Republican treasurer candidate Betty Shultz yesterday said a delinquent tax-lien plan that has been used by county treasurers in at least four other large Ohio counties and is recommended by her opponent is not appropriate for Lucas County.
Selling delinquent tax liens to make tax deadbeats pay up has been advocated by Wade Kapszukiewicz, the Democratic candidate for county treasurer. Mr. Kapszukiewicz and Mrs. Shultz are running Nov. 2 to replace Democrat Ray Kest, who is not seeking re-election.
How to collect delinquent taxes has become a point of contention in the race.
A 1997 state law allows Lucas County and the 11 other largest Ohio counties to sell liens on delinquent properties. The purchasers, typically out-of-state banks, buy hundreds of delinquent liens at a time, paying the county the cost of taxes due for each parcel, plus an administrative fee.
In return, the bank may charge up to 18 percent interest per year on the debt and then foreclose on the property if it's not paid.
Mr. Kapszukiewicz said auctioning off tax liens could produce as much as $6 million in uncollected tax revenue for Lucas County school districts and other governmental agencies. He said the tax lien auctions have been used effectively in other large counties.
Mr. Kapszukiewicz said the Ohio tax lien auction program was devised by a committee on which Mr. Kest served, according to a statement on Mr. Kest's Web site, even though Mr. Kest has rejected it for use in Lucas County. "This sort of bold, reform-minded program has brought millions of dollars in without having to increase property taxes," Mr. Kapszukiewicz said.
But yesterday, Mrs. Shultz called the plan "outsourcing."
"It's the job of the Lucas County treasurer to collect taxes - all the taxes that are due - not just the easy ones," Mrs. Shultz said.
She said a tax lien auction means "an unfortunate family, already having trouble meeting its obligations, has [interest fees] added to what it owes. Now the bill collectors are really hounding them."
Mrs. Shultz spelled out a three-stage intervention plan she said could help delinquent taxpayers pay up before facing foreclosure. The first stage would promote prepayment of taxes on a monthly basis for taxpayers falling behind. Those who are falling behind and delinquent would be put on a second-stage payment plan. Foreclosure is the third and last option, she said.
"It sounds like what Betty's talking about doesn't go far enough," Mr. Kapszukiewicz said.
Officials in Cuyahoga, Franklin, and Mahoning counties said yesterday that selling tax liens to outside collectors is an effective way to bring in revenue against delinquent taxes. Summit and Stark counties also use such sales.
"It was a very successful program and we're going to do it every year," said Richard Cordray, Franklin County treasurer, who held his county's first auction last year. He said certain categories of property owners, including senior citizens, are exempt, and properties are not put up for sale until they've been delinquent at least one year.
Franklin County had taxes due last year of $1.2 billion, and $40 to $50 million in delinquent taxes. The 2003 tax sale resulted in $22.5 million of delinquent taxes being paid, he said.
Cuyahoga County has cleared as much as 46 percent of delinquent taxes each year by holding sales - with most of the revenue coming from property owners paying up rather than having their liens sold, according to Robin Thomas, chief deputy treasurer of Cuyahoga County.
Lucas County had taxes due last year of about $500 million, and about $31 million in delinquency, said Joseph Beckler, the supervisor of real estate in the treasurer's office. He said "very little of the $31 million is not collectable." Most of the properties are in the foreclosure process, or some other stage, such as in payment plans.
"We've probably got one of the most efficient foreclosure processes in the state," Mr. Beckler said.
Mahoning County Treasurer John Reardon said he lowered a delinquency of $50 million to about $5 million by selling liens.
He said Mahoning County had an unusually bad delinquency rate, with thousands of nearly worthless parcels, and a prosecutor's office that was slow to bring foreclosure.
Mr. Reardon said no one that he knew of lost their homes through tax lien sales in his county and that Lucas County's delinquency rate is "not insurmountable" using conventional methods.
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