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CASE STUDY: Improve Your Budget & Operation Outlook

How the City of Florence Maximized Compliance, Grew Revenues & Streamlined Tax Administration.

Revenue management has always been a top priority for local governments. Tax revenues come from a variety of sources, including business licensing fees, sales taxes, property taxes, and more. Managing all of these disparate sources of tax revenue is a big task and a huge responsibility, especially when effective revenue management can make the difference between a balanced budget and a budgeting crisis.

But the coronavirus pandemic has made revenue management even more important than before. The pandemic has dramatically impacted tax revenues, and many state and local governments are struggling to adapt to the changing tax landscape that COVID-19 has created. Previously reliable sources of tax income are drying up, while new revenue sources derived from digital businesses and technologies are emerging in real time.

To manage their revenue streams effectively, governments need datadriven, cost-efficient, and streamlined technologies to maximize tax compliance and ensure they get the tax revenue that is owed to them.

Bob Leyde, City Clerk for the City of Florence, Alabama, knows the importance of effective revenue management and a partnership with Avenu has enabled the city to take advantage of cutting-edge technology that has streamlined tax administration and provided deep insight into areas of non-compliance.

Together, we were able to develop a solution to help Florence meet these challenges. Bob Leyde, City Clerk for the City of Florence, Alabama summarized the results when he stated, “Our partnership with Avenu has brought the city well over $3 million dollars of additional revenue that allowed us to provide needed services to our citizens.”

Learn how a combination of our solutions were able to create incredible results for this city.

Florence, Alabama

Digital Government In 2021: Lessons From The Past Year And Top Trends For The Future

By Paul Colangelo, Avenu CEO

If local governments have learned anything from 2020, it’s the importance of digital tools, platforms and services. Amid the unprecedented economic and social disruption incurred by the Covid-19 pandemic, digital governments proved crisis-resistant and efficient enough to thrive.

However, if the pandemic accelerated the digital transformation of government, that transformation is still far from over. In fact, it’s bound to pick up pace as both constituents and government employees become adjusted to ever-increasing digitalization. As we enter Covid-19’s second year and prepare for the future, local governments must continue their efforts at digital transformation.

That means local governments need to stay on top of the latest developments in IT, cybersecurity and digitalization. With that in mind, I want to highlight some of the biggest digital trends to watch for in 2021 and beyond.

To learn the top digital trends of 2021, read the full article on Forbes.

Changing Tax Landscape Requires Prioritizing New Compliance Efforts

By Kennon Walthall, Avenu Senior Vice President

In almost no time at all, COVID-19 has transformed both society and the economy. A rapid shift to remote work and the emergence of more digital-first services, combined with new social distancing and safety protocols, have altered everything from our work patterns and office practices to our home lives and shopping schedules.

While many of these changes hold promise for the future, they come at a cost. This is especially true for state and local governments whose tax revenue  has dramatically been impacted the pandemic, and many are facing   a severe budget crunch. From March to August of last year, as the coronavirus pandemic first took hold, total tax revenue at the state level declined by 6.4%, and state governments were suddenly facing hundreds of billions in lost revenue across the board.

Better revenue management will have to be a top 2021 priority for state and local governments looking to thrive in the post-COVID era. That’s because COVID-19 hasn’t just hurt the budgeting bottom line by depressing tax revenues; COVID is changing how tax revenue comes in and where can it be found, with previously reliable tax revenue streams drying up, while others grow. To stay on top of their revenue streams, governments will need to adopt the data-transparent, cost-efficient and effective technology tools and practices that maximize tax compliance in the new COVID-19 tax landscape and ensure that no tax revenue source goes untapped.

Tax revenue has always been a huge part of our economy, with state and local tax revenue accounting for about 9% of our national GDP. But taxes come in all shapes and sizes, and not every tax contributes equally to total tax revenue across every municipality and all 50 states. That means a major disruptive event, like the coronavirus pandemic, can shift the way tax revenue comes in, creating a disparate economic impact and changing the way taxes ought to be collected.

Take sales tax, for example. In 2017, state and local governments took in about $389 billion in general sales tax revenue, amounting to about 12% of overall revenue. In 2020, COVID-19 reduced sale tax revenue by about $50 billion, mostly by reducing the emphasis on what and how much people bought from heavily-taxed goods and services like restaurants and hotels.

But that overall decline in revenue doesn’t tell the whole story, because the impact from COVID-19’s effect on sales tax revenue wasn’t felt equally across the country.

Only 46 states collect general sales tax, and of those 46 states, some rely on sales tax more heavily than others to balance their budgets. These differences in revenue management led to significantly different COVID-19 outcomes; new research has found that the more a state or local government relied on sales tax income, the higher its unemployment rate for government employees during the pandemic.

But at the same time that sales taxes have gone down, other tax revenues may start to go up. As more people leverage the freedom of remote work to relocate from urban to rural areas, property taxes in some municipalities will rise. And as more people order take-out and use online delivery services, these digital platforms like Uber and DoorDash present yet another lucrative tax revenue stream.

A similar story can be told about a plethora of different tax revenue streams. With stagnant business growth in 2020 and many offices retooling their employees for remote work, business licensing taxes and occupational taxes are likely to decrease. At the same, alcohol sales have increased dramatically and alcohol taxes have grown with them.

What we see across revenue streams, industries, municipalities, and states is a shifting tax landscape, where previously reliable revenue streams are drying up while others are widening and increasing. The key for governments will be their ability to comprehend this changing tax landscape and tap into it effectively by maximizing compliance.

There’s a lot that governments can do, but maximizing compliance will start with an internal audit. As tax revenue streams shift and change, governments need assurance they’re getting what is owed to them. But all too often, cumbersome paper processing, opaque data, and an over-reliance on manual work can hamstring a government’s capacity to get a clear overview of patterns of compliance or noncompliance, especially when tax realities are rapidly changing. A comprehensive, internal audit can ensure that doesn’t happen.

In the same vein, governments must prioritize adopting technology that streamlines tax collection and administration. An automated tax management system, for example, can make sure governments get their tax revenue quickly, easily, and with a minimum of human error. Many of these systems are cloud based and can be quickly and easily implemented for a jurisdiction. Meanwhile, citizens are expecting and often times demanding  an easier and more convenient way to meet their obligations  So, if governments don’t have the digital portals and online payment options that facilitate paying taxes, licensing fees, and fines, then a lot of revenue will potentially get lost in the confusion and upheaval.

These are just a few examples, but the list goes on. The main idea is that better administrative practices and new technology can help governments enhance tax compliance by making tax collection and payment easier and more efficient for both governments and citizens, while also rooting out noncompliance. By doing so, state and local governments can unlock their 2021 revenue streams and face the future of our changing economy and society with strength and success.

Why and How Local Governments Should Start Automating During COVID-19

The coronavirus pandemic has severely impacted the economy. As a result, tax revenue is down, and many local governments are struggling to withstand significant budget shortfalls.

But cash-strapped governments can access new revenue simply by updating and automating their internal systems. In his new op-ed for Forbes, Paul Colangelo, Avenu’s CEO, explains why automation is imperative today and how it can help cities become more resilient against crises like COVID-19.

At its core, automation is increasing efficiency and productivity through digital technology. Far too many governments today are still reliant on outdated paper processes and inefficient manual labor. Automation can streamline the public workforce and equip governments to maximize their revenue streams while delivering higher quality services to their constituents.

Read more about the benefits of automation here.