30% of taxes overdue in St. Paul, penalties start Oct. 1

Town council gets update on tax collection.

Normally the Town of St. Paul would have 95 to 96 per cent of taxes collected by this point in the year–but 2020 has been anything but normal.

In response to the widespread layoffs and economic hardship experienced as a result of COVID-19, Town of St. Paul council voted to give a grace period from July 1 to Sept. 30, during which time the penalties on overdue taxes would be waived.

“Because there was no penalties, there was no motivation for people to pay on time,” said Town of St. Paul CAO Kim Heyman, noting the Oct. 1 deadline to pay without penalty is fast approaching.

“Until that date rolls by, we won’t know what our tax collection rate will be, but at this point it is 70 per cent of taxes.”

According to Heyman, one of the problems of having so many overdue tax rolls is that the town budgeted based on collecting their usual amount of taxes.

If those are not paid, the town could see itself in a deficit.

“The way municipal accounting works, you’re not supposed to run [your operations] at a deficit. If it does, within three years, you have to make that up. So we’d have to have a surplus next year. The long and short of it is if we run a deficit it either means increase the mill rate or reduce services,” said Heyman.

While council could choose to transfer funds from reserves to make their cash flow even for the year, Heyman said reserves are not considered part of operations and so the deficit would still exist.

Heyman said she is already doing the preliminary work on next year’s budget. “If I have to include making up a deficit it’s going to be a very different picture than if I don’t.”