Missoula County opposes HB 127, Revise property tax payment procedure, up for hearing at 8:30 a.m. tomorrow, Jan. 14, in the House Taxation Committee.
HB127 would allow for partial payments of real property taxes, potentially delaying revenue. The delay in revenue has the potential to create available cash shortages, working cash, for many of our smaller districts, like schools. If the taxpayer is allowed to partially pay throughout the year, the revenue stream will create a negative balance for the smaller school districts in many of their funds, forcing them to operate in the red or rely on the county to float them until funding is received. This could impact the amount of cash reserves that would be required by the county. The delay in revenue could also impact the county’s ability to pay debt service which in turn could impact our bond rating going forward.
HB 127 would multiply the number of payments Missoula County would need to process without providing any additional revenue to fund that work. The bill also fails to specify the order in which a partial payment is to be applied (i.e., does it go all to penalty, interest and any assignment costs; does it go to the underlying tax first, which would reduce penalty and interest).
HB 127 will only affect properties that have no outstanding mortgages (otherwise the mortgagee would pay the taxes to protect their security interest, which means there will be properties that are free and clear paying a 10% penalty and 10% interest, where they could likely get a substantially cheaper loan from any established lending institution. The county would become the easiest bank to use but it would also be the most expensive. This bill has the potential to trap people in a cycle of tax debt where the threat of nonpayment is that you lose your home.
Sent Jan. 13:
ReplyDeleteRepresentatives Marler and Thane,
Missoula County opposes HB 127, Revise property tax payment procedure, up for hearing at 8:30 a.m. tomorrow, Jan. 14, in the House Taxation Committee.
HB127 would allow for partial payments of real property taxes, potentially delaying revenue. The delay in revenue has the potential to create available cash shortages, working cash, for many of our smaller districts, like schools. If the taxpayer is allowed to partially pay throughout the year, the revenue stream will create a negative balance for the smaller school districts in many of their funds, forcing them to operate in the red or rely on the county to float them until funding is received. This could impact the amount of cash reserves that would be required by the county. The delay in revenue could also impact the county’s ability to pay debt service which in turn could impact our bond rating going forward.
HB 127 would multiply the number of payments Missoula County would need to process without providing any additional revenue to fund that work. The bill also fails to specify the order in which a partial payment is to be applied (i.e., does it go all to penalty, interest and any assignment costs; does it go to the underlying tax first, which would reduce penalty and interest).
HB 127 will only affect properties that have no outstanding mortgages (otherwise the mortgagee would pay the taxes to protect their security interest, which means there will be properties that are free and clear paying a 10% penalty and 10% interest, where they could likely get a substantially cheaper loan from any established lending institution. The county would become the easiest bank to use but it would also be the most expensive. This bill has the potential to trap people in a cycle of tax debt where the threat of nonpayment is that you lose your home.
Please oppose HB 127.