Posted: 7:00 a.m. Sunday, Feb. 16, 2014

Millions worth of tax dollars go unpaid

Schools, libraries, parks miss out on their share of funds.

By Amanda Seitz

Staff Writer

Business and home owners in Butler and Warren counties fail to pay about $28 million worth of taxes used to fund schools, libraries and local government operations every year, a Journal-News analysis has found.

Roughly 250,000 property owners living in those counties received this year’s tax bill in the mail within the past month, but local leaders already know between 2 percent and 5 percent of those residents or business owners won’t pay that bill. That leaves county officials, including the prosecutor’s office, to coax and, in some cases, threaten taxpayers to give schools, local governments and libraries what they’re owed.

When your neighbor or the business owner working on your block doesn’t pay his or her property taxes, that means you end up paying more, according to Jim Aumann, the Warren County Treasurer. In Warren County, taxpayers owed $6.6 million, or 1.86 percent, as of this week in back taxes out of the $360 million billed last year.

“A lot of people don’t realize it, but a large portion of the taxes they pay, they, or their neighbors, voted for,” Aumann said. “When you have people who are not paying tax that is rightly owed, what happens is all of those taxing authorities have to come back to the people who are paying their taxes and ask for more money.”

Stories of hardship

Still, the number of delinquent taxpayers has dipped slightly this year for both counties as Americans begin to recover from the economic recession that engulfed millions of people just five years ago.

Of the $488 million Butler County was suppose to collect and distribute to local entities in 2013, more than $21 million, or 4.5 percent, is still owed in back taxes.

That number is down, however, from 2010 when nearly 5.5 percent of taxes owed to local school districts, parks, libraries, the county and municipalities wasn’t paid. It was the year after the Great Recession took hold of Americans’ wallets.

Butler County Treasurer Nancy Nix said during that time she’s heard countless stories — some of homeowners recounting their devastating job loss, others explaining the medical emergency that’s derailed their life and their bank account, and mothers or fathers describing the divorce that’s drained their life savings — that explain why thousands of local business or homeowners are unable to pay their tax bill ever year.

“We have to be careful that we’re not throwing owners out of their home if they have nowhere to go and no one buys the home,” Nix said. “And, if it’s a business, we don’t want to put a business out of business.”

A majority of the unpaid tax bills are from Hamilton, Middletown and West Chester property owners, Nix said.

“It’s everywhere,” Lorie DiStaola, the Executive Director of the non-profit Neighborhood Housing Services of Hamilton Inc., said of delinquent taxes. “This stigma that it’s a certain class or a certain neighborhood is not true.”

Taxpayers, for example, owed Lakota Local Schools about $4.6 million in 2011. That number has since dipped to $3.2 million, Randy Oppenheimer, a spokesman for the district, said.

“Governments at every level see decreased tax revenues during a recession,” Oppenheimer said.

The Butler County Treasurer’s office keeps nearly 1,300 contracts, plans for property owners to pay back taxes while keeping current on the taxes they presently owe, with the county’s delinquent taxpayers every year. If a taxpayer breaks the contract but still shows ability to pay down their taxes, Nix said she will have to re-write a new one. The agreements are re-written, sometimes, as many as six or seven times.

“You hear these hardship stories and it’s very difficult for me to say, ‘That’s your final contract,’ when I know he has a heart attack, she’s got cancer and they’re scraping every dime together to pay (the taxes) every month,” Nix said. “We do definitely try to work with our taxpayers, just recognizing the economy. If we feel people are not making the right choices, or they don’t have the right reasons … we have people who do game the system.”

The Forest Fair Village Mall in Forest Park owes the second most of anyone in back taxes to Butler County, at $549,000 dollars. The mall’s owners are currently under contract with Butler County to pay down those outstanding tax bills. West Chester Hospital owes the most, at $2.3 million in back taxes, but the state tax commissioner ruled last year that the hospital should be exempt from paying those taxes — a ruling county and school officials are currently fighting.

A representative for the Forest Fair Village Mall did not return phone calls seeking comment for this story.

Butler County is home to two large urban cities, making its delinquency rate higher than neighboring Warren County but still likely not as high as other counties that contain major metros, such as Cincinnati, Nix said.

Warren County, where the average household makes $35,000 more than other Ohioans, has a low delinquency rate compared to other counties across the state, Aumann, the county treasurer, said. He said the delinquency rate fell slightly this year — by tenths of a percentage point — after hitting a slightly higher rate during the recession.

Local government entities — from schools to townships — still budget, however, for a chunk of taxes to be left unpaid.

“There’s always going to be a base rate of delinquency,” Aumann said, citing events such as bankruptcy or divorce that make it difficult for residents to pay their tax bill.

Residents who turn in their tax payments up to 10 days late face a 5 percent penalty and those who pay 10 days or more after the bill’s due date are hit with a 10 percent penalty.

Prompting payment

Still some taxpayers refuse to pay after months and even years, forcing the local prosecutor’s office to step in and order taxpayers to pay up.

Prosecutor offices in Ohio can take up unpaid tax cases and begin the foreclosure process against home and business owners two years after bills go unpaid, Aumann said.

The assistant prosecuting attorney typically sends a letter every October notifying delinquent property owners in Warren County that they if they don’t pay, they’re going to face foreclosure. Last year, the office sent about 1,800 of those letters — down by about 500 from two years before. More than 1,700 people paid up after getting a warning about foreclosure from the office.

“When they get the letter for foreclosure … it prompts the taxpayers to actually take some action, to try to do something to remedy their situation. It takes that nudge or prompt,” Aumann said.

The county only ended up having to prosecute roughly 100 cases last year for back taxes. In Butler County, the prosecutor’s office took legal action against nearly 200 delinquent tax cases last year.

Nix said the county is looking at ways to increase the number of back taxes collected. Some Ohio counties, she said, sell delinquent taxes to a third-party vendor, who then raises interest rates and demands payment from residents who aren’t current with their bills.

“It’s for the people we can’t get to pay their bills,” Nix said. “We’re looking at our delinquencies right now and in talks with the prosecutor’s office to bring them down.”


Hot topics