Dean Mann

Dean Mann and two KDOT employees came in to discuss US Highway 69. KDOT did a meeting in Franklin yesterday to talk about the corridor from Fort Scott to Pittsburg. There is money allocated to put 4 lanes from Fort Scott South to 680th Street. This should begin in 2013 be completed by 2019.

KDOT is trying to get things prepared for the phase that comes after that. Mr. Mann said that some times the Federal government has money available for “shovel ready” projects. So the goal is to have the planning in place to take advantage of such funds if they become available. They want to complete the design and if there are no funds available it will “go on the shelf” until funds materialize. There is hope that by the time the Fort Scott section is constructed, there will be funds to continue with a four lane toward Arma.

The purpose of the meeting with the Commissioners was to ask if they would support getting the design done. While the addition wouldn’t have a direct impact on Bourbon County, it does have impact in how traffic moves through Fort Scott. Having local governments supporting the projects may help KDOT lean more favorably toward those projects instead of ones where there is not support or support hasn’t already been expressed.

Commissioner Endicott expressed concern that putting in the Arma connection might delay the Crawford County Corridor and asked if the money would be better spent on that project which would go from 680th Street through Pittsburg.  Mr. Mann explained that since the timeline of the Crawford County Corridor is unknown, the benefit of having a four lane in the Arma area may be very beneficial to have sooner (if funds become available) rather than waiting for the larger project.

Fort Scott is submitting a grant application today for a grant to turn US 69 from 18th Street to 23rd street into a 5 lane road.

The Commissioners passed a motion to support the plan as long as it didn’t delay the Crawford County Corridor project.

Dylan Morrow Director of Security SEKRCC (county jail)

Mr. Marrow talked with the Commissioners about some of the things he was doing to help reduce overtime. He also wanted to thank the Commissioners for helping him move around some responsibilities to be able to give some raises in his department.

The jail is spending a lot of money on plumbers and electricians, but that is just due to the age of the building.

Terri Johnson – County Attorney

The County Attorney suggested that the commissioners go into Executive Session to discuss a possible settlement for case 11CB45.

Another Executive Session was called for Attorney Client privilege regarding suits filed against the county and insurance claim loss ratio for 5 minutes.

Chairman Endicott asked the County Attorney what their next step should be related the allegations about the Treasurer’s office . The County Attorney said that she asked the Attorney General and KBI to look into the allegations back in August and she has yet to hear back from them regarding this request. She expects to hear back at some point in the near future.

The list that went to the abstractor in preparation for the tax sale was for 2007 and previous years delinquent taxes. In addition non-homestead properties could be foreclosed on for 2008 delinquent taxes. Ms. Johnson pointed out that from a practical standpoint there may need to be more than one tax sale depending on how property owners respond to the suit to foreclose and what type of delays occur on various properties.

There was some discussion about whether or not it makes sense to try to differentiate between homestead and non-homestead property and whether it is even possible to determine which properties fall into the homestead exemption category. In the past the county has just applied the three year rule to everyone.

No one disputes that there were mistakes made in the way that property taxes have been calculated for Bourbon County. However, any reasonable person realizes that there are going to be at least some mistakes made in this line of work no matter how careful you are.

The big question is whether the process has been fixed.  So lets take a look at an example of delinquent property that is showing it was brought current on 10/7/2010 a few weeks ago. Below is a screenshot from the tax search that raises some questions. This is for 2010 taxes. So $673.37 was due in December 20th of 2010 and the remaining $673.37 was due in May 10th, 2011. The tax rate should have been 7%, plus a $15 publication fee if the property were published in the paper.

The property is crossed out of the list that was originally sent to the paper. It is  part of the addendum to the list (see the last page of the PDF), but the amount listed as owed is off by $1,000. So it was probably printed in the paper with the rest of the property that was left of because it was part of the payment plan. However, it was not in the payment plan contracts we received.

