After an exhaustive internal study last year, and an updated review this year, Travis Co. commissioners agreed Tuesday that the county’s tax collection system isn’t broken after all. But they voted to do another exhaustive study – this one independent of the first – just to make sure there isn’t something, anything, that a private firm couldn’t do better.
The 3-2 vote, with Commissioners Karen Sonleitner and Ron Davis abstaining, effectively keeps the controversial issue of privatization alive for another year, meaning the law firm that’s been chomping at the bit to take over the county’s collection of late property taxes can still hope to land a piece of the county’s lucrative tax business in 2007. Commissioners will formalize the study’s scope and appoint its stakeholders at their June 6 meeting. The new committee, which will likely include representatives of the county’s two largest taxing entities – the city of Austin and AISD – will then spend the next four months reviewing the way in which the county collects and enforces payment of late taxes for more than 80 jurisdictions. The county’s overall collection rate averages close to 99%.
The commissioners’ action came as a mixed blessing for privatization foes. On the one hand, they were relieved the commissioners didn’t give away the store to a private firm, voting instead to ditch the two proposals submitted from private collection firms. On the other hand, they were frustrated that the controversy wasn’t finally laid to rest, as they had hoped. While they didn’t get everything they wanted, neither did Ken Oden, former county attorney and now partner in the Austin law firm of Linebarger Goggan Blair & Sampson, one of the largest private collection agencies in the nation. Oden, who has worked tirelessly in pursuit of the county contract, had hoped to seal a deal before the end of the month. He said he was disappointed that the issue had taken on a volatile, personal edge, but he was optimistic nonetheless that a new analysis would serve to “ratchet down the rhetoric” and address issues of equity relating to the county’s enforcement action against low-income homeowners. A running theme of the privatization folks is that the county sues a disproportionate number of poor and minority homeowners who fall behind on their property-tax payments. Oden also sought to diminish the incendiary remarks of privatization opponent and former Co. Judge Bill Aleshire, who crafted the consolidated tax-collection system when he served as the tax assessor-collector. “I will not take the bait,” Oden said, referring to Aleshire’s pot-shots at Linebarger, including its record of hiring away public officials who then lobby to get the government business of their former employers. “As we’ve seen here, they even hired a former county attorney whose job in the past was to help keep them out of Travis County,” Aleshire said.
Privatization opponents, both inside and outside the county, acknowledge they were caught flat-footed when Co. Judge Sam Biscoe first placed the collections item on the May 9 agenda. As a result, no one was more prepared for that meeting than Oden, who arrived armed with charts and graphs and a smooth spiel. Community representatives also showed up to speak in favor of privatization. (The group included two former mayors – Bruce Todd, who’s on the Linebarger payroll, and Gus Garcia, who’s not.)
Many people believed the privatization issue had died last summer, particularly after the furor that was raised over Linebarger’s 2005 takeover attempt, followed by an exhaustive internal study that seemed to bear out county staff’s arguments for keeping the collection business under public control, and rejected Linebarger’s claims regarding equity for poor and minority homeowners. Moreover, the study, conducted by County Auditor Susan Spataro, also concluded that hiring an outside firm to do the work would cost the county several million dollars in lost revenue. County Attorney David Escamilla, speaking prior to Tuesday’s meeting, said the internal analysis should put to rest any doubt that the county wasn’t performing up to par. Privatization, he said, “would not only lose money for the county, but it would result in more delinquent taxpayers paying more amounts of money. I can’t see any justification not to accept the results of the study.” He added that the issue has taken its toll on county staff and that last year’s study and this year’s update had eaten up more than 2,000 hours of staff time and “diverted attention from much more critical matters.”
Still, many Eastside leaders say county leaders can’t altogether ignore the reality of low-income residents losing their homes to the highest bidder at county auctions. The hard feelings are compounded by the Eastside’s growing popularity among the yuppie set, which drives up land value and, of course, property taxes. “People are losing their homes,” Susana Almanza, co-director of PODER, told commissioners earlier this month. “It’s not just their homes, it’s their whole culture that’s being lost; it’s their whole sense of community that’s being lost.”
But privatizing the collection system would just make matters worse, say two of the plan’s most vocal opponents: Aleshire and Sonleitner. They argue that poor homeowners who fall behind on their taxes would be hit doubly hard because private firms charge a 15% to 20% penalty fee for every delinquent notice they send out, regardless of whether or not a lawsuit is brought. “None of that money is going to come to Travis County,” Sonleitner said. “It goes into the pockets of really, really, really rich people who have figured out how to make public indebtedness an art and a science.”
Until this month, the privatization debate had been all but forgotten, though it re-emerged during a rather nasty Democratic primary race that pitted former county attorney Sarah Eckhardt against Sonleitner. During the campaign, Oden teamed up with the powerhouse law firm of Minton, Burton, Foster & Collins and formed a political action committee to help Eckhardt. Eckhardt’s own opposition to privatization served to neutralize the issue, but Oden’s insertion into the political fray was a clear indication, at least to Sonleitner, that he was still keen on capturing a chunk of the county’s tax-collection business. And, as this week’s voting action showed, some commissioners might be just as keen on giving Oden a piece of that pie.
This article appears in May 26 • 2006.
