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20 taxing districts threaten to sue Kootenai County over decision to retain delinquent property taxes

The four-page letter sent to commissioners is critical of Treasurer Steve Matheson's decision and cites codes and cases in arguing his position is wrong.
Credit: CDA Press

COEUR D'ALENE, Idaho — Twenty taxing districts are threatening to sue Kootenai County over Treasurer Steve Matheson's decision that the county will keep penalties and interest associated with delinquent property taxes, as reported by our news partners, the Coeur d'Alene Press.

“The taxing districts are now asking the Commissioners to take action to overturn the decision. If the decision stands, the taxing districts are ready to take the matter to the State Tax Commission for a full investigation and, if necessary, to bring a legal action against the County and the Treasurer,” says a letter from the taxing districts, including the cities of Coeur d’Alene, Post Falls, Hayden and Rathdrum.

“In our view, this decision is contrary to the law and the justifications presented by the Treasurer are utterly without merit,” the letter states.

It goes to state, “This ill-advised approach and overreach is harmful to both the citizens of the County and the taxing districts which serve them.”

Matheson, in a phone interview with The Press on Wednesday, said he did not plan on changing his mind.

“Not at the moment, no,” he said.

The county previously distributed a share of penalties and interest to the taxing districts. For some districts, that's thousands of dollars and part of their budgets.

Idaho Code provides that the county can collect “costs, late charges and interest” whenever a delinquency exists.

The Press on Tuesday reported that Matheson pointed to the Idaho Public Depository Law, which provides that the county treasurer “shall deposit, and at all times keep on deposit … all public moneys coming into his hands.”

Idaho Code defines “public moneys” as “all moneys coming into the hands of any treasurer of a depositing unit” and specifically includes all moneys coming into the hands of a county tax collector.

The four-page letter sent to commissioners is critical of Matheson’s decision and cites codes and cases in arguing his position is wrong.

It even states “the appropriation by the Treasurer of moneys rightfully belonging to others could be considered a criminal act,” according to Idaho Code 57-139.

“The Treasurer’s decision is unreasonable, unjust, and contrary to the law,” it states.

Matheson said Wednesday that the arguments made in the letter regarding the funds in question were inaccurate.

“The analysis we did here at the county still stands,” he said.

He said the letter from the taxing districts was forwarded to the county’s legal counsel for review.

Matheson said he will wait to see if the letter changes their position.

“It may,” he said. “It may not.”

Matheson said the letter doesn’t address his primary point: that Idaho’s property tax statutes are unclear about what should be remitted to taxing districts and who keeps the penalties and interest money.

He said clarity could come from the Legislature or at the judicial level.

He said the last thing he wants to be doing is sending money to taxing districts and finding out later that was wrong.

“I fully embrace getting clarity on where the money is supposed to go,” Matheson said.

While the letter says commissioners have the authority, based on Idaho Code 31-802, to direct the treasurer to “faithfully perform his duties and distribute to said taxing districts the statutory interest owed by tax payers on delinquent property taxes,” Matheson disagreed.

“The answer is no,” he said when asked if commissioners had that authority.

Matheson said he hopes taxing districts acknowledge there is ambiguity as to who gets the money.

“Let’s get it cleared up,” he said.

He said they need to take their time in seeking a resolution, perhaps by a mutual party, judicially or legislatively.

“Obviously taxing districts want the money," Matheson said.

In the letter, the taxing districts say they are wiling to work with the county to discuss concerns and identify solutions.

“However, they will not allow the interests of their constituents to be harmed by reason of an ill-informed unilateral decision by a single County representative," the letter says.

Taxing districts that signed on to the letter are the cities of Coeur d’Alene, Post Falls, Rathdrum, Hayden, Spirit Lake, Dalton Gardens, Harrison, Hayden Lake, Fernan and Athol; ignite cda, Coeur d’Alene and Post Falls school districts; and fire districts Kootenai County Fire and Rescue, St. Maries, Hauser Lake, Worley and Northern Lakes; the Post Falls Urban Renewal District and the Dalton Gardens Irrigation District.

The Coeur d'Alene Press is a KREM 2 news partner. For more from our partners, click here.

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