January 7, 2000

To: Budget Advisory Committee

From: Wanda A. Liczyk

Chief Financial Officer and Treasurer

Subject: 2000 Capital Budget - Transition Program

Finance Department - Revenue Services Division Tax and Appeals Processing Update

Purpose:

This report provides the status of tax and assessment appeals processed and advises that casual staff will continue to be required until April 30^th, 2000.

Financial Implications:

Cash flow requirements for the continuation of casual staff totaling $135,000 and the associated funding from the Transition Reserve Fund were requested in the 2000 - 2004 Capital Works Program.

Funding is available from the carry forward of 1999 approved funding specified for this purpose, but not required in 1999.

Recommendations:

It is recommended that this report be received as information.

Background:

On April 26^th, 1999, through Strategic Policy and Priorities Committee Report No. 8, Clause 121(a), City of Toronto Council was advised that there was a backlog of approximately 24,000 assessment appeals to be processed. Of these, approximately 4,800 related to 1996 and prior years and 19,200 related to 1997 and onward. Staff also advised that the Assessment Review Board (ARB) was operating on an expedited basis to clear its backlog, which was contributing to the issue at the time.

Given this information, Council authorized the Chief Financial Officer and Treasurer to hire 20 additional casual employees for a period not to exceed six months to assist in the processing of assessment appeals. The cost was not to exceed $325,000. Funding was provided from the Transition Reserve Fund.

The discussion below advises on progress made to date and on current status.

Comments:

Although Council approved the hiring of 20 additional casual staff to assist with the backlog of appeals, only 12 additional staff were employed by May 1999. Eight of the casual staff were hired for 6 months and 4 were summer students that returned to school in September 1999. By the end of September, the backlog on hand had been processed as promised. With the assistance of the casual staff, 24,926 decisions were processed between March and September 30^th, 1999. During this period, staff focused on processing decisions for 1997 and prior with mailing dates from the ARB to the City of Toronto of before April 30^th, 1999.

In September, a decision was made to extend the contracts for the 8 casual employees that were hired in May to the end of the year. The Unit has since then been operating with a staff complement of 25 full time equivalent (FTE's), including 1 supervisor

By the end of October 1999, the Assessment and Appeals Unit has processed an additional 4,983 decisions, which were largely for the 1998 tax year.

The following provides a breakdown, by month, of the appeals processed and identifies the average number of decisions processed by each employee:

Appendix 1, provides by former municipality and tax year, the number of accounts and the associated dollar value.

Prior to March 1999, staff were located across the former area municipalities. In addition, tax appeals processes and procedures were not harmonized. For these reasons, the number of appeals processed and the number of appeals processed/FTE's were low as compared to the months that followed. Centralization of appeals staff at 112 Elizabeth Street occurred in March 1999. By the end of March, procedures were harmonized and training on the new integrated tax system was completed. Staff was than ready to process tax appeals efficiently.

In late April 1999, 8 casual staff were brought on and trained as required. Four additional casual staff was brought in May 1999 to assist in processing the backlog that had developed since amalgamation.

Although progress has been made with respect to the backlog, the following decisions require processing.

It must be noted that the mailing dates of these outstanding appeals are from April 1999 onward. Again, to the end of October 1999, staff concentrated on processing decisions from 1997 and prior with mailing dates before April 30^th, 1999.

For approximately half of the above decisions, the account analysis is done using the legacy systems. All accounts are analyzed for name changes, payments made, other decisions processed, Ontario Municipal Board (OMB) appeals pending, taxes outstanding for other years and particular notes that may relate to the issuance of the refund. Once a tax adjustment is calculated, staff must review the 1998 and 1999 frozen listing, make changes according to the decision and recalculate the phase-in and capping. Once the phase-in/capping is recalculated, the credit is refunded/transferred.

The monthly appeals processed/FTE as calculated for the ten month period from January to the end of October 1999 is 128. However, as January and February were difficult months from a processing perspective, this analysis will utilize the monthly average from March to end of October, which are 156. Given the current staff complement of 24 front-line FTE's and an adjusted average of 156 appeals processed by each employee per month, 3,744 decisions per month can be processed (24 employees x 156 decisions per month). Essentially, at this rate, the current volume of 12,449 decisions could be processed in just over 3 months.

However, during this time, it is expected that additional decisions will be forthcoming from the ARB at an accelerated rate. At this time, it is difficult to estimate the number of decisions that will be received each month. Best estimates indicate that between 2,000 and 3,000 will arrive/month, resulting in an additional 12,000 to 18,000 appeals to be processed (November to April) which will require from 3 to 5 months of staff time.

Assuming that the current staffing and performance levels continue during the later part of this year and into 2000, it will effectively take from 6 to 8 months to process all outstanding decisions and for the Assessment and Appeals Unit to be in a position were decisions are processed within one month of receipt. Achieving this objective will mitigate the need to pay interest on assessment appeals that have been processed after one month that the Notice of Decision is received from the Assessment Review Board.

Of the $325,000 approved in 1999 for casual employees, it is projected that $189 thousand will be spent by December 31^st, 1999. This report advises that the remaining funding totaling $135,000 will be carried forward to 2000 to permit the funding of the required staff until April 30^th, 2000.

Conclusion:

The Assessment and Appeals Unit has worked diligently to process the backlog of decisions resulting from appeals received from the ARB. By the end of September, with the assistance of casual staff the backlog identified in April had been resolved. However, a recent review indicates that approximately 12,449 tax appeals are currently on hand to be processed. Furthermore, it is expected that an additional 12,000 to 18,000 decisions will arrive from the ARB between October 31^st, 1999 and the end of April 2000.

In order to continue to provide timely processing of assessment appeals, 6 casual staff will continue service within the Assessment Appeals Unit to April 30^th, 2000.

The Chief Financial Officer and Treasurer will update on the status of appeals processing in the spring of 2000.

Contact:

Giuliana Carbone

Director, Revenue Services

(416) 392-8065

e-mail: gcarbone@toronto.ca

Wanda A. Liczyk

Chief Financial Officer and Treasurer

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