Montgomery County & Amsterdam — The Montgomery County Legislature voted 6-3 on Tuesday night to allow the city of Amsterdam to repay $1.24 million in back taxes over 20 years at an interest rate of 1 percent.
The issue sparked a heated debate between legislators at their June 16 Finance Committee meeting, but none spoke about it during Tuesday’s meeting of the full Legislature.
At issue in the repayment plan are county taxes paid by city property owners which the city collected but never turned over to the county, apparently keeping the money for city expenses between the years 2005 and 2013. Nearly half of the money owed came in 2013 when Amsterdam collected $725,037 in county taxes, but only turned over $32,401.
District 9 Legislator Robert Purtell and District 6 Legislator John Duchessi sponsored the tax repayment plan.
Purtell has estimated the annual debt service cost for the repayment plan at between $72,000 and $74,000.
Legislature Chairman Joe Isabel, District 8, Finance Committee Chairman Michael Pepe, District 7, and District 4 Legislator Robert Headwell voted against the plan.
County Treasurer Shawn Bowerman also advised against the 20-year plan.
Bowerman provided a “fact sheet” attached to the repayment resolution explaining why he thinks the county should have tried to get Amsterdam to borrow the money owed to the county as part of its recent $7.6 million deficit finance municipal bond borrowing.
On Monday, Amsterdam Controller Matt Agresta told the city Common Council that the city was able to secure a $7.6 million municipal bond with a 1.89 percent annual interest rate. They money will go to repay the city’s accumulated budget deficit, which did not include the tax money owed to Montgomery County.
Bowerman in his fact sheet argued the city should have included the money owed to the county as part of that bond. He said the county faces significant financial uncertainty due to the coronavirus pandemic, which has contributed to a $1.3 million decline in county sales tax receipts over the last three months. He said state aid and Department of Social Services settlements are being held up, and the $1.24 million in owed taxes is considered part of the county’s approximately $5 million fund balance of unspent tax reserves.
Purtell said it’s in the interest of Montgomery County as a whole to help the city of Amsterdam. He said it is a good compromise in that the county now has a means of collecting over time most of the taxes it is owned.
“I feel it is important that the city has a manageable means to repay their debt to the county, and at the same time the county will start receiving a determined amount of money that they have not received in the last 13 years,” he said.
The $1.24 million does not include all of the potentially unremitted county taxes by the city of Amsterdam. Bowerman estimates there is another $514,254 in owed county taxes, but the city has lost all of the parcel-data records pertaining to it, making it impossible to collect. Bowerman has said he’ll likely introduce a resolution later this year for the Legislature to write-off that debt as uncollectible.
Bowerman argued that Montgomery County’s tax collection arrangement with the city is far more generous than nearly any county-city tax collecting deal in the state because the city is not required to make the county whole for county taxpayers who are delinquent.
“No other city that we are aware of has a more lenient tax payment system in place than what the city of Amsterdam has with Montgomery County,” Bowerman wrote.
Duchessi, who served as mayor of Amsterdam from 1996-2003, said it’s time for the city and county to discuss reforming several aspects of its arrangements, including the city of Amsterdam controlling its own foreclosure process and its property tax assessment process.
“Because the city has the right of foreclosure it is allowed to collect the taxes, and it’s supposed to forward them to the county, and they guarantee the school taxes [but not the county’s],” Duchessi said.
“Over time, these arrangements kind of wear out. The city’s right of foreclosure really meant something when property values were increasing and very few people were delinquent with their taxes.”
Purtell said it took three years for the Legislature to determine how much the city owed the county in unremitted taxes and what to do about it, so he thinks the county and the city should move carefully on any major reforms.
He said if the county did take over the city’s foreclosure power, the county would become liable for unpaid city taxes and school taxes to the Greater Amsterdam School District. Purtell said he is concerned that would put fiscal stress on the county.