Tax delinquency, interest on late payments spike after historic property tax increases

This sent total tax bills across Montgomery County from $1.058 billion to $1.136 billion, of which $958 million was collected by the July deadline. This 16% delinquency rate is up from 10.2% in 2023. The delinquency rate in Greene County rose from 2.88% to 5.43%.

Montgomery County Treasurer John McManus, a Republican up for reelection in November, says that the number of delinquent parcels has gone down since he took office, but the amount owed ballooned as the interest they are required to charge for delinquent taxes is tied to the national rate and “soared” from 5% to 8%.

“Even when the delinquent parcel count is decreasing, the delinquency totals aren’t nearly keeping pace with the reduction in the actual number of parcels carrying that delinquency. The penalties and interest compounding over the years is a huge factor,” McManus said.

His challenger Democrat Mohamed Al-Hamdani says McManus could be doing more to help taxpayers saddled with historic tax increases, saying McManus shortened the hours his office is open and focuses more on selling delinquencies to lien collectors than working with property owners on payment plans.

“Given the economic hardship created by the historic tax increase, it is only right that we as public servants do everything we can to assist members of our community deal with that hardship,” Al-Hamdani said.

In July after the tax deadline, the Montgomery County Treasurer’s Office changed its office hours to close at 4 p.m. instead of 5 p.m., which is when other county offices close. McManus said that was done to better manage staff schedules — employees worked staggered shifts previously — and his office will stay open till 5 p.m. during collection periods.

Greene County Treasurer Kraig Hagler said they historically had a 2% or less delinquency rate because, “we don’t have old downtown Dayton or old downtown Springfield with all these old big abandoned homes,” they have small singe-family ranches. He attributes the uptick to the higher bill amounts caused by the historic value increases.

“You’re going to have an increase in delinquent taxes amounts because the taxes went up but that doesn’t mean you have more people delinquent,” Hagler said. “To me the people that were paying their taxes still are paying their taxes, we don’t have a large number of people that aren’t paying their taxes.”

Hagler is running unopposed for reelection in November.

Tax delinquency

Delinquency numbers are very fluid since past due bill payments come in all the time and some people default on their repayment plans which means additional penalties, among other variables. For this story the Dayton Daily News used the tax deadline, because after that penalties start mounting.

As prescribed by state law, a 10% late fee is charged immediately after the deadline, but if they pay within 10 days the penalty is halved. Interest on the unpaid amounts is also charged. As long as a payment is postmarked by the deadline no penalties will ensue.

McManus said tax collections and delinquencies vary widely from one county to the next, depending on a county’s demographics and numerous other factors.

“Delinquency in Ohio’s large urban counties is generally different than delinquencies in smaller counties and/or those with newer property portfolios. Why? The large swaths of vacant and abandoned properties across Dayton and Montgomery County’s urban core are more than an eyesore and a target for crime. They carry with them decades worth of delinquent taxes,” McManus said.

McManus noted that just because someone missed the payment deadline doesn’t mean they are considered “delinquent” in legal terms, the county auditor must certify a parcel as delinquent. He said to combat the delinquency problem Montgomery County sells tax liens to third parties for collection, which should bring the delinquency rate down to around 12% by year’s end.

They generally collect $25 million to $30 million through that process. Since McManus took office the number of delinquent parcels has gone from 28,806 in 2021 to 17,450 in January and they collected $98 million total. He said it appears there are 18,435 delinquent parcels with liens ripe for sale this year.

McManus said tackling the delinquency problem has been paramount for him.

“To turn a blind eye to delinquencies would be an insult not only to those who actually pay their taxes, but to those local entities who are depending on these dollars to meet the needs of our residents,” he said. “Delinquency in Montgomery County was a problem for far too long, and turning it around was my top goal when I took office. I’m proud of the results we’ve achieved in a few short years.”

Payment plans

Al-Hamdani says McManus focuses too much on selling liens to debt collectors and not enough on helping taxpayers with payment plans.

“If elected, I would focus on ensuring that the office of the treasurer is more accessible to our community by restoring operating hours, and creating a program that helps those who fall behind on tax payments through payment programs,” Al-Hamdani said.

“Our annual lien sales result in tens of millions of dollars paid in taxes every year that would have otherwise not been paid,” McManus said.

McManus’ office does offer several payment plans — for both repayment of delinquent taxes and regular payments — and encourages as many people as possible to sign up for their pre-payment program that allows taxpayers to pay in smaller, more manageable amounts, similar to a mortgage escrow. McManus said they have 89,140 parcels paying taxes through their mortgage and 25,781 are enrolled in the pre-payment program.

“This program allows taxpayers to break their tax payments into smaller monthly payments, helping property owners stay on track and budget with ease,” McManus said. “This program is the most effective tool we have to help taxpayers with their bill, and that’s why my team has worked incredibly hard to enroll Montgomery County residents at a far higher pace than usual.”

There are rules for people on delinquent tax repayment plans. A 20% down payment is required and “you must make your monthly payments. If monthly payments are missed, the payment plan will void and any penalties and interest will be added back into your taxes,” according to the Montgomery County Treasurer’s Office website.

Foreclosure is the collection system of last resort and the next step for chronic delinquencies. Hagler said he has a staffer dedicated to working with the prosecutor’s office to help people before foreclosure is inevitable.

“Since she took over we’ve had more people complete contracts in the past 24 months than we did in the first three years I was in office,” Hagler said. “Our goal is to not fish for the big fish, we put our line out there to all people, we try to get people when they’re just a year-and-a-half behind to sign up for the contract before they dig themselves a hole they can’t get out of.”

Greene, Butler counties

Butler County, which also saw massive taxable value increases, saw their delinquency rate fall slightly from 4.4% to 4%.

Butler County Treasurer Mike McNamara’s told this news outlet, “I don’t have any explanation for that” but he surmises all the efforts the county auditor, commissioners and his office made to let people know huge tax bills were coming might be why delinquencies didn’t skyrocket.

“For six or seven months before the bills were even mailed for first half collections this year, we’ve engaged in an aggressive public awareness campaign,” McNamara said. “I don’t know if that makes a difference but I am very happy to see that right now our delinquency does not appear to be increasing.”

Greene County Auditor David Graham also noted the actual amount of taxes collected as of the deadline was nearly $6 million higher because an AES property tax payment, “was mailed timely — evidenced by a US Postmark — but was received after the books were turned over by the treasurer for distribution to the subdivisions, so they were not included in the settlement.” That brings the delinquency rate down to 3.82%.

All three counties offer payment plans and the state is somewhat liberal in allowing them to craft their own repayment criteria. McNamara said basically they draw up a contract giving a taxpayer 60 months to pay off back taxes — while still keeping current with new charges — but extenuating circumstances are considered. He said they currently have contracts with 649 taxpayers who owe a total of $2.27 million.

“If somebody had medical bills, has been hit hard with financial crisis or a personal shock to their income but are still demonstrating an effort to pay their taxes, it’s our goal to try and work with them as much as possible,” McNamara said. “We do everything we can within the law to try and help people maintain their properties.”