Brian O'Neill: Sluggish city taxman? There’s a $900,000 good reason
February 21, 2016 12:00 AM
Paul Leger, Pittsburgh's finance director
By Brian O'Neill / Pittsburgh Post-Gazette
Thrift is a virtue, and my mother could hold so tightly to a nickel that Jefferson screamed. She played banks like fiddles, moving the same $100 around in the heyday of bank gifts, accenting our home with table lamps and toasters.
Had she ever let any of our money sit without drawing interest, she probably would have felt the need to cop to that in Confession. So I was thinking of Mom this past week when a mountain of property tax checks arrived on Grant Street, and the city couldn’t seem to get them out of the envelopes and into the banks.
I, like thousands of homeowners, wondered why my check wasn’t cashed Feb. 10, the deadline for homeowners who are eager to save 2 percent on taxes. That discount is there because money is worth more to the city sooner than later.
That discount date is, in effect, the city treasury’s Black Friday. Nearly $46 million in property tax revenue arrives in the mail in the week after the groundhog does his thing in Punxsutawney. In years past, the tens of thousands of checks were cashed with alacrity.
Yet my check didn’t clear my bank until Wednesday, seven days past the deadline. A neighbor’s was still uncashed Friday morning. How many thousands of checks and millions of dollars sat idly in their envelopes last week?
You know they don’t mean a thing if they ain’t got ka-ching.
I finally reached Paul Leger, the city’s beleaguered finance director, late Friday afternoon. The difference this year is the city had previously handled these payments through bank lockboxes. Payments were sent to a post office box and the bank immediately deposited them in the city’s account.
This year, the finance department dumped the lockbox and decided to handle some 34,000 incoming checks itself. It sounded like the mound of envelopes that was dumped in the courtroom in “Miracle on 34th Street,” though nobody feels much like caroling over property tax payments.
“I apologize for this delay,” Mr. Leger said in an email, “but we pulled $900,000 out of our expenditures by taking this process in house.”
OK, a $900,000 savings in bank fees and expenditures trumps any argument about days of lost interest on millions of dollars. At today’s rates, the math isn’t close. The process could take months and the city would still save money. But why does this take so long? What’s the holdup?
The staff receives envelopes in the mailroom several times a day, Mr. Leger explained. The payment coupon is verified against the check. If there’s no coupon, a duplicate is printed because the payment amount has to be written on the coupon.
Batches of 50 to 100 payments, with staples and paper clips removed, are scanned in another office. Checks are endorsed and batched for deposit by 11 a.m. each day.
At least a couple of thousand checks are still left to process, Mr. Leger said, which should take about four days. (For the record: The 2 percent discount for sending a check postmarked Feb. 10 or before remains.) There’s been a learning curve, as purposeful attrition has shaved a dozen positions from the finance department.
I suggested the city do more to encourage electronic payments. The city charges $1.25 for those, while electronic bank payments to utilities, credit card companies and such are free.
Mr. Leger said he’d like to move toward the technology the banks use, but his objective next year is to have checks processed within two days. Interest rates would have to go back “to what they were in Carter administration,” when U.S. Treasury rates hit the teens, for short delays to mean anything.
He had me on the math. Still, I thought back to one night last week when I moved $100 in cash I’d withdrawn from my interest-bearing savings account at Dollar Bank into my checking account at PNC to cover some bills due the next morning.
As I pressed the prompts and made the ATM deposit, I knew my maneuvers for maximum interest amounted to pennies. But I felt my mother’s presence, in a kind of secular communion.
I’m sure she’d be happy to know that at current rates I, too, could earn up to $900,000 this way, given 900,000 years.
Brian O’Neill: email@example.com or 412-263-1947.
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