City will dock paychecks of delinquent employees

Hundreds of tax-delinquent city workers will soon see their pay docked because of a new city program calling for wages to be withheld from employees who owe taxes or other government debt.

Currently, 869 employees owe $4.8 million to the city - mostly in property taxes - and 466 others have entered into payment agreements since May to reduce their debts.

Beginning next week, those 869 workers who have yet to take action will receive letters from City Controller Alan Butkovitz urging them to pay or enter a payment agreement within 30 days or risk losing up to 20 percent of their paychecks.

A 1937 state law gives the city controller the authority to withhold income, most of which will be used to pay outstanding property, wage, or business taxes, as well as water and sewer fines and other fees.

The effort to collect the delinquent money follows an Inquirer analysis in July that found 2,000 city employees and their spouses owed $5 million in property taxes, including some debts that were more than 20 years old.

Under Butkovitz's plan, how much salary is withheld would depend on the worker's disposable income, which includes overtime but not federal, state, or city taxes or other government-mandated deductions.

For instance, employees who earn $2,505 or more every two weeks would see their paychecks fall by the maximum 20 percent; just 45 delinquent workers fall into that category.

The vast majority - 458 employees - would lose 15 percent of their paychecks. They earn between $1,259 and $2,504 biweekly. "I was really surprised that the people making less money had a better track record of paying their taxes," Butkovitz said.

Income deductions for the remaining workers - all earning less than $1,258 every two weeks - would vary among 10, 8, and 5 percent.

The bottom line: Butkovitz anticipates that 68 percent of employees will pay off their debts in a year or less, and that the city will collect $2.7 million in delinquent fees within five years.

"I see this as part of our total efforts to increase tax collections," Butkovitz said, noting his office's focus on collecting outstanding debt of all sorts. As far as getting city workers into compliance, he said, "It makes sense to use all of the tools on all of these fronts."

Even so, he doesn't anticipate collecting any money from about 52 workers, mostly part-time city employees who earn less than $580 every two weeks.

Also, of the money owed, nearly a quarter of it - $1 million - is traced to just 16 employees. Deducting their paychecks won't be sufficient because it would take decades for them to pay off what they owe, Butkovitz said. Citing other potential steps, such as tax liens and sheriff's sales, he said, "They will be subject to the process but this will not be the final word."

Included among those 16 workers is Martin Cabry, an aide to Councilwoman Jannie Blackwell who owes the city $97,705. Cabry, whose 26-year-old case was detailed in the July Inquirer report, was slated to lose his University City home to a sheriff's sale on Sept. 16.

Two days before that, though, Cabry filed for bankruptcy protection, a maneuver that prevents the city from foreclosing on his house and deducting from his wages.

Derek Green, another City Council aide who owes the city back property taxes, has whittled away at his debt through a monthly payment plan. The $6,215 he owed in July is now down to $4,847, according to city records.

Another employee featured in the Inquirer report was George Brooks, a Democratic ward leader and patronage employee in the Register of Wills Office. According to city records, Brooks owes more now - $15,146 - on his two-decade-old debt than he did in July.

But wages will not be withheld from his paycheck because his case is being handled by a private collection agency hired by the city, said Doug Oliver, a spokesman for Mayor Nutter. Brooks has a payment agreement with the collection agency, Oliver said.

As a preventive measure, the city also took steps yesterday toward adopting rules that would prohibit hiring people who owe the city money, unless they first enter into agreements to pay the debts.

That action - by the city's Administrative Board, composed of the mayor, managing director, and finance director - will apply to civil service and non-civil service workers. It will also eventually extend to employees who owe money to the Philadelphia Gas Works.

Chicago and Washington have similar hiring policies, city Revenue Commissioner Keith Richardson said.

The policy will go into effect next month after a 30-day public-comment period. The new rules "set a new tone and policy for the city that's been long overdue," Nutter said.

However, he added: "Just because you have outstanding issues today doesn't mean you shouldn't apply."