There are safeguards written into the law to prevent the County from bearing the brunt of the cost of borrowing or the expense of any uncollectible taxes. The Treasurer, also by State law, must charge a 4% administrative fee and 12% interest per year to the delinquent tax payer to cover the costs of borrowing. The County Treasurer collects the delinquent taxes, and if not collected, forecloses and auctions the property.

If the auction does not pay all of the taxes, the Treasurer can “charge back” to the taxing jurisdictions the pro rata taxes not collected. This happens most often when the Michigan Tax Tribunal adjusts a property’s value downward and the Treasurer must refund the extra taxes paid to the tax payer. The only time I can remember this happening in the past 14 years was when the former hotel at Huron and Fourth Ave. went into bankruptcy and was later sold for affordable senior citizen housing for $1.00 and no back taxes.

The state law says “shall” and it is not discretionary. The County does not have $40-50 million dollars in reserves to pay delinquent taxes to local jurisdictions until they are collected. In better economic times, as the County Treasurer, I did self-fund a portion of the delinquent taxes. Last year was the first year that the County’s cash flow was insufficient for me to self-fund partially and this year I expect it to be worse.

Here are the key points and I’ve included excerpts from the State law.
1. Once a County has established a Delinquent Tax Revolving Fund as Washtenaw did 40 years ago, the County is required to pay the local taxing jurisdictions their delinquent taxes whether it borrows the money or has the money in reserves.
2. The County is required to pay the local taxing jurisdictions interest if it doesn’t pay the delinquent taxes timely.
3. The County has the ability by state law to borrow under certain conditions specifically to pay the delinquent taxes to the taxing jurisdictions.
4. The County Board of Commissioners must adopt a resolution to borrow if they want to issue Notes. The County Treasurer is always, under State law, the special agent for the County in issuing Delinquent Tax Notes. (There was an error in the Chronicle’s report, probably because of the confusion in the meeting during the attorney’s report.)
5. The Treasurer cannot borrow more than the actual uncollected delinquent taxes. (I will not borrow $50 million “to hedge her bets.” The borrowing resolution allows to the Treasurer to borrow an amount not to exceed $50 million.)
6. The County Treasurer collects fees and interest from delinquent tax payers to offset its expenses.
7. The County Treasurer can “charge back” uncollectible taxes so the County is not stuck with the liability.
8. While Michigan’s system of Townships and County’s for real property tax collection may seem strange (it is too convoluted for modern times), it was created by Thomas Jefferson as part of an elaborate plan for making education available to every citizen.
“I have indeed two great measures at heart, without which no republic can maintain itself in strength: 1. That of general education, to enable every man to judge for himself what will secure or endanger his freedom. 2. To divide every county into hundreds, of such size that all the children of each will be within reach of a central school in it.” –Thomas Jefferson to John Tyler, 1810. ME 12:393

I have included only excerpts and bolded sections to make it easier to read. You can go to the website to read it in its entirety. The delinquent tax borrowing section 211.87 begins on page 132 approximately.
[.pdf file of Act 206]

THE GENERAL PROPERTY TAX ACT
Act 206 of 1893 as amended
Michigan Compiled Laws (MCL) 211.1 – 211.154

