Teetering On The Brink

A few weeks ago we reported on the County’s Tax Collection Mess, highlighted by the December 2025 State audit report which concluded that “The county estimated that as of December 2025 it had $30.6 million in uncollected taxes, penalties, interest, and fees related to defaulted properties.”

Uncollected taxes fall into two categories: Delinquent taxes (the above $30.6 million where tax bills are not paid, or paid late), and “escapes” (after-the-fact discoveries over and above the $30.6 million that stem from tax bills that were incorrect or unbilled due to mistakes, overlooked ownership changes, development, etc.).

In the last few years, Mendo’s unpaid taxes rate has been creeping steadily up, leading to concern that millions of dollars worth of taxes due may never be paid and that more millions of taxes due may never even be billed.

At their Tuesday, February 3, 2026 Board meeting the Supervisors discussed the problem with County Auditor-Controller/Treasurer-Tax Collector (ACTTC) Chamise Cubbison.

Cubbison began by telling the Supervisors that the amount of unpaid taxes fluctuates over the year. As of January 29, 2026 the amount was calculated to be about $29.4 million, $9.8 million of which is penalty and interest on unpaid taxes. Cubbison added that of that $29.4 million, about $10 million is old enough to be “eligible” for collection via tax auction because the unpaid debt (penalty and interest) is at least four years old. And, of that $10 million, a whopping $6 million is penalties and interest which have built up over time on a base of about $3.7 million in delinquent taxes.

But a property being “eligible” for tax auction is far from actual collection. Some properties (particularly in the northern inland area of the County where marijuana cultivation artificially raised the value of rural properties, some of which have been abandoned) aren’t worth the current assessed value, much less the penalties and interest which have accumulated to be more than the taxes due. In addition, putting a tax-defaulted property on the market is a labor intensive process requiring tediously accurate information.

Last fall, Ms. Cubbison told the Supervisors that about $4.1 million of unbudgeted revenue had been received as part of the end-of-year close-out carry-over which she guessed was largely due to “escapes” that were discovered and processed late, primarily associated with County staff getting around to assessing and billing for properties that had changed ownership creating increased assessments and associated taxes. Escape bills do not have penalties and interest added.

Ms. Cubbison also told the Supervisors that there are now hundreds of property owners who received delayed “escape” bills sometimes for taxes accumulated over several years that have opted for “payment plans” because they can’t pay the full catch-up amount in one year. This in turn has created a substantial additional workload for the tax collection office staff, causing them to spend time managing lots of extra payment plans rather than actually collecting delinquent taxes.

However, Ms. Cubbison pointed out that despite the millions of uncollected taxes, neither the County nor the schools and special districts that rely on those revenues have suffered from declining revenue so far because the County participates in a state-authorized funding scheme known as the “Teeter Plan.”

The basic concept of the Teeter Plan is that the County distributes 100% of the value of property taxes billed while the County assumes the debt owed plus penalties and interest. Then, in theory, when the delinquent taxes are (hopefully) paid, the County is reimbursed for what they distributed and keeps the penalties and interest.

But that theoretical benefit is only realized if the taxes, penalties and interest are paid, or if the defaulted property is sold at a tax auction for at least the value of the taxes, penalties and interest due.

So far, the distributions to County departments, schools and special districts have continued despite the unpaid taxes deficit because the County maintains a “Tax Loss Reserve Fund,” also known as the Teeter Fund, which is drawn down to cover delinquent taxes and replenished when (or if) payments are made (with interest and penalties).

If taxes, penalties and interest are paid, the Teeter Fund accumulates the money until the amount exceeds 25% of the delinquent tax value at which point the excess can be added to the General Fund.

But if the taxes, penalties and interest are not paid the Teeter (reserve) Fