No Foreclosures Over Local Fees On Tax Bills

February 14, 2013 13:00 pm

by Charlie · 12 comments

Today’s Courier Herald Column:

A friend of mine whom I usually agree with sent me the following asking me to incorporate it into a discussion on House Bill 159.  The bill would strip out the additional fees from property tax bills in the event a home is about to be lost to foreclosure in a tax lien sale.  Currently property tax bills must be paid in full with no partial payments.  His letter:

Under the guise of protecting homeowners from foreclosure and the IRS, Georgia House Bill 159 seeks to have all fees billed separate from our property tax bill. While that sounds like a good idea on the surface, I can find no record of any Georgia property owner being foreclosed upon solely for non-payment of fees. Secondly, protecting us from the IRS is akin to NYC’s jumbo soft drink ban.

In fact this bill, if passed, will have two negative impacts – the cost of billing will increase and the amount of bad debt will increase. Both of these additional costs will be passed along to homeowners in the form of higher fees to cover these shortfalls.

Most local politicians I know complain about unfunded Federal mandates to the states but seem to have no problem when the state proposes unfunded mandates to the counties or municipalities. HB 159 proposes a classic unfunded state mandate and worst of all is being sponsored by a local legislator who campaigned on fiscal responsibility and efficient effective government. HB 159 will produce neither.

Additionally the same legislator is attempting to alter the Gwinnett Storm Water Authority through local legislation that will ultimately increase those fees. This is bad legislation and I urge every Georgian to contact their State Senator and Representative to oppose HB 159 as well as the local legislation.

County governments have started adding additional fees to these bills for items such as garbage pickup and stormwater utility bills that are fees – not taxes – and must be paid in full with property tax bills.  Fees, incidentally, cannot be deducted on itemized federal income tax returns.  Thus, these truly are “fees” and not taxes.

Yet a homeowner hitting rough times must pay the whole amount – taxes and fees – to avoid losing their home to foreclosure in a tax sale.  The sponsors of the bill don’t believe that those in a difficult situation should be forced to pay for “fees” to avoid foreclosure.  Instead, the collection of past due fees should be done with more conventional collection methods that have far less draconian penalties for non-compliance.

I disagree with my friend’s position for a couple of reasons.  We routinely object to legislators who now consistently call any new tax a “fee” to avoid breaking a “no new taxes” pledge.  It’s not uncommon for those at the local government level to do the same.  In this case, however, these fees are not taxes.  Homeowners do not get the “benefit” of deductibility of these tacked on fees.

If homeowners aren’t going to get to treat these fees like taxes that are involuntarily levied against them, then it stands to reason that the county shouldn’t get to collect them using the same methods available to collect taxes.  If county commissioners and city council members won’t put levying a “tax” on their voting records, then homeowners shouldn’t have to comply as if they had.

As to the higher cost, this too must be balanced out by the homeowners having to pay higher costs through the loss of deduction as well as the possibility of paying uniformly for services that may not be requested or needed.  Many areas that have moved to government provided trash pickup are now paying more than under previous private sector arrangements.  If the county deems this an essential service, then levying a tax would spread the cost uniformly.  If the cost of a “fee” is more, then the barrier to the county from adopting these practices may be enough to keep bad policy from being enacted in the first place.

HB 159 isn’t an unfunded mandate.  It’s a way to keep the truth in advertising when local governments want to extend costs and controls on homeowners but don’t want to go on record of having done so by calling them taxes.

THunter February 14, 2013 at 10:16 pm

Charlie, you are correct in your disagreement with your friend, and sum up pretty darn well my opposition to “fees” and my support of HB 159.

Tommy Hunter
District 3 Commissioner
Gwinnett County

Harry February 14, 2013 at 10:41 pm

Whose job should it be to hire the collection service – the county or the garbage company? Living in Gwinnett as I do, I know there will plenty of deadbeats.

Dave Bearse February 14, 2013 at 11:45 pm

I’m oppose HB159.

Deductibility from income for income tax purposes doesn’t define whether an involuntary payment to government is a tax or a fee. Airline ticket taxes among others aren’t deductible. Georgia’s so-called $2,500 “fee” for new vehicle title service costing less than $50 wouldn’t be deductible if the Dome had rightfully labeled it the tax that it is.

I may be mistaken concerning sanitation fees, but my understanding was there was more to it than simply elected officials not wanting to call the charge a tax.

The stormwater fee is a tax. There’s no direct connection to service, and it being called a fee may indeed simply be elected officials not wanting to call it a tax. Like the title tax, calling the stormwater fee a tax won’t make it deductible for income tax purposes.

“The sponsors of the bill don’t believe that those in a difficult situation should be forced to pay for “fees” to avoid foreclosure.” What about those Harry aptly describes as deadbeats?

Joseph February 15, 2013 at 6:46 am

In Columbus, our trash service is billed on our water bill. It’s also only $14 / month.

I’m generically in favor of the concept – a “clean” property tax bill. City Services should not be a foreclosable item. If the city/county needs the $200 or whatever smaller amount it is – badly enough they can force the homeowner into bankruptcy like every other “vendor” that provides “credit” for services rendered.

I also feel the same way about HOA dues – those should not be a foreclosable item, but that’s for a different day!

