by Jon Baliles

City Hall has spent the last few months trying to fix the meals tax fiasco where they were charging restaurants thousands and tens of thousands of dollars in penalties and interest which accrued that the restaurants never knew about and about which the city never made any attempt to contact them, so that their bills were ballooning. At first it was just a handful of complainers, according to Richmond’s Chief Administrative Officer (CAO), but then it was acknowledged it was 500, and then finally the auditor discovered there were 673 affected accounts.

So the city began to stem the bleeding and started resolving the situation.  They refunded some restaurants that had paid a lot of money just to stop the interest from continuing to accumulate, and others had the charges the city said were owed wiped out. Anything to stop the buffet of media stories and bad press.

City Council moved faster and passed legislation in February that requires the city administration to apply payments only to the month for which they are submitted. They city had been following the worst practice of taking a portion of a payment and applying it to a delinquent account balance that the restaurant owner never knew about because they weren’t notified; they were unknowingly constantly in arrears while the interest and penalties continued to grow. That’s why some restaurants had balances of $37,000, $68,000 and $180,000 outstanding.

But the legislation that Council passed also included making the administration notify accounts if they had a credit on their account. The fixing of the fiasco and reimbursement of the erroneously billed accounts and wiping out of phantom balances began after the passing of the legislation because City Hall needed this issue to disappear ASAP because they didn’t want the other shoe to drop — the shoe that might show possible credits on accounts.

Tyler Layne at CBS6 asked the question nobody at City Hall wants asked — Is the city telling taxpayers when they overpaid on their taxes? Layne obtained a draft report that reveals the city’s Inspector General (IG) is investigating after receiving a complaint alleging the “finance department is failing to notify taxpayers of credits on their accounts” for meals taxes and business license taxes and then “writing the credits off the taxpayer accounts and converting them to city funds” after a “statutory three-year period.” The IG’s office would not comment.

The draft report found that more than $3.2 million in meals tax (ALM) and business license (BPOL) tax write-offs were written off between 2014-2018. But the city is not certain how much of that amount were credits due to accounts and how much were delinquencies owed to the city.

City spokeswoman Petula Burks offered up an all-time Hall of Lame excuse:

It’s crucial to understand that determining a credit balance is not as straightforward as it may seem. It requires a comprehensive analysis of the taxpayer’s accounts to ascertain when a credit exists. This process is governed by financial policies derived from state and local code and [Generally Accepted Accounting Principles].

Most people who balance their checkbook or reconcile an account or statement can do so without advanced mathematical formulas or a deep-dive analysis, i.e., “Is more going out than coming in?”

Layne wrote [emphasis added]:

Burks said determining whether a taxpayer is owed a credit can only be done through a complex, manual reconciliation process. Explaining why, she said some taxpayers have multiple accounts with the city, and finance staff must ensure taxpayers are in good standing across all their accounts before issuing a refund.

It is somewhere between astonishing and infuriating that the city knows instantly when an account is delinquent and they will not issue a business license to a restaurant or a permit to build or renovate until payment is made, but it takes the Labours of Hercules and a complex, manual reconciliation process to determine if an account has a credit and the city owes the account holder money.

Unsurprisingly, Chief Administrative Officer Lincoln Saunders declined an interview with Layne and instead sent Council President Kristen Nye out to try and explain it away.

“A lot of our systems in the finance and tax areas in which the city functions are archaic and are manual,” Nye told CBS6. “Sometimes what I have seen is that data can be pulled– it just takes a lot of man hours to pull it, and we don’t want our folks spending hundreds of hours trying to go through things manually.”

But at the same time, Nye also said, “We don’t want to have any unclear policies. We don’t want residents to think anything is cloudy and not being transparent,” she said.

Unclear and cloudy has sadly been the standing order from the “leaders” at City Hall for too many years. Let’s hope the next Mayor and CAO are crystal clear about their policies to rebuild administrative competence and offer a real and believable commitment to transparency and to rebuild trust.

Jon Baliles is a former Richmond city councilman. Republished with permission from RVA 5×5.