax collector Daniel J. Wynn says the collection rate for his town is about 85.6 percent. That added up to a whopping $175.476.98 shortfall for the struggling borough. Wynn has also urged council to eliminate per capita and occupational taxes, which are currently in arrears to the tune of $17, 248. Those taxes cost more to collect than they generate in revenue, he has said.Summit Hill Borough is currently $39,500 behind in delinquent tax payments. Each mill generates about $35,000.Lehighton Borough is doing pretty well. Treasurer Kira Michalik says the collection rate is 93 percent. Currently, delinquents owe a total of $27,000 in unpaid taxes. Each mill generates $80,036, so the hit is relatively small.Davare says that school districts and municipalities can wait for the tax delinquent property to be sold at a sheriff's sale to recoup the cash. They can also hire a third party to collect the back taxes, although those companies tend to levy hefty fees. But the property owner can pay one year's delinquent tax bill and continue to slide on the others, constantly staying two years behind."The delinquencies are going to be a continuous moving target," Davare says.