When life happens – you lose your job, medical bills pile up, your spouse who always handled the finances dies – you can fall behind on your property tax payments. With that comes a litany of other fees that only add to your financial burdens and emotional strife. Nobody should have to pay a usurious 23 percent penalty and interest in order to stay in their home. We believe it’s high time that penalty is reduced.
There’s a bill moving through the Legislature this year – House Bill 1105 – aimed at preventing families from entering foreclosure. But as lawmakers and county officials, we know a major component to helping families stay on top of their tax payments and remaining in their homes is reevaluating the penalties and fees associated with late payments.
In the 1980s, mortgage and short-term interest rates surged to as high as 15 to 18 percent. As a result, the Legislature at the time raised the underlying interest rate charged on delinquent property taxes to 12 percent. Additionally they added an 11 percent penalty, which amounts to 23 percent penalty and interest after the first year.
Fast-forward to 2019, nearly four decades later, and the same penalty and interest is still charged.
Let’s put this into perspective. If you have a home with an estimated value of $150,000, your property tax bill is roughly $2,000. If you’re delinquent on your payments for three years, when your home is up for foreclosure, you could be facing a $6,000 property tax bill and more than $2,500 in penalties and interest. All of this is on top of other fees related to foreclosure, including court fees, filing fees, title searches, advertising, and more.
Revenue derived from penalties and interest are funneled into a county’s general fund, which provides for administrative and operational costs like county-run programs and services. In Spokane County, delinquent property tax penalties totaled more than $1.4 million in 2018 – a revenue stream counties throughout Washington have become all too reliant on.
If we want families to get back on their feet and stay in their homes, the state shouldn’t require counties to levy such hefty and punitive fees on those struggling to make ends meet. This is not the counties’ fault. That’s why Rep. Mike Volz offered an amendment to the bill referenced earlier that would remove the requirement for counties to charge an 11 percent penalty on top of the interest owed on delinquent property tax payments. There’s simply no need for it. Taxpayers pay through the nose enough as it is.
Current interest rates, which hover between 2 and 6 percent, don’t necessitate these massive fees, and relying on this revenue source is just bad governance.
Opponents of the amendment cite a loss in revenue, saying the amendment would deny counties money they depend on to fund operations. But basing budget decisions off the financial struggles of others is ill intentioned and reflects poor decision-making at the state level.
We ask the naysayers to abandon their loan-shark-style tactics, and support sound public policy that will reduce the financial burdens of those they were elected to serve.
House Bill 1105 – with Volz’s amendment – passed the House 59-38 and is now under consideration in the Senate.
Rep. Mike Volz, R-Spokane, represents the 6th Legislative District, which includes Cheney, Medical Lake, Airway Heights, and part of Spokane. He is also the deputy treasurer of Spokane County.
Michael Baumgartner is the treasurer of Spokane County. He formerly served as a state senator for the 6th Legislative District.
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