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No Foreclosures over Local Fees On Tax Bills

By   /   February 14, 2013  /   Comments

A friend of mine whom I usually agree with sent me the following asking me to incorporate it into a discussion on House Bill 159.  The bill would strip out the additional fees from property tax bills in the event a home is about to be lost to foreclosure in a tax lien sale.  Currently property tax bills must be paid in full with no partial payments.  His letter:

Under the guise of protecting homeowners from foreclosure and the IRS, Georgia House Bill 159 seeks to have all fees billed separate from our property tax bill. While that sounds like a good idea on the surface, I can find no record of any Georgia property owner being foreclosed upon solely for non-payment of fees. Secondly, protecting us from the IRS is akin to NYC’s jumbo soft drink ban.

In fact this bill, if passed, will have two negative impacts – the cost of billing will increase and the amount of bad debt will increase. Both of these additional costs will be passed along to homeowners in the form of higher fees to cover these shortfalls.

Most local politicians I know complain about unfunded Federal mandates to the states but seem to have no problem when the state proposes unfunded mandates to the counties or municipalities. HB 159 proposes a classic unfunded state mandate and worst of all is being sponsored by a local legislator who campaigned on fiscal responsibility and efficient effective government. HB 159 will produce neither.

Additionally the same legislator is attempting to alter the Gwinnett Storm Water Authority through local legislation that will ultimately increase those fees. This is bad legislation and I urge every Georgian to contact their State Senator and Representative to oppose HB 159 as well as the local legislation.

County governments have started adding additional fees to these bills for items such as garbage pickup and stormwater utility bills that are fees – not taxes – and must be paid in full with property tax bills.  Fees, incidentally, cannot be deducted on itemized federal income tax returns.  Thus, these truly are “fees” and not taxes.

Yet a homeowner hitting rough times must pay the whole amount – taxes and fees – to avoid losing their home to foreclosure in a tax sale.  The sponsors of the bill don’t believe that those in a difficult situation should be forced to pay for “fees” to avoid foreclosure.  Instead, the collection of past due fees should be done with more conventional collection methods that have far less draconian penalties for non-compliance.

I disagree with my friend’s position for a couple of reasons.  We routinely object to legislators who now consistently call any new tax a “fee” to avoid breaking a “no new taxes” pledge.  It’s not uncommon for those at the local government level to do the same.  In this case, however, these fees are not taxes.  Homeowners do not get the “benefit” of deductibility of these tacked on fees.

If homeowners aren’t going to get to treat these fees like taxes that are involuntarily levied against them, then it stands to reason that the county shouldn’t get to collect them using the same methods available to collect taxes.  If county commissioners and city council members won’t put levying a “tax” on their voting records, then homeowners shouldn’t have to comply as if they had.

As to the higher cost, this too must be balanced out by the homeowners having to pay higher costs through the loss of deduction as well as the possibility of paying uniformly for services that may not be requested or needed.  Many areas that have moved to government provided trash pickup are now paying more than under previous private sector arrangements.  If the county deems this an essential service, then levying a tax would spread the cost uniformly.  If the cost of a “fee” is more, then the barrier to the county from adopting these practices may be enough to keep bad policy from being enacted in the first place.

HB 187 isn’t an unfunded mandate.  It’s a way to keep the truth in advertising when local governments want to extend costs and controls on homeowners but don’t want to go on record of having done so by calling them taxes.

Charlie Harper is the Atlanta based Editor of PeachPundit.com, a conservative-leaning political website. He is also a columnist for Dublin Georgia based Courier Herald Publishing.

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