Darien maintains high tax collection rates even in tough economic times
The Town of Darien has consistently maintained a high collection rate on taxes, keeping mill rates in check.
Tax Collector Robert Locke said Darien is fortunate to be able to maintain such a high collection rate -- consistently above 99 percent -- even during tough economic times.
"We are very fortunate to have such a high collection rate. Over the last four or five years it has been 99.5 percent or higher," Locke said. "I'm not saying we don't send out second notices, but it's really not an issue."
When the economy began to slide and unemployment rates were on the rise, Locke said he expected to see the collection rate dip, but was pleasantly surprised when the town still managed to collect nearly all of the taxes owed.
"I honestly didn't see much of a change in the tax collection when the economy went downhill," he said. "I know there have been some foreclosures, but there really hasn't been a huge impact."
The town's ability to collect a high percentage of taxes is also attributed to the fact nearly half of the taxes are paid through escrow accounts.
"Many residents have mortgages on their homes and money is automatically set aside in a escrow fund to cover the taxes on the property each year," Locke said. "It's nice because the banks handle the payments and residents don't need to worry about coming up with a big chunk of money."
Maintaining a high collection rate also contributes to keeping the mill rate at a reasonable level as a lower collection rate would force town officials to raise the mill rate to compensate for the loss in tax revenue.
Board of Finance Chairman Liz Mao said an assumption is made each year as to the percentage of taxes the town will collect based on previous collection rates.
"A lower collection rate increases the mill rate, but we haven't assumed a collection rate of less than 98.5 percent and we still collected more than that," Mao said. "People in Darien pay their taxes."
Mao said the town tends to be more conservative when assuming the collection rate, because if the collection rate is too high and the town doesn't collect the assumed percentage of taxes, then the town could be forced to dip into its reserves.
"When you assume a more conservative collection rate it's always a positive surprise when it comes in higher," she said.
Residents also are encouraged to pay their taxes because interest rates for properties with unpaid taxes are fairly high, at 18 percent per year, Locke said.
"They will pay eventually with interest rates that high," Mao said. "There were some instances where businesses in town didn't pay taxes because they went out of business."
Collecting a high percentage of taxes is also important for a town such as Darien because personal property and real estate taxes are the sole source of tax revenue the town receives to fund its government, Mao said.
Other towns, such as in Westchester County, receive some revenue from the sales tax. However, Mao said not relying on sales tax revenue helps the town protect its Aaa credit rating because fluctuations in sales tax can impact the credit rating.
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