With much of the country shut down or limited due to stay at home/shelter in place orders, the business of government has kept moving forward because it can’t shut down completely. But, like everything else in our new reality, taking COVID-19 into account when making decisions has become necessary.
At the April 21 meeting of the Wright County Board of Commissioners, discussion took place about how to proceed with first half property taxes, which are due May 15. Many counties have taken action on the issue, some pushing the due date back to July 15, which can create a funding gap for cities, townships and school districts, which have their lifeblood coming from the funding property tax provides.
Wright County Administrator Lee Kelly laid out the options for the board to consider at the April 21 meeting, saying that there have been different approaches taken.
“We reached out to our cities, townships and school districts to get some input,” Kelly said. “Similarly, other counties have been reaching out to the other jurisdictions to get a sense from them. Across the state, county boards have looked at two different options – the first one being delaying payments and making them not due until later, July 15 for example. Other counties – and most of them around us – have looked at adopting a resolution the reduce the (late fee) penalty, so the due date would still be May 15 for the first half property taxes, but instead of, as time went on, up to an 8 percent (penalty), they’ve chosen a number that’s lower than that.”
Board Chair Christine Husom said that COVID-19 and the closure of numerous businesses has created a burden on many taxpayers that is difficult to manage, especially when there is no concrete end in sight and more questions than answers.
“This is a real hardship for some of the taxing entities if we hold them off completely for two months or one month even,” Husom said. “It is kind of complicated with the system in place.”
Auditor/Treasurer Bob Hiivala stated there were two options the county could use. Both kept the May 15 due date, but one would eliminate the standard 8 percent late fee and have no penalty for being one or two months late with the first half tax payment. The second option would reduce the late fee penalty from 8 percent to 1 percent for May and June, increase the penalty to 2 percent if not paid by July 1 and revert to the 8 percent standard if not paid by Aug. 1.
Hiivala sent out an email to all cities and townships to get feedback and the response range hit both ends of the spectrum.
“The reaction we got from our municipalities was kind of from both camps,” Hiivala said. “Some of our eastern cities said they recognize our citizens need some relief, so postpone them. Most of the schools said they have debt service and they need those tax dollars.”
The discussion among the commissioners focused on taking into account those taxing jurisdictions that don’t have a reserve fund and need to get their allocation as quickly as possible to meet their responsibilities.
Commissioner Darek Vetsch made a motion to accept the second of the two proposals – the reduction of the late penalty to 1 percent after May 15, citing that it is what many similar and surrounding counties to Wright County are opting to do.
“The majority of counties have gone after reducing the penalty to 1 percent for May and June and going to 2 percent in July,” Vetsch said. “That’s actually what the majority of the entities that we reached out to are requesting. It would only make sense that we follow a similar practice that seems to be tried and true. It seems to offer a good amount of relief for the taxpayers.”
Commissioner Mike Potter, who has been a vocal proponent of the county having a surplus on hand in the event of a disaster that stops the funding supply chain said that, while COVID-19 couldn’t have accurately been predicted six months ago, it is one of the reasons that having money in reserve is essential.
“The whole time I’ve been here (on the board), I’ve made a big push for having six months of operating reserve and I’ve had pushback from all of you,” Potter said. “This is exactly why we want the six-month reserve. Something like this comes up out of the blue – nobody’s fault, it just happened. If some of those school districts and municipalities do not have that reserve and you go two months out with a property tax payment, they’re in a world of hurt.”
The board unanimously approved the penalty reduction method, which will go into effect May 16 for those who don’t pay their first half tax statement in full. Hiivala added that if the state comes up with a plan to be implemented for all taxing districts, the county will be required to follow it. But, since no action has been taken, counties have been left to come up with own suggestions and solutions.
“If the state takes action, we will follow that,” Hiivala said. “But, if that doesn’t happen, this is the approach we’re going to take.”