Pending legislation has the county treasurer scratching her head

DAYTON—Columbia County Treasurer Carla Rowe believes the duty of the treasurer’s office is to collect taxes, not to make judgments on who is, or who is not, qualified for delinquent tax deferrals.

That is what she says she will be required to do if one of two pieces of Washington state legislation, dealing with the state of emergency due to the novel coronavirus, pass into law.

Engrossed Substitute House Bill 1332 suspends interest and penalties during a state of emergency declared under RCW 43.06.010. It would require county treasurers to grant extensions of the due dates of any taxes payable in April 2021 to be due October 31 for real property used for business purposes. Owners of real property used for business purposes who apply for deferrals at their county treasurer’s must demonstrate a 25-percent loss of revenue for the calendar year 2020, as compared to 2019.

This has Rowe scratching her head as to the documentation needed to make a determination on loss of revenue and whether the tax software in her office can even handle what the state is asking her to do.

She is also concerned about what effect the failure to collect taxes in full will have on the local tax districts.

Rowe said almost 24-percent of all property tax collections in Columbia County go to the state. The county relies on the remainder to fund county roads, schools, the Fire, Library, and Hospital Districts, the Port, the EMS levy, and part of the county’s current expense budget. Just look at the pie chart with the levy sheet enclosed with your tax statement to see how many pots there are and what percentage of the tax collection goes into each.

Servicing bond debt would be a huge concern, said Rowe. If the bills pass into law, Rowe’s office will be required to prioritize payment plans to protect scheduled bond payments. If a delinquent tax payment plan between her office and a taxpayer is made and that person makes a payment every month, the full amount of that payment must go to the Hospital or School District, ahead of any of the other districts.

Normally, 8.25-percent of the property tax collection goes to bonds held by the Dayton School District and the Hospital District, Rowe explained.

When those debt bonds are in their infancy, the repayment amount is calculated. The property tax collection amount is based on that.

If the tax revenue doesn’t come in, there are no funds in reserve for the bond payment, and the district will either have to come up with funds to cover the cost or default on it.

Fire District 3 has no excess funding they can rely on, and Rowe said if revenues do not come, the fire commissioners will have to decide whether to default on the bond payment or not provide services.

Bond payments are made two times a year, on June 1 and on Dec. 1. She said if this legislation is passed into law those districts may not be able to make their June 1 bond payments.

Engrossed Substitute House Bill 1410 amends a bill introduced to protect taxpayers from foreclosure during a state of emergency. It also speaks to delinquent tax payments, calls for reduced penalties and interest rates, and expands the duties of county treasurers.

Rowe said she doesn’t understand the need for changes to the RCWs when county treasurers already have the authority to grant tax payment extensions during states of emergency.

County treasurers are not involved in mortgage foreclosure, and Rowe said county treasurers have been unsuccessful in convincing the legislature that tax foreclosures are rarely on occupied homes.

She said what is most concerning about ESHB 1410 is it does away with penalties on delinquent tax bills.

“It is only human nature that if a bill can be delayed to be paid, it will be delayed. And that means delayed revenue for the districts,” she said. “There should be a benefit of paying taxes on time, and those that don’t should have a consequence.”

Rowe said last year, only a handful of homeowners called the Treasurer’s Office with questions about tax payment extensions, and when they learned about the 1-percent interest charge, they paid the bill.

“I’m sure if there had been no interest or penalty, payment would have been delayed,” she said.

Out of 2,500 taxpayers, on 6,000 taxable parcels in the county, her office has only processed payment plans for two businesses.

She said that counties are working on options if the revenue stream from fees and penalties is lost. Larger counties where the loss of revenue could be substantial, are talking about charging the districts for billing or adding a fee to all taxpayer statements.

That would mean the consequences for nonpayment would be shifted to all taxpayers instead of those who are delinquent.

“While I think the legislators are trying to lend a helping hand, there’s an issue in fairness here to the districts and taxpayers,” she said.

Rowe said both bills are on their way to being passed into law.

Rowe wants people to know the current property tax collection rate is above what has been collected for this same time period in the past three years, with many homeowners paying the full amount due for the year instead of the half payment.

She said if any taxpayer comes to her office to request making payments, her office staff will work with them.

However, if the terms of the agreement are not met, penalties and interest apply under the proposed legislation.