GFOA/MBIA 1997 survey on revenue collection practices in state and local governments.

• Author: Tigue, Patricia
• Position: Government Finance Officers Association; financial services firm MBIA

A centralized collection process, technology innovations, and competitive contracting were reported by many survey respondents.

How do state and local officials collect the revenues necessary to provide vital public services? What steps have they taken to improve these practices? How do they use technology to assist in their efforts? What innovations have they used, either through privatization of the collection process or securitization of tax liens or receivables?

Answers to these questions were found by the Government Finance Officers Association (GFOA) and MBIA, a leading insurer of municipal bonds and provider of investment management and tax administration services, through their annual, jointly sponsored survey of financial practices. This survey comes at a critical time. As state and local governments look to improve the efficiency of the revenue collection process, it is helpful to understand what others have done or plan to do.

The GFOA/MBIA survey found that nearly half of the governments surveyed have made changes to their revenue collection process during the past 24 months, with many focusing on improved performance monitoring and enhancements to their computer systems. Additionally, 48 percent of the governments used credit reporting agencies or collection agencies to collect delinquent accounts during the past 24 months, and 50 percent plan to use such agencies during the next 12 months - indicating satisfaction with the performance of these agencies and a continued growth in interest. Also, a small but significant number of governments are examining the sale or securitization of property tax liens.

The GFOA/MBIA survey was conducted in March and April 1997, through a faxed questionnaire sent to GFOA members in 3,500 governments, of which 1,022 responded. The respondents reflect a wide variety of geographic regions and types of government in the United States and Canada. Three-quarters represent cities, towns, and villages with populations ranging from less than 10,000 to more than one million. Officials from county governments, states, and special districts were also among the respondents.

General Collection Practices

More than half of the respondents have designated staff to collect delinquent accounts and have centralized the collection process on behalf of all departments. More than half of these collect at least 97 percent of their accounts receivable, and only a few collect less than 90 percent (Exhibit 1). In...