Tuesday, Apr. 08, 2008

Unpaid tax expected to soar

Auditors predicting Stanislaus won't get 8% of what's owed

Property taxes are due Thursday, but Stanislaus County auditors predict a startling spike in unpaid taxes. If trends hold, about 8 percent of what's owed won't be paid.

That's about triple what is normal.

"Eight percent is ridiculously high," said Todd Filgas, the county's property tax accountant. "We're having quite the excitement over here about it."

More than 170,000 landowners were billed $484.3 million for their 2007-08 property taxes. Half of that money was supposed to be paid Dec. 10 and the second half is supposed to be mailed by Thursday.

But many property owners missed that first payment, and there's fear that many more will ignore Thursday's due date. Those who do will be slapped with an instant 10 percent penalty, plus additional interest charges the longer the taxes are past due.

Last year, 6.42 percent of Stanislaus County property taxes weren't paid, and that was bad enough.

"Since I came here in the late '70s, it had never been that high," said Ray Rassmusen, who manages the auditor's property tax division.

Rassmusen said the county doesn't have easy-to-access delinquency statistics going back to the Great Depression, but auditor records show the average delinquency rate has been less than 3 percent the past 15 years.

In trying to predict this year's delinquency rate, Filgas has been tracking daily collections and comparing them with the same dates in 2007. Filgas said collections consistently are falling about 1.5 percent below last year's rate.

Assuming that trend continues, it will mean about 8 percent of what the county is owed won't be paid by June 30, the end of the fiscal year.

Eventually, those taxes will be collected, said Stanislaus County Tax Collector Gordon Ford. Property owners who don't pay within five years will have their land sold at tax foreclosure auctions, which enables the government to recoup what it is owed. Last year, three Stanislaus County properties met that fate.

Mortgage payment defaults, however, triggered more than 2,500 foreclosures in Stanislaus county last year. Those auctions on the courthouse steps resulted in lenders repossessing those homes and taking responsibility for all the back taxes they owed.

"Banks that foreclose will make their property tax payments. It's just a matter of when," Ford said. He said banks weigh the cost of late payment penalties against other financial factors in deciding when to pay.

But before banks can resell foreclosed property, Ford said, the back taxes must be paid. That's required to get clear title to the property, and it's automatically done when a sale goes through the escrow process.

Although taxes eventually get paid, Ford said delinquencies cause cash flow issues for government agencies.

In 2006, Stanislaus County property tax dollars got split like this: 46 percent went to school districts, county agencies got 26 percent, redevelopment agencies got 7 percent, cities got 18 percent and special districts got 3 percent.

Ford warned that landowners who skip tax payments usually end up in trouble with their lenders. He said lenders typically "will go after them, pay their taxes and require they pay into an impound account" so all future property taxes get paid on time.

Bee staff writer J.N. Sbranti can be reached at jnsbranti@modbee.com or 578-2196.