Members of the Senate Finance Committee focused on $100 million in delinquent taxes owed to the Government of the Virgin Islands during Tuesday’s budget wrap-up, at which the governor’s financial team testified to the Fiscal Year 2022 Executive Budget and the Fiscal Year 2021 Supplemental Budget.
Brent Leerdam, a tax collector with the Office of the Lieutenant Governor, said the office has “a focus on delinquencies and we are trying to move the needle on all of those, for all the years.”
But when committee members pressed Leerdam for a detailed plan of how the office was going to ensure collecting on all the delinquent accounts, he could not provide an adequate response that satisfied the committee.
“We have a number of things we do for customers to assist them with satisfying the arrears with the government,” Leerdam told senators. He said the office has several tactics used to assist customers with delinquent accounts, some as simple as calling those who owe, but also financial counseling, brochure mailers, and payment plan options.
“We call customers based on if they identify as long hanging fruit. If they have had delinquencies for multiple years or have large amounts owed to the government, we individually chase these customers and try to arrange for payment or see what we can do to move that along,” Leerdam said. He added next week the office “hopes” to post a “delinquency publication” for tax years 2015 and before.
Legislators were largely unimpressed by the office’s efforts.
“If we don’t go after individuals who owe delinquent taxes for donkey years, we are never going to improve this particular number,” Sen. Kurt Vialet said.
“This body has passed legislation waiving penalty and interest on property tax multiple times. I think what we are trying to find out is how are we aggressively going to go after that $100 million that is still on the street,” Vialet said. “Counseling, I don’t think counseling works. You’ve got to pay, and they need notification that they owe and that they have to begin to make payment … The government cannot have an entity that hasn’t paid tax for 15, 20 years and it’s just sitting there and there is no notification or anything.”
Leerdam defended the projections and said the $58 million projected to be collected in delinquent taxes for fiscal year 2022, “represents our increased focus on delinquencies. So, it increases that delinquency forecast by $5 million above fiscal year 2021.” But Sen. Donna Frett-Gregory wasn’t as convinced the office’s projection would prove accurate because property taxes collected so far for fiscal year 2021 are under $42 million but projected at $53 million.
“Perhaps you do have a plan, but you haven’t really sold to us today that you would really be able to collect the additional $5 million,” in fiscal year 2022, Frett-Gregory said. “So, as far as how you have explained and what you are doing, didn’t necessarily seem like anything that was aggressive. It perhaps is, but I didn’t gather that from your response. I’m looking forward to what the final numbers are in 2021 because that is going to help us make some true determinations as to what we will truly see in 2022 because I don’t see you making the 2021 numbers.”
Specific to property taxes, Leerdam said the revenue comes “on a cyclical basis and as such we arrive towards the end of fiscal year, that’s when more payments are typically made. Because of that, we are optimistically cautious.”
Leerdam said the projected $53 million in property tax collections should be realized because “the lockbox payments for all the mortgage companies and banks are just coming in now. As well as the delinquency publication is probably going out next week.” But after Vialet inquired how much was expected to be contained within the lockboxes, Leerdam said “it varies, I think the total is some $3 million,” leaving an $8 million shortfall.
Sens. Marvin Blyden, Samuel Carrion, Dwayne DeGraff, Janelle Sarauw, Vialet, and Frett-Gregory were present for the hearing. Sen. Javan James Sr. was absent. Additional non-committee members also attended the hearing.