 

There was a payment of $1,346.74 toward the tax and $7.05 toward the interest and fees on 10/7/2011. The website is showing that the amount has been paid and that there is no longer an amount due.  But the publication fee alone should have been $15.

For a rough idea of the interest that should have been charged, if we calculate 7% on the first half for January through September (10 months), it comes to $39.28 (673.37 * .07 / 12 * 10). If we calculate interest on the second portion from June through September (four months), it comes to $15.71 (673.37 * .07 / 12 * 4). That leaves off about 18 days of interest on the first payment and around 27 on the second payment. So the actual interest should be a bit higher if you calculate to the day instead of only including full months as I have done.

Still the total comes to $69.99 when you include the publication fee.  So why is it only showing $7.05?  One possibility is that payments were being made into an escrow account on the old system and the interest rate was based on the fact that a good portion of the principle was already paid. However, to only be charged $7.05 the interest would be for less than two full months on the December 20th half of the payment. In other word’s the property owner would have needed to pay almost all of the tax due except for a very small portion.

It is interesting to note that the list of delinquent taxes where this property was crossed off has the interest listed as $39 (the cents are obscured by a marker).

If the tax payer had done this, I would expect to see the December 20th half listed as paid as soon as the escrow account had enough money to pay it and given the very small amount of interest, this couldn’t have occurred any later than March. Perhaps the escrow accounts are setup to only bring the amount over, once the full tax has been paid. Even then the publication fee was not charged.

It is possible that the interest was calculated correctly and the publication fee was inadvertently omitted. The biggest problem here is that that process is not transparent and if you look at what is actually published on the website it looks like something is being done incorrectly. If the new system was being used to accept all the payments, it would be trivial for anyone to look and see exactly how the interest and fees had been calculated and how payments had been applied.

The presentation of the auditor’s report has gotten many people in Fort Scott talking about how they would like to see things handled. Mr. Sercer’s report suggested that the computer system should be setup so it was impossible to override interest charges without the approval of someone from another department.

I disagree with that suggestion.

The last thing we need in government is more hoops for people to jump through to do their jobs. People are elected because we want them to use their judgement. If there is no judgement involved, what is the point of having an election in the first place?

Let me give you an example. Lets say that you are late on your taxes so you call down to the Treasurer’s office and ask how much you owe.  They look at the computer and say you owe $342.76. You make out a check, put it in the mail and it arrives at the Treasurer’s office two days later. When they go to receive the money, the computer says that you now owe $342.88.

As a tax payer, how would you prefer to see the situation handled?

• Your money is received, but because of the $0.12 outstanding, your property gets given to the abstractor and you don’t find out about it until you discover that your property is going to be auctioned off for the $0.12. By that time there are other fees and expenses that you have to pay in order to keep your property off the sale. In addition there is all the expense of time spent by the court house to deal with another piece of property going through the tax sale procedure.
• The person entering the amount has to ask the treasurer to override the $0.12. The treasurer needs to involve someone in another office to approve the override. All in all it takes 3 people an extra 10 minutes. Assuming an average wage of $10 apiece the cost for labor is $5 (30 minutes total x $10 per hour). So instead of being out $0.12 the county is now out $5.12.
• The person entering the amount has enough leeway to say “close enough” but the system records the difference in a way that is public to everyone and viewable on the web. What constitutes “close enough” is set by policy by the Treasurer.

Maybe it is just me, but I would rather see the county just write off the $0.12 but handled in a public way where everyone can see it. What about you? How would you like to see a situation like that handled? In talking with employees in the Treasurer’s office it doesn’t sound like getting a check that differs by a few cents unusual. It happens on a regular basis.

I’m sure some people are asking, “but what if it starts happening for larger amounts?” That is a good question. Imagine that any time they needed to write off some interest, everyone in the county was given a chance to vote whether or not to write of the $0.12 or $2.00 or whatever it might be. Would that be fair? It might be fair, but it would require far to much time to get anything done, but in essence that is why we have an elected official. We don’t vote on every decision. We vote on the person who makes those decisions.

