Allegheny County's hike on tax liens has some taxing bodies griping
April 21, 2017 12:00 AM
Thomas Sumpter, then-member of the Pittsburgh Public Schools board of directors, speaks with attorney Ira Weiss, right during a meeting in 2016. "The county is cannibalizing other taxing bodies,” said Mr. Weiss, solicitor for the Pittsburgh Public Schools.
By Mark Belko / Pittsburgh Post-Gazette
For decades, the fee to file liens on tax delinquent real estate in Allegheny County has been $10. But this year, it has shot up 400 percent, prompting accusations that the county is trying to profit from local school districts and municipalities that seek to collect back taxes.
“It’s outrageous. It’s extracting money from local taxing bodies for the benefit of the county. The county is cannibalizing other taxing bodies,” said Ira Weiss, solicitor for the Pittsburgh Public Schools.
This year, the county raised the fee that is paid by municipalities and school districts to file liens on properties on which delinquent real estate taxes are owed. The fee rose to $50 from $10. A common tool for taxing bodies, liens are placed on properties to ensure that the delinquent taxes are recovered if the real estate is sold.
The $10 fee had been in place since the early 1970s, according to the county. The $40 increase was approved by Allegheny County Common Pleas Court.
“It’s a de facto additional tax on municipalities, that’s what it is,” said Jonathan Kamin, a Downtown attorney who represents seven communities. “Basically, you’re giving the county additional money for doing nothing.”
But Mike McGeever, the county’s director of court records, defended the increase. The county petitioned the court to raise the fee after finding that neighboring counties were charging an average of $30, he said.
“This is one of the fees that the county had which was reviewed to determine if it needed to be adjusted to ensure that costs were being covered and were in line with other neighboring counties,” Mr. McGeever said in a statement.
Not all neighboring counties are as high as $30. A check by the Post-Gazette found that Beaver and Washington counties charge school districts and municipalities $15 to file real estate tax liens.
The fee is paid upfront by municipalities and school districts when they put a lien on a property. It is recovered if they end up collecting on the lien, but only then.
In addition to the $50 filing charge, municipalities and school districts also pay upfront to the county a $10 lien satisfaction fee, bringing the total outlay per lien to $60.
That means that if Pittsburgh and its school district file the same 8,290 liens this year as they did in 2016, they would be paying nearly $1 million in fees to the county. That compares with the $326,580 they paid last year in lien filing and satisfaction charges.
“It’s obviously a revenue-generating thing,” Mr. Weiss said. “All of this rhetoric you get about no tax increase. We all know there are different ways to do things.”
Mr. Weiss said the school district must budget for the increase in the fee, with the cost ultimately being passed on to the taxpayer. He could not say in what percentage of the liens the district files, it ends up recouping the upfront fees.
“Municipalities already are placed in a bad position having to do this. To force them to incur more cost does not seem to be just,” Mr. Kamin added.
He maintained that the fee hike has a disproportionate impact on poorer municipalities and school districts.
The city likely will adapt to the increase by filing fewer liens, finance director Paul Leger said. In the past, it usually has filed liens when at least $300 in delinquent taxes were owed. The city now will set the filing threshold at a higher amount, he said.
In many cases, it has been difficult to collect on the $300 liens in the past, Mr. Leger said.
“We don’t want to lose any revenue but we also don’t want to pay out for liens we’re not about to collect on,” he said.
“[The county’s] not going to make a windfall on it because we’re not going to pay a windfall.”
Mr. Leger called the fee increase “substantial.” But as a former county official himself, he said he was sympathetic to the government’s plight in trying to raise revenue. In a time when money is tight, taxing bodies are looking for ways to generate revenue without raising property taxes.
“I don’t have any great objection to them trying to fund the county. It’s a tough job. I’ve tried to do it myself,” he said.
Bill Andrews, an attorney who represents about a dozen taxing bodies, mostly school districts, noted that those who do not collect on the liens they file end up eating the upfront charges.
That’s one reason the districts and municipalities he represents try to be judicious in determining what properties to lien. As a result, they tend to have a fairly high collection rate, he said.
That doesn’t mean he’s thrilled about the increase in the fee.
“We’re all kind of in the same boat,” he said. “If you want to collect delinquent taxes, it’s the cost of doing business.”
Mark Belko: firstname.lastname@example.org or 412-263-1262.
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