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Back taxes mount in county

| Tuesday, Dec. 27, 2005

The $147 million owed to Allegheny County school districts in back taxes would pay for 3,300 teachers at an annual salary of $45,000, or buy more than 140,000 computers for classrooms.

The county's delinquency rate dwarfs that in nearby counties. Experts blame the unpaid taxes on industrial decline -- which shifted the tax burden from corporations to homeowners -- but a bigger factor might be that Allegheny is one of only two counties in the state not required to collect delinquent school, municipal and county taxes through a county-run tax claim bureau.

The other county, Philadelphia, has just one school district and one municipality -- the urban district and the city itself. By comparison, Allegheny is made up of 43 school districts and 131 municipalities, each left on its own when tackling delinquent taxes.

"In Allegheny County, it's a free-for-all," said Ben Avon Heights-based municipal finance consultant Michael Weir, who studied the issue while working for the Pennsylvania Economy League. "They can each do it however they want to do it."

The school tax delinquency rate is $118 for each person in Allegheny County, 13 times higher than the $9 per person rate in Westmoreland County and more than 17 times the $6.72 per person rate in Beaver County.

The result is unwieldy debt that forces those who pay to carry the tax load for those who don't.

Taxpayers owe Pittsburgh Public Schools $41 million -- more than three times the delinquent taxes owed in Beaver, Butler, Westmoreland and Washington counties combined. Woodland Hills is owed $7.5 million, and Penn Hills, $6.5 million.

Districts take different approaches to getting the money. Some delegate the task to solicitors. Others hire private attorneys or collection agencies. Still others sell their tax liens outright. A few publish lists of debtors with the hope of shaming them into paying.

At least some districts have found ways that work.

Shaler Area began getting tough on delinquent taxpayers in 2004, sending letters to its top 60 scofflaws with a warning that the district would take "appropriate action" if the taxes weren't paid. The response was swift. Some people sent payments topping $25,000.

Since then, the district has whittled its delinquent debt from $7 million to $5.8 million.

"We just looked at the top numbers and started a concentrated effort to try to collect," said district business director Charles Bennett. "It's amazing when you put on a little pressure -- all of a sudden they come up with a check for you."

East Allegheny has collected nearly $2 million in back taxes over the last two years, said district business manager Roger D'Emidio.

Still, the district is owed at least $3 million in delinquent taxes, D'Emidio said. He said he has never added up the total "because I don't want to faint."

Said D'Emidio: "I honestly feel that if we could collect this money, we wouldn't have to raise taxes," something the district has done in five of the last 13 years.

Shifting to a centralized tax bureau -- though not a panacea -- would help ease the problem, some experts and district business managers say.

"It could take the pressure off the districts," Bennett said. "If it's successful in other counties, I don't see why it wouldn't work in Allegheny County."

In Westmoreland County, the tax claim bureau gathers the delinquent tax accounts in January and, if non-payers do not begin payments after receiving letters in April and then January, begins preparations for a tax sale. Sales are on the second Monday in September -- fewer than two years after the account becomes delinquent.

North Hills finance director David Hall said the process is not as smooth or uniform in Allegheny County.

"Under the Allegheny County process it's considerably more difficult, time-consuming and expensive to force a delinquent sale," he said. As a result, properties are less likely to be put up for sheriff's sale and people feel less pressure to pay their back taxes.

A centralized bureau would be a small step toward righting the county's tax and assessment system, but one worth taking, said Robert Strauss, a professor at Carnegie Mellon University's Heinz School of Public Policy.

"What you get from that is professionalization and economies of scale, and a transparent process," Strauss said. "It's a microcosm of good government."

Getting marginal properties -- vacant houses or small pieces of land that lack traceable owners -- on the tax rolls could be easier under a centralized system, some business managers said.

When county and local taxing bodies are pursuing payment, it "becomes economically unfeasible to sell marginal property," Hall said. "By the time you've gone through the legal gyrations, you'd have far more money in it than you could ever get out of it in the sale, so nothing happens. They just sit there for 50 years."

Mike Kohlman, director of Beaver County's tax claim bureau, said the convoluted system in Allegheny County, where different entities might own liens on a single property, discourages people from buying the land.

"When you've got three different collection processes, it can be quite confusing," he said. "Here, you buy it once -- baby, you're done."

Still, some districts are wary of turning delinquent tax collection over to a county agency.

Plum, for example, would insist that the county give assurances of doing a better job than the district does in collecting back taxes through a private attorney, district spokeswoman Dawn Check said. The district is owed $1.67 million.

"We're not just going to say, 'Oh, let somebody else do it,' " Check said.

Many local officials are skeptical of the county's ability to handle the job and may be reluctant to cede power or responsibility, Strauss said.

"They don't trust county government. ... Parochialism is present everywhere," he said. Establishing a tax claim bureau "is a step forward, but getting these officials to go along with anything is just a nightmare."

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