211.87 Adjustment of accounts; statement of account; interest on delinquent payments; charge back lists.
Sec. 87.
(1) The accounts between this state and each county and local tax collecting unit in this state shall be adjusted on the basis of crediting and paying to each county and local tax collecting unit the taxes collected by and for each county and local tax collecting unit with interest on those taxes. . . .
(3) . . . the county treasurer shall pay to this state all money collected and due from that county to this state . . . . The county treasurer or collector of each assessing district in the county shall also pay to the state treasurer for the use of this state 1/2 of 1% for each month or fraction of a month as interest on all money in his or her possession belonging to this state and not remitted on the fifteenth of the month.
(4) . . . The county treasurer shall deliver the statement to the treasurer of the local tax collecting unit and pay the amount shown by the statement to the local tax collecting unit. The county treasurer shall notify the clerk of the local tax collecting unit of the total amount paid and provide a description of the property upon which the taxes were paid. The county clerk shall charge that amount to the county treasurer, and the clerks of the local tax collecting units shall charge that amount to the treasurers of the local tax collecting units on the books of their respective offices.
(6) The county board of commissioners by majority vote may authorize the county treasurer to pay directly to the school districts all money shown on the statement to be due to the school districts within the county
Sec. 87a.
The township or city clerk shall within 10 days after receiving the notice from the county treasurer of the amount of delinquent taxes and a description of the land upon which said taxes were paid, make out and deliver to the moderator or secretary of the district board or board of education of each school district situated in whole or in part within such township or city to which money may be due from delinquent school taxes as shown by the statement of the county treasurer, a detailed statement showing the amount of such delinquent school tax together with the interest thereon and the year of assessment thereof and deliver a copy of such statement to the township or city treasurer. The township or city treasurer shall forthwith pay all moneys shown by such statement to be due such school district to the proper receiving officer of such district and notify the secretary or director of each respective school district of the total amount paid to the school treasurer.
Sec. 87b.
(1) The county board of commissioners of any county may create a delinquent tax revolving fund that, at the option of the county treasurer, may be designated as the “100% tax payment fund”. Upon the establishment of the fund, all delinquent taxes, except taxes on personal property, due and payable to the taxing units in the county, except those units that collect their own delinquent taxes after March 1 by charter or otherwise, are due and payable to the county. The primary obligation to pay to the county the amount of taxes and the interest on the taxes shall rest with the local taxing units and the state for the state education tax under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906. If the delinquent taxes that are due and payable to the county are not received by the county for any reason, the county has full right of recourse against the taxing unit or to the state for the state education tax under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, to recover the amount of the delinquent taxes and interest at the rate of 1% per month or fraction of a month until repaid to the county by the taxing unit. However, if the county borrows to provide funds for those payments, the interest rate shall not exceed the highest interest rate paid on that borrowing. A resolution or agreement previously executed or adopted to this effect is validated and confirmed. For delinquent state education taxes under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, the county may offset uncollectible delinquent taxes against collections of the state education tax under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, received by the county and owed to this state under this act. The fund shall be segregated into separate funds or accounts for each year’s delinquent taxes.
(2) If a delinquent tax revolving fund is established, the county treasurer shall be the agent for the county.
(3) The county treasurer shall pay from the fund any or all delinquent taxes that are due and payable to the county and any school district, intermediate school district, community college district, city, township, special assessment district, this state, or any other political unit for which delinquent tax payments are due within 20 days after sufficient funds are deposited within the delinquent tax revolving fund or, if the county treasurer is treasurer for a county with a population greater than 1,500,000 persons, within 30 days after sufficient funds are deposited within the delinquent tax revolving fund. In a county with a delinquent tax revolving fund where the county does not borrow pursuant to section 87c or 87d, if the county treasurer does not make payment of the delinquent taxes to the local units within 10 days after the completion of county settlement with all local units under section 55, the county shall pay interest on the unpaid delinquent taxes from the date of actual county settlement at the rate of 12% per annum for the number of days involved.
(5) In the resolution authorizing the borrowing and issuance of notes, the delinquent taxes from which the borrowing is to be repaid shall be pledged to the payment of the principal and interest of the notes, and the proceeds of the collection of the delinquent taxes pledged and the interest on the proceeds shall be placed in a segregated fund or account and shall not be used for any other purpose until the notes are paid in full, including interest. The segregated fund or account shall be established as a part of the delinquent tax revolving fund and shall be accounted for separately on the books of the county treasurer.

Treasurer McClary already made a substantial “money grab” by taking a couple of hundred thousand dollars from the increase in the hotel room tax to do the same job her office did before ….simply collecting the tax. Couldn’t that money save jobs and services elsewhere in County government?