The city might stiff the county to the tune of $1.5 million next year.
Apparently unbeknownst to county legislators, the city’s proposed budget would not make the county whole on unpaid property taxes.
Currently, if any city property owner doesn’t pay his county taxes, the city pays the bill then can try to collect the money from the owner through foreclosure or other means.
The city also pays the school district for all unpaid taxes. That’s required by state law, but the city can opt out of paying the county. Mayor Gary McCarthy said the City Council should opt out because the county would have no way of forcing the city to make the payment.
Councilman Carl Erikson said he was worried the county would withhold money it has promised to pay the city. That happened early this year, when the city opted out of this year’s tax payment. The county responded by withholding agreed-upon funds for hazardous materials protection and police patrols.
But now, those grants have been added to the sales tax contract between the city and the county.
“It’s in the contract. It’s a contractual obligation,” McCarthy said.
Council members did not discuss the matter at length, but were clearly surprised by the move. Just nine months ago, McCarthy convinced them to pay this year’s tax debt to the county even though the council had opted out of the payment for 2012.
County officials also seemed to be taken by surprise. County Legislator Philip Fields, who chairs the finance committee, said he had no idea of the city’s plan.
Speaking just hours before the county Legislature met to discuss the final 2013 county budget, he said, “My goodness, it’s a surprise. I didn’t expect the mayor to do that.”
He questioned whether the city would legally opt out this year, noting the city made a technical error in its attempt to opt out last year.
“We can’t stop them from trying to do that,” he said. “I understand the city has its own struggles. So does the county.”
He hinted that the county might respond in kind,
“It’s a very interesting chess piece,” Fields said.
The City Council tried to opt out of the payment due this year, but County Attorney Christopher Gardner found a technical error in the City Council’s legislation and another county attorney threatened to sue the city if it did not pay. In the end, the council paid, wiping out the city’s entire savings account.
At the time, McCarthy argued paying the county would make it easier to foreclose on tax-delinquent properties.
The city is now beginning a series of foreclosures to collect old tax debts, and that could become more complicated if the county is also owed money. If the city does not pay the county, the county would have to approve each foreclosure before it is filed.