Thursday, July 30, 2015

How Ayers was able to skip taxes: City stopped cracking down on delinquent city workers

After an Inquirer investigation in 2009 about city employees failing to pay taxes, the Nutter administration announced that the city would crack down: City Controller Alan Butkovitz would send tax-delinquent employees a letter telling them to settle up or enter into a payment plan - or get docked up to 20 percent of their pay.

How Ayers was able to skip taxes: City stopped cracking down on delinquent city workers

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After an Inquirer investigation in 2009 about city employees failing to pay taxes, the Nutter administration announced that the city would crack down: City Controller Alan Butkovitz would send tax-delinquent employees a letter telling them to settle up or enter into a payment plan - or get docked up to 20 percent of their pay.

So, why was Fire Commissioner Lloyd Ayers caught last week owing more than $1,100 in back taxes? Shouldn't his pay have been docked?

After the city talked big, it withheld pay from employees who were delinquent in 2009. But it hasn't done the same to workers who became delinquent in 2010 and 2011.

In fact, the city controller hasn't sent letters to employees who became delinquent in those years, or even taken an inventory of how many there are.

Ayers never had his pay docked because he became delinquent in 2010.

Asked why the city hasn't continued cracking down, mayoral spokesman Mark McDonald said, "It's a project, and [the Revenue Department and the Controller's Office] have to do a lot of other projects."

The Controller's Office didn't offer any argument for discontinuing the crackdown. "[Butkovitz] does want to revisit the idea of following up on a more regular basis," spokesman Harvey Rice said.

In 2009, the city found 1,300 delinquent employees on its payroll. The Controller's Office said that most of those employees are now compliant, and its enforcement efforts generated more than $3.4 million for the city.

McDonald emphasized that the city is proud of this campaign, and that it "doesn't cost a lot of money" to identify tax scofflaws and garnish their wages. In fact, it's a net gain for city coffers.

In years past, some municipal union leaders argued that city employees shouldn't be treated differently from other delinquent taxpayers. Now, John McNesby, president of the Fraternal Order of Police Lodge 5, said that he is "not sure about garnishing wages" but has no problem with the city asking tax-delinquent employees to enter into a payment plan.

Bob Bedard, spokesman for both the firefighters and white-collar workers' unions, said, "It's typical of the Nutter administration to do high-profile, publicity-grabbing grandstanding and then not follow through," then added that he thought collection procedures should treat city employees the same as anyone else.

The city already docks pay from employees who owe bail, restitution or court fines. This fall, it will crack down on employees who have become delinquent since 2009, McDonald said.

It's hard to see why the city wouldn't be more consistent about going after tax delinquents on its own payroll. It could generate much-needed revenue, send the message that delinquency won't be tolerated, and, of course, preserve the sanity of taxpayers.

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Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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