Title
Resolution - A Resolution Authorizing a Contract between the City of Mansfield, Texas and Tarrant County and the County's Tax Assessor/Collector for the Collection of the City of Mansfield, Texas Tax Collection Services
Requested Action
Ratify, confirm and approve the Contract between City of Mansfield, Texas and Tarrant County and the County's Tax Assessor/Collector, to collect property taxes on behalf of the City of Mansfield, Texas.
Recommendation
Staff Recommends that the City Council of the City of Mansfield, Texas ratify, confirm and approve the Contract by authorizing the City Manager or his designee to enter into a contract with Tarrant County and the County's Tax Assessor/Collector for the City's tax collection services.
Description/History
Years ago, over 15 years ago, the City of Mansfield, Texas managed its own tax collection office. A decision was made to outsource this function, collection of property taxes, to Tarrant County. The reasoning was based on the costs of the City providing the collection services compared to the cost of Tarrant County providing the collection services. Tarrant County was able to provide the services at cost below what the City's cost of services were at the time.
Justification
City staff performs a simple analysis every year to determine if this cost of service is more economical for the City's tax payer whether the service is provided by the County or the City. Staff has reviewed the decision model again and concluded that it is more economical to contract with the County's Tax office for the collection of the City's property taxes than it is for the City of Mansfield, Texas to re-establish its own Tax Collection Office. The cost per account is $1.10 cents per account within Tarrant County and the cost per account in Johnson/Ellis County is $2.60 per account. According to the latest collection report, the City has 38,611 total accounts. Through discussions with the County's Tax Office, the City has 3,365 outside the bounds of Tarrant County. This means there are 35,246 accounts within Tarrant County and 3,365 accounts in Johnson/Ellis County. The math projects the total cost of these services to be $47,519.60 for fiscal year 2014 ($38,770.60 Tarrant County + $8,749 Johnson/Ellis County).
Through discussion with Ron Wright via Tom Spencer, Deputy Tax Collector, Ron Wright initiated an expansive cost study that included the opinions of the County's External Auditor, the District's Attorney, and the County Auditor on the appropriate methodology to define the cost of services provided by the Tax Collector/Assessor. The study concluded with a final number to be charged to the contracting parties for accounts within Tarrant County and a final number to be charged for accounts outside the County, i.e. Johnson/Ellis County. By law, this number or cost is designed to capture only the cost of the service provided by the County to the City. (Ron Wright, Tax Assessor/Collector for the County, notes in his transmittal that the State Law requires him to charge his actual costs for these tax collection services.)
Given the County's new fee structure this year, the City considered the idea of contracting tax collections with several counties, Johnson, Ellis, and Tarrant, instead of just Tarrant County. The conclusion of the cost benefit analysis still favors the idea of using Tarrant County for collection services for all the customers of the City Mansfield, Texas. The reasoning for continuing to use Tarrant County for tax collections for all residents of the City Mansfield, Texas include the additional administrative time by the employee group of the City's Finance Department to account for the collections from multiple agencies instead of one agency, Tarrant County, accounting for the multiple agencies and the additional audit work to prepare for the City's Auditors. Additionally, the efforts of simplifying the payment process for the Citizens are nullified because other taxing jurisdictions still engage just Tarrant County for their collection services.
Funding Source
General Fund
Prepared By
Peter K. Phillis, CPA
Director of Business Services
817-276-4266