NEWS | OLYMPIA
Losing Interest Would a bill to cut steep penalties on unpaid property taxes help poor homeowners or reward rich scofflaws? BY DANIEL WALTERS
M
organ Sanders, a former facility engineer, first realized something was wrong when he started falling off ladders and getting dizzy driving. Then, nearly a decade ago, came the devastating diagnosis: He had a brain tumor. During the depths of the recession, he struggled to pay his bills, including his mortgage and his Spokane County property taxes. “I worked extremely hard to keep up with my taxes,” Sanders says. “[But] I was a year behind. After you miss the first due date, it escalated something fierce.” Go a year without paying your property taxes in Washington state, and your tax bill skyrockets by a full 23 percent. To start with, you’ll have to pay an additional 1 percent in interest each month your bill remains unpaid. But it gets worse: You’ll be hit with an additional 3 percent penalty in June and an 8 percent penalty in December. “Other people who were struggling in an economy that was failing were losing their homes left and right,” Sanders says. About seven years ago, he started urging reforms, successfully lobbying the Legislature to allow treasurers to accept partial payments of unpaid property taxes. Yet he wants the state to go further and reduce the sky-high penalties punishing those who fall behind. “I’m not talking about the deadbeat that just doesn’t want to pay taxes,” he says. “I’m talking about Mr. or Mrs. Joe that loses their job in a bad economy. Or the women whose husband dies and didn’t know they were behind because they were struggling.” It’s an issue that Spokane County Chief Deputy Treasurer Mike Volz says he knows well. “We get calls all the time in
the office from folks that are concerned about that,” Volz says. Volz, however, is in a unique position to do something about it: He’s also a state representative. In that role, he’s repeatedly introduced bills to simply eliminate the extra penalties on unpaid property taxes. “I’ve fought every year to just reduce that to 12 percent simple interest,” the Republican lawmaker says. During this year’s legislative session, he plans to try again. Volz’s proposals have drawn biparRep. Mike Volz tisan support from Spokane County Democrats like Rep. Marcus Riccelli and Rep. Timm Ormsby. But they’ve also drawn bipartisan opposition, including from many treasurers in other counties who warn that killing the penalty would sabotage county revenues while rewarding tax scofflaws.
A
decade after the depths of the Great Recession, another potential housing crisis is brewing: With key sectors of the economy crippled by lockdowns and virus-control measures, record numbers have lost their jobs. State and federal governments have issued eviction moratoriums, preventing landlords from booting tenants who aren’t paying their rents. But what was a
relief for tenants was a crisis for the landlords. “We’ve had a number of landlords — with nonpayment of up to 10 months from some tenants — pursuing bankruptcy,” says Steve Corker, president of the Landlord Association of the Inland Northwest. Last year, property owners in Spokane County got a break. Spokane County Treasurer Michael Baumgartner significantly delayed the property tax filing deadline, giving beleaguered taxpayers more time to scrape together payments. But Corker says the financial impact of the moratorium is likely to hurt landlords well into 2023, and the penalty for unpaid taxes exacerbates the issue. “When you throw 23 percent on top of your bill, it makes that bill that much harder to pay,” says Corker. “Honestly, if credit card companies or somebody else charged those kinds of rates, they would be outraged, and rightfully so. … Today, Jesus Christ would come in the courthouse and throw them out on the street. It’s punitive and ridiculous.” In fact, in most circumstances, charging 23 percent annual interest rates is flat-out illegal in Washington state, Volz notes. But when it comes to unpaid property taxes, the law makes an exception. “It’s wrong for everybody else, but it’s OK for property taxes,” Volz says. While Republicans like Volz, Baumgartner and Rep. Rob Chase — another former Spokane County treasurer — champion reducing the penalties for missing the tax deadline, so do nonprofits like the Northwest Justice Project that try to save homeowners from foreclosure. “Those homeowners who get deep into the foreclosure process are the most vulnerable among us,” Joseph Jordan, supervising attorney for foreclosures at the Northwest Justice Project, said at a legislative hearing last year. And while exceptions can be made in some circumstances like a death in the family, Jordan argued that the
DAVID SEIBOLD/CC BY 2.0 PHOTO
12 INLANDER JANUARY 28, 2021