A very simplistic view is that the Treasurer and other public officials need to “just follow the law”. That is true, but the whole reason we have someone in that position is because there are going to be judgement calls that have to be made. If it was just a matter of following a procedure, then why are we even paying a salary for a Treasurer in the first place? They could be replaced by an ATM type device that just takes people’s money for their taxes or an online payment webpage.

As a citizen and as a tax payer, I know I want someone in that position who can act on my behalf and do what is in the best interest of the county as a whole. Many times that might mean writing off small amounts where the cost of collection is greater than the amount itself. In some cases it might mean making a decision that later turns out to have lost some money, but was still a reasonable decision based on the data available at the time.

My point isn’t to discuss the legality or ethics of a particular decision, but merely to point out that the entire reason for having a Treasurer (and other officials) is allow people to elect someone who can use their judgement to make decisions as we’d like to see them made and in the interest of all tax payers. Taking the ability to make judgement calls away defeats the purpose of electing them in the first place.

But that is my opinion.  What do you think?

The report by Terry Sercer that was presented to the Commissioners this morning is available as a PDF from the link below. The report is addressed to the Bourbon County Commissioners and is dated October 10th.

Audit Report

Mr. Sercer said it was essentially the same report he gave to the Attorney General and the KBI.

Some notes from the report:

• The amount paid on the Treasurer’s property taxes are actually overpaid by $346.32 for the years 2005 and 2006. (Note: The treasurer has since paid her 2007 taxes as well).
• A number of tax payers on the payment plan over paid their interest by around $800.
• The biggest tax payer under paid by about $5,000.
• There was one tax payer where $1,130 was not collected in August when the property was offered for sale.

8:53 am

Terry Sercer is on the agenda for this mornings commission meeting at 9:00. There are already 8 people in attendance.

9:00 am
As the clock chimes indicating the top of the hour, everyone stands and begins the meeting with the pledge to the American flag.

Chairman Endicott introduced Terry Sercer as an accredited auditor.

Terry said he was asked to:

• Verify the proper publication of taxes.
• Summarize delinquent taxes
• Verify the process for tax sales.
• Verify whether proper interest charges are being applied.

 9:03 am

Mr. Sercer did not spend time looking at previous years tax sales.  He said he was told by the Treasurer that the previous tax sale included people who had been on the payment plan.

9:05 am

The accounting for partial payments involves putting money into a fund and then when the amount is sufficient, applying it to the amount owed. There were two systems in use because the new system couldn’t handle partial payments.

9:07 am

Mr. Sercer was able to obtain copies of every payment plan. He went through every one to make sure the proper interest rate was supplied. He then traced all the partial payments to the records on the old system. He also verified the proper payment of interest.

9:08 am
Mr. Sercer said that he didn’t think people knew about the partial payment plan and there didn’t seem to be any type of written eligibility requirements, but noted that state law allows the Treasurer to use his/her own judgement.

He said that the Treasurer and several relatives were repeat users of the plan.  Also there were several personal property taxes that were on the plan. Mr. Sercer said he wasn’t aware of a statute that allows payment plans on personal property. The Treasurer said she checked with Johnson county before doing this.

Mr. Sercer pointed out several examples where plans were for very small amounts that wouldn’t have allowed the individuals to pay off the amounts owed within 3 years. He referred to these as “errors in judgement.”

9:13 am
There were numerous errors in the manner in which partial payment plans were established. Mr. Sercer said that the amortization on 23 of 224 payment plans that are now in plance “made no sense whatsoever.” The Treasurer wasn’t sure how these had been calculated.  He said he couldn’t audit the history to see if it had been changed from what the computer calculated. There was not correlation between the plans that had the expected interest and the ones that had “crazy” interest.

18 of the agreements used the right tax, but the interest rate was far to low. In some cases the interest rate was 0%. 27 agreements had a higher interest rate than they should have. 8 plans looked reasonable, but there wasn’t a schedule to verify them. About 1/3 had interest rate issues.