Joseph

Patrick T. Malone February 15, 2013 at 8:12 am

During the state budget crisis a few years ago, the state legislature raised all state fees in lieu of raising state income taxes. So apparently this is a case of “Do as I say, not Do as I Do.” Still have not seen an instance of foreclosure in Georgia based on only non-payment of fees. This is a solution looking for a problem to solve.

Charlie February 15, 2013 at 10:11 am

I don’t think you will ever see a case of it, because partial payments of property taxes (just the tax part, not the fees) isn’t allowed. You have to pay all or nothing (or at least that was the way I remember it the last time I had properties that didn’t have a mortgage with escrow). That’s the point of this bill. If you’re trying to find a way to get all the bills paid, it would seem that getting the tax paid would be a priority. Garbage, stormwater, et al can go in the pot with other lower priority bills.

Patrick T. Malone February 15, 2013 at 11:01 am

Lower priority bills increase the probability of bad debt and that is eventually passed along to those citizens who pay their bills. In essence protect the deadbeats (or in the case of Gwinnett the trash protesters) while punishing the 90% who pay their bills.

Jimmy orr February 15, 2013 at 12:42 pm

Charlie, trust all is well with you. Your friend bears an uncanny resemblance in his writing style to a good friend of mine. Perhaps you and I have the same mutual friend. Therefore, in my comment, I will refer to him as our mutual friend. I will have to say to you, as would I say to our mutual friend from time to time, we’ll have to agree to disagree on this one. As the young folks might say, our mutual friend is “right on” in his opposition to Representative Brett Harrell’s HB 159. I am in opposition likewise. Charlie, hopefully, I will have a forthcoming op-ed piece appearing in the printed news media shortly. If I make the cut, I will be sure to copy you. Say what you want but if these fees are removed form the property tax bills, the offset in the increased costs of separate billing and the decrease in collectible revenues will be passed onto to the taxpayers. I believe our mutual friend speaks to this point. Charlie, I don’t want you to think that the friend I speak of and I have a mutual admiration society so to speak as there are times when I don’t think he is on the right side of the ledger. Therefore, as stated earlier, we agree to disgree and call FIDO. Forget It and Drive On. In closing, Charlie, I enjoy your commentary but ask you to reconsider your position on HB 159 and join us in opposition to an Act that should not be enacted.

abacuses February 28, 2013 at 12:50 pm

I’m totally opposed to HB159. This is ONE politician WHO HAPPENS TO BE IN THE GARBAGE BUSINESS HIMSELF trying to hurt his competition. No one has pointed out the bill’s sponsor is in the business and has a financial interest in this legislation. For years, citizens have complained about government inefficiency. Yet, here the Snellville legislator is mandating governments waste money by splitting the bills merely because one is a user fee and one is a tax. The bill makes no sense and the bill’s author is putting his personal interests over saving taxpayer dollars. Brett Harrell’s HB159 stinks more than the garbage he collects.

Charlie February 28, 2013 at 2:46 pm

I don’t understand the logic here. If Rep. Harrell’s companies were affected by this bill, the fees would currently be collected by the county via the tax bill and remitted to them. After this bill, the person who didn’t want to pay these fees could skip that part of the bill and the added fees would have to be collected via debt collection processes – a much less efficient system with a higher cost of collection and lower recovery rate.

So, if I’m missing something there, then please dial back the vitriol and try to explain in better terms where the conflict is. AND TELLING US IN ALL CAPS WILL NOT IMPROVE YOUR LOGIC.

Brett February 28, 2013 at 8:36 pm

Abacuses,

The fact that I am in the garbage business should be a secret to no one. I state that fact on my website (VoteHarrell.com), Facebook (facebook.com/voteharrell), and the Georgia House website even lists my occupation as Garbageman.

The company I work for as an entry level salesperson owning no equity opposes the bill. I have no financial interest different from any other Georgia property owner.

I announced this position prior to going to work in the industry. I have fought these fees and billing mechanism since 2008 or earlier. Click link to read an article published in February 2008 “Stormwater scheme spreads to Snellville” against the fee frenzy local governments are engaged in over 18 months prior to my going to work in the garbage industry.

http://brettharrell.blogspot.com/2008/02/stormwater-scheme-spreads-to-snellville.html

I have refuted much of the added cost and delinquency argument and my bill provides flexibility to local governments to minimize any perceived negative impact. In many instances the individual impact to the taxpayer will be a reduction in cost resulting from separate billing.

I appreciate you are opposed, however, other than I happen to have some knowledge of one of the industries benefiting from the nearly one dozen different fees added to Georgian’s property tax bills, I didn’t read another reason why.

I am very pleased to report the full House Ways & Means Committee favorably reported out HB 159 this afternoon and the Property Protection Bill is now pending before House Rules. A very long way to go, however, we are making progress. I am also very thankful for the strong support for HB 159 by Americans for Prosperity Georgia (representing 55,000 Georgians), the NFIB (National Federation of Independent Business), and the Real Estate Trade Group comprised of members including the Georgia Association of Realtors, Mortgage Bankers, Community Bankers, SunTrust, Associated Building Contractors, Georgia Credit Unions, Home Builders, and others. These are important associations of Georgian’s actively involved in building and protecting the American dream – our homes.

Brett

Charlie February 28, 2013 at 10:31 pm

It would be more convincing of a rebuttal if you would slip some ALL CAPS in there. I have it on good authority that’s how you win blog arguments. At least, that’s what those in Coweta County tell me.

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