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Montgomery County mulls tax write-offs for Amsterdam

Montgomery County mulls tax write-offs for Amsterdam

City officials have attributed the major cause of the deficit to the city having not foreclosed on any properities during that time
Montgomery County mulls tax write-offs for Amsterdam
Montgomery County says the city of Amsterdam owes it $6.2 million in uncollected property taxes.
Photographer: Gazette file

AMSTERDAM -- Montgomery County officials say it has been "six to eight years" since the city of Amsterdam last reconciled its tax-collection figures with the county, contributing to $6.2 million in uncollected taxes the county still expects as a "receivable" from the city. 

The city has been dealing with a financial crisis caused by an approximately $7 million budget deficit accumulated over a period of seven to eight years. City officials have attributed the major cause of the deficit to the city having not foreclosed on any properities during that time because of turnover in the city controller's office. 

During that time period, the city continued to budget tax revenues for properties that weren't paying them, causing bookkeeping chaos on the city and county level.  

Montgomery County legislators discussed the seven-figure receivable due from city properties during the county Legislature's Finance Committee on Tuesday night. 

District 7 Legislator Michael Pepe, chairman of the that committee, said $2.6 million of the $6.2 million total is "current year taxes" not yet received, but the rest is uncollected taxes from prior years, some going back as far as the year 2000. 

"The two most ancient, aged amounts are from 2000, 2009, 2010 and 2015. Those would be the ones that would be the most apt to perhaps be subject to potential write-off or write-down because of their age, so that figure added together is about $2.8 million," Pepe said of the oldest unpaid taxes.

"If Amsterdam came to us tomorrow and said 'Sorry, you need to write off all taxes receivable from us from 2000 to 2015 in the amount of $2.8 million' the offsetting entry would be taken out of our deferred tax revenue account. So, we have room, we have cushion, in the event that that would happen. It would not require us to take money out of [the county's reserve fund]. It would not affect our financial standing." 

County Treasurer Shawn Bowerman spoke to the Finance Committee during its meeting. He said Amsterdam does not owe Montgomery County the $6.2 million, the city merely collects the county property tax, along with the school taxes, from property owners and then gives the county its share of the taxes.

He said most of the $6.2 million represents money Amsterdam hasn't been able to collect from properties, but the county can't "write off" the money as being "uncollectible" until Amsterdam goes through a foreclosure process on the properties, hands over the county's percentage share of the money gained by a foreclosure auction of the delinquent property and then both sides are able to write off the remaining uncollected taxes.

"They don't guarantee us [the money], they only pay what they collect," he said. 

District 9 Legislator Robert Purtell helped spur the discussion over the $6.2 million in uncollected taxes. He said the way taxes are collected in Montgomery County is "unequitible" with respect to the city of Amsterdam and the county's 10 towns. He said the towns also collect county taxes, but the towns only pay out to the county after making themselves whole for any deliquent taxes not paid into the town's annual tax levy. The county then controls the foreclosure process for any town properties and keeps the entire proceeds of the foreclosure auction. The county also makes the school districts in the towns whole for any owed tax money from town properties. 

The city of Amsterdam, on the other hand, collects all of the taxes owed on its properties, on a quarterly basis, unlike the annual tax bill in the towns, and then makes the Greater Amsterdam School District whole for any delinquent city property school taxes. The city of Amsterdam conducts its own foreclosure auctions and then splits the proceeds with the county based on the amount of taxes owed to each entity.

"My point is not to point fingers at anybody," Purtell said. "I'm not an accountant, and I don't play one on TV, but is it good practice to go all the way back to 2000 to keep those on our books. And if it's not, we should correct that one way or another," he said. "I'm also wondering if there is a more equitable way to do this, especially since the city of Amsterdam is experiencing such a financial heartache right now, with anywhere from a $6 million to a $15 million deficit."

Bowerman said Montgomery County has been able to write off some county taxes as uncollectable since Amsterdam completed its recent catch-up foreclosure auction, the first the city had conducted in over eight years, but some of the other older uncollected taxes are still unaccounted for.

"I'll stand by my numbers. I believe the onus is on the city to reconcile these numbers. I take off the payments that they send to me and the write-offs that they send to me, and that [$6.2 million] is the balance I have due from the city," he said. "I'm in a position to protect the county, and I'm not going to just go off and agree to write off a receivable from the city of Amsterdam because they are in financial trouble." 

"I'm not asking you to do that, and I won't ask you do that," Purtell said." My point is that we get some closure on this, because it's going back to 2000. What do we have to do to inspire them to balance this on the city level and increase their communication with us, so this isn't a recurring thing?" 

"I'll be the first to admit, the city has not sent me a reconciliation in probably six to eight years, and I've requested one every year," Bowerman said. "I can't direct an elected official to do something. The controller is an elected official in the city."  

Bowerman said until about three years ago Montgomery County was carrying uncollected taxes from the city of Amsterdam going back to 1983 and there was a write-off of uncollectable taxes totaling about $700,000 going up to 1999.

District 1 Legislator Martin P. Kelly said he doesn't understand why if the city of Amsterdam's recent foreclosure auction was meant to catch the city back up for years worth of not foreclosing on properties, why there would still be property taxes owed on buildings between 2000 and 2009. 

Bowerman said one reason old property taxes might still be uncollected is unfinished bankruptcy proceedings. He said Amsterdam still has $923,000 in uncollected county taxes on buildings that have not gone through the foreclosure process for 2013 and he doesn't know why.

"I tried to get an answer from the city on that," Bowerman said. 

"Do you know what that's pertinent to?" Pepe said. 

"I do not," Bowerman said. 

City Controller Matt Agresta said he isn't certain what accounts for uncollected taxes for 2013. He said he's never done a full reconciliation of the city's uncollected taxes figures with the county.

"The county's never approached us, at least that I'm aware of, to do a reconciliation on an annual basis," he said. 

Former Amsterdam 4th Ward Alderman Dave Dybas has raised the question of whether Amsterdam's city charter requires the city controller to reach an annual "settlement" of the taxes collected with the county treasurer. 

Amsterdam's city charter section C-97 states: 

"Upon the final settlement with the County Treasurer, the Controller shall pay from the general fund of the City the amount of the collected state and county taxes in his hands for collection. At the time of the delivering to him of the City roll and tax warrant, the Controller shall receipt for the same and shall then be charged with the whole amount which he is thereby authorized to collect. He shall not be authorized to credit himself with any amount as unpaid on any warrant until he shall make and file with his office an affidavit stating the amount paid and setting forth the reason in each case why tax or assessment is not or has not been collected. Upon the expiration of his warrant, the Controller shall make delivery to the County Treasurer an account, subscribed and affirmed by him as true under the penalties of perjury of all taxes listed on the tax roll which remain unpaid. The County Treasurer shall thereupon credit him with the amount of all such unpaid delinquent taxes. Upon settling with the Common Council, the Controller must show that he has duly settled with the County Treasurer for State and County funds." 

Agresta said he is unaware of that part of the city charter. 

"I'm sure if we needed to do it, we would come up with a way to do it. I've been here for five years, and we've never done it, so I don't know if it's a lot of work," Agresta said. "This isn't something I've ever been approached to do. That was never a question that was asked, that I recall, of something that we should be doing. Obviously, I think it would be a good idea that if we have discrepancies, we figure out what they are, but what processes are involved with that, having not done it before, I can't tell you what would be involved or how it should be done."  

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