9:17 am
The computer system from Infinitec that was calculating interest was no longer under maintenance, so that might have been part of the reason some interest rates were incorrect. These errors are in addition to the ones mentioned above.

9:19 am
The way that the interest and tax were applied was incorrect. Sometimes early payments were applied entirely to interest. He said this was a flaw in the program itself.

Mr. Sercer said there were also errors in the way it was managed and implemented.  Some tax payers did not make their payments on time. Late payments should require recalculating the interest. The actual payment plan states that it is estimated amount and that late payments may require additional interest to be paid.

9:21 am
Most people on the payment plan did not pay the amount they should have.  One tax payer under paid by $5,000. The Treasurer’s own tax payments were low, but she paid to catch up and now has overpaid.

A number of tax payers overpaid interest by approximately $800. (It sounds like this is cumulative–not per tax payer.)

There was a case where the Treasurer wrote off interest based on a judgement call in hopes of recovering some taxes before the property went to sale.  Mr. Sercer said he was told that was the only case where that occurred.

9:26 am
88% of the plans currently in place are not making payments as agreed–and that is even given them some leeway for time.  Mr. Sercer said that the payments that are not being paid can probably be terminated.

It is the auditor’s understanding that property on a payment plan still needs to be sold. He suggest that all the money in the payment plan fund should be applied to taxes and move forward on the new system that is calculating interest correctly.

9:29 am
Mr. Sercer said there needs to be better controls in place so amounts can’t be over-ridden without the approval of a second person–preferably from a different office.

9:32 am
Susan Porter (former Treasury employee) said that some of the properties were held off the tax sale and not even sent to the abstractor. She said there was an individual who were held off tax sale for two years and only made one payment of $100. She said they took the money out of the account and applied it to someone else’s account.

She said she knows of three that were held of the tax sale for “personal reason’s of Susan [Quick].”

Mr. Sercer said he did not go back and verify old sales, but agrees that the presence of a payment plan should not change whether or not property is sold.

9:37 am
Susan Porter said that she was repeatedly told to “make it work” in cases where she was told to drop off interest that was owed. She said that the interest that was being calculated was correct, but they were being told to manually change the interest.

She said the case where the interest was completely dropped (which Mr. Sercer mentioned above) was dropped at the request of a realtor who said they could sell the property if the interest was not being charged.

9:41 am
Cecilia Kramer brought and example to ask Mr. Sercer about. He was familiar with that case and said the calculation was wrong because it was based on the old system.  Asked some questions about the listing she had originally been given and Mr. Sercer said that some of the numbers on it were incorrect.

Mr. Sercer said the he suspects that if 2011 is wrong, previous years are as well.

9:45 am
One citizen said that he wasn’t sure if he would pay his taxes next year until this is all sorted out.

There was some discussion about how the computer should work in letting people override interest amounts. Mr. Sercer suggested that if a system is put into place where override authority must require more than one person. His example was the treasurer and someone from the clerk’s department.

10:00 am
Chairman Endicott asked about Mr. Sercer’s meeting with the Attorney General and KBI. He said they said they would take his report under advisement. He said that the Treasurer could be removed based on failure to perform their duties. Mr. Sercer said that the Commissioner’s would have to ask the County Attorney to see if the findings are grounds for removal of the Treasurer. The County Attorney would contact the Attorney General and they would start the process if there were grounds for removal.

Mr. Sercer said Attorney General isn’t going to automatically pursue removing someone based on the report he presented to them.

Mr. Sercer said he did not audit whether or not properties were left off of tax sales.

10:14 am
Mr. Sercer was asked if he recommended dumping the old software. He said his understanding was that once the payment plans were done away with and no longer being run, the Treasurer planned to go to the new system and not keep the old one.

The Attorney General said because there are no qualifications for becoming County Treasurer so the AG office looks into several issues in one of the 105 counties each year related to issues like this.

10:18 am
Susan Porter asked if the properties that weren’t previously advertised in the newspaper could actually be sold. She asked if delinquent properties had three years from the first year they were published.

Chairman Endicott said that Mr. Meara “is reviewing that hopefully at this moment.”  He also said that most of the properties send to the abstractor were published as they should have been in the past.

10:20 am
Susan Porter said that as an employee of the Treasurer’s department, they told people on the payment plan were allowed to skip a month, pay late or bring in a lump sum.

Mr. Sercer said the county was out about $5000 in the eight months he audited.

10:23 am
Mr. Sercer and the Commissioners were asked if the people who underpaid their taxes could still be collected from and if people who overpaid would get a refund. The Commissioners didn’t know, but Mr. Sercer said in the case of the person who underpaid by $5,000 they had a statement from the county that specifically said their taxes had been paid for at least the past 2 years.

He said that as far as he knows the fact that this person saved $5,000 on their taxes was not a relative of someone in the Treasurer’s department.

10:29 am
Melvin Antrim asked what the process would be if an elected official was removed from office. The answer is that their party would make a recommendation to the Governor and the Governor would appoint someone.

Randy Handly suggested that the Commissioner’s contact the state representative to see about rewriting the laws in order to change legislation to give less authority to the Treasurer. He felt that the laws need to be changed.

10:39 am
Most people left after the discussion turned to other matters.

The county is looking at buying a fuel truck to fill the generators at the rock quarry. Commissioner Warren, made a motion to purchase a 1979 GMC fuel truck from Mike Judy for $5,000. It will be paid for in January and picked up at that time. The motion passed.

11:00 am
Stewart Porter who is the engineer for the sewer district project out at the lake came in to bring the commission up to speed on a few items.  The lift station will be ready to go in a few days, but they don’t have a date for when they will turn it on.

He wondered if the commission had given any thought to the grinder pump at the old Wally Anthony property. He didn’t think it needs to come out, but wondered if the Commissioners felt it need to be moved because of flooding.

Commissioner Warren said that in 1986 he lived near there and in 1986 the water got 12 inches above his dock. He suggested that Mr. Porter measure off the top of the dock to see if the pump was high enough.

The engineers said that the placement of that grinder unit was determined by the easements that they had to work with. The easement was created by condemning part of the lot and the engineers were trying to not condemn a strip through the center of someone’s lot.

Lake Fort Scott isn’t mapped for 100 year flood elevations, so the engineers haven’t had a good guide to work off of. The engineers said it would probably cost something like $1,000 to move it, but it would greatly depend on where they want to put it.

They will compare the elevation to Commissioner Warren’s old dock and come back with additional data.

Stewart Porter asked what should be done with old holding tanks. The original idea was to collapse them, but some of the locations are difficult to get to and may need to just be filled with sand.  His goal is to minimize destroying people’s driveways and other property.

Chairman Endicott questioned whose responsibility it would be if a holding tank caved in because it wasn’t collapsed like the others. It sounds like the holding tank still belongs to the homeowner and the agreement was to render the tanks inoperable so the actual method doesn’t matter.

Some individuals do not want the holding tank to be demolished, but it wasn’t clear why.

The Commissioners agreed that filling them with sand was sufficient to destroy them. There was some discussion about the tanks that were above ground where demolishing the tank might leave a pile of rubble and the homeowner might prefer to have the tank left as it is and simply filled with sand.

The engineers said that communication with homeowners has been difficult. There are still a handful of homeowner where they still have no contact information. The County Attorney said she may be able to help contact these individuals.

The bulk of the equipment should be operable within the next month, but actual date will depend on the how much cooperation they get from homeowners. The engineers felt that it would likely be somewhere in the 4 to 6 range.

At that point, the commissioners will need to hold a public hearing to set the rates that people will be charged once the costs are known. Some people may start pumping (and not being charged) before that point.