RCSD, like other special districts in the county, has money on deposit in the county treasury and invited Bartholomew to learn more about the county investment strategy.
Bartholomew began by stating that his department collects taxes but does not have anything to do with determining the amount of tax assessed. That is the job of the County Assessor. The Assessor’s office evaluates the property and determines the tax. They send that information on to the County Auditor’s office, which adds on bond and parcel tax charges and when that is done the information is sent to Bartholomew’s office. His office also collects the 10 percent Transit Occupancy Tax (TOT) applied to motels and hotels.
”We are charged with billing and collecting those taxes,” Bartholomew said.
Property taxes are due in two installments. The first installment is due on Nov. 1 and is delinquent at 5 p.m. on Dec. 10, after which a 10 percent penalty is applied. The second installment is due on Feb. 1 and is delinquent on April 10. Bartholomew said that sometimes people who wait until the last minute miss the 5 p.m. deadline and incur that penalty. His office now accepts online payments, although there is a 2.35 percent processing fee charged for this service by the credit card company that handles online payments.
Last year, Bartholomew said, his department billed $130 million in taxes and sent out 107,000 tax bills and other notices. Not receiving a tax bill does not relieve the property owner from paying the property tax.
”We get calls all the time that ‘hey, I never received a tax bill’ but there’s no excuse,” Bartholomew said. The property owner is responsible and needs to take the initiative.
Because his staff has been reduced so much, the office is becoming more and more automated and they have a cash counting machine, which is helpful since they get a lot of cash payments. The machine records the coding on all the bills. Prior to having the machine, they had to take a photocopy of every bill that came into their office.
”We get so much cash,” he said, “and this is for obvious reasons, which I’m sure you are aware of. We get cash that actually smells of the local crop. Not too long ago we had a guy come in with a lot of cash and he said it was out in the yard and had gotten moldy and he washed it. The cash counter couldn’t read the bills so we told him he needed to pay some other way. We just can’t take the time to deal with that when we’re swamped.”
The department electronically deposits checks into the bank. They keep the physical check for 90 days and then it is destroyed.
They have a vault and everything is reconciled daily before it goes into the vault, he said. Besides collecting taxes, his office does other things, such as subdivision applications, work with title companies, bulk transfers and tax auctions.
”Last year, we transacted more than $1 billion dollars through our treasury department, all reconciled, with checks coming and going out. Everything has to be reconciled and that’s what we do on the treasury side. Fortunately, we’re automated with the banks and it goes pretty quickly. Every day we have to reconcile the previous day’s transactions. We have to project how much cash we need on hand that day for checks that are cashed at the banks to calculate how much money will probably be drawn out of our accounts. We also have an accounting of all the large checks we have outstanding and then we have a projection of checks that might be cashed that day and bring extra cash into the bank if we need it every day. On average, we transact about $4 million dollars every day.”
The process of doing all that has checks and balances built in to catch errors.
Schools receive the largest portion of the tax revenue. The County General Fund gets the second largest portion. County roads, cities and the library get nearly equal portions, and a slightly larger amount (7.6 percent of the total) is distributed to special districts like RCSD.
Bartholomew also talked about the department’s portfolio of investments. Money from about 100 different agencies is deposited into the treasury and invested in various accounts. The Local Agency Investment Fund (LAIF) is run by the state but the state cannot access the money. There is about $100 million in the county’s LAIF fund. Bartholomew said it was like a money market account.
”Interest rates are so low right now, that I don’t want to invest the money to mature too far out at these low interest rates and be stuck with low interest yield securities if rates go up. I can’t take the risk of extending the maturity out too far.”
The money is also invested in other institutions such as Home Loan Bank, Fanny Mae and Freddie Mac, Farm Credit, which are all government agencies. Bartholomew said they yield the best rate currently. When the financial market imploded he pulled away from corporate investment although there is some money invested in Berkshire-Hathaway.
The department also has about $41 million invested in Certificates of Deposit (CD) in all the local banks. This is something he transitioned into since he took over the office to fulfill his campaign promise.
They pay Bank of America between $8,000 and $9,000 a month for all of their transactions. The county has been doing business with Bank of America for about 39 years. Local banks don’t have the electronic capabilities the department requires, he said
”I have looked into changing banks, but it’s going to be a huge endeavor because we are so intimately connected with the bank on a daily basis,” he said. But he does think that they will transition to another bank eventually.
The fundamental policy of his department puts safety as the number one concern for investments, followed by liquidity and yield. He said also that he really does adhere to principles of prudence and discretion in deciding where to invest the money.
With interest rates at historic lows, Bartholomew said he has curtailed investments and is refinancing old debt at the lower interest rate with the same maturity date. He expects to save $1 million or more doing this.
Bartholomew also cleared up the issue over the $80,000 error made when money that should have come out of another account was mistakenly taken from an RCSD account. That error was made by the auditor, he said, as that is the department that transfers money between funds. But he added that all the departments employ humans and humans make errors sometimes. That’s why it’s important to regularly reconcile the books.
In response to a question, Bartholomew said a portion of the TOT tax is given to the County Visitors Bureau and distributed by them to promote tourism. There is now a Tourism Improvement District (TID) that will add 2 percent to the TOT that will be directed at marketing the area. The Humboldt Lodging Association will be managing the extra funds and John Porter of the Benbow Hotel & Resort, Mike Caldwell of Inn of the Lost Coast and Garberville contractor Jim Johnson are on the board to represent Southern Humboldt. The larger portion of the TOT goes into the General Fund to help fund the Sheriff’s Department.
After hearing Bartholomew’s presentation the board voted to hold a Finances Workshop on Wednesday, May 23, at 5 p.m. The goal is to educate all the board members on reading and understanding financial reports.
At this meeting, the directors also heard a report from Martha Spencer, new head of the Planning Department, and Supervisor Clif Clendenen on the Draft Environmental Review of the General Plan Update. The GPU minus the Housing Element is expected to be before the Board of Supervisors on June 12. Monday workshops for the public are planned and the comment period on the document has been extended to June 15.
REDWOOD TIMES PHOTO BY MARY ANDERSON
Humboldt County Treasurer-Tax Collector John Bartholomew explained the workings of his office to the board of the Redway Community Services District at their May 16 meeting in Redway. Most special districts in the county have money invested in the county treasury because of the safety and good rate of interest paid.