Dayton Property Tax Collections Miserable

Dayton, Ohio has a struggling economy. A Dayton Daily News story on Sunday suggests that local governments (particularly schools) are paying for that with low property tax collections. About 13% of property taxes in Dayton proper were uncollected. The Dayton Public Schools are more than ten million dollars short on revenues as a result, even before accounting for a declining property tax base.

This is stunning because in Colorado, property tax revenue collection rates are extremely high (approaching perfect) even in bad times. This is because the right to receive unpaid taxes and the interest due on them are sold to private bidders who know that they have a nearly 100% chance of recovering their investment eventually because property taxes have a first priority lien on real estate, that generally can't be discharged in bankruptcy, and because the property that can be foreclosured upon in satisfaction of property tax liens is almost always worth more than the taxes due with interest. Investors eager to buy safe (if somewhat complicated) investments with an above market rate of return abound, and all the risks of non-collection quickly become private sector risks rather than burdens on property tax supported entities.

In contrast, predicting revenues from Colorado income and sales taxes is a dicey proposition requiring serious economic prognostication, because the tax base is less stable and the gap between taxes due and taxes collected is much greater and more variable.

While property values in Dayton are low, they aren't Detroit low. People in Dayton generally don't have houses worth less than their cars.

I don't know enough about the Dayton system to clearly discern why it can't collect its property taxes, but it seems like a problem that Ohio ought to be able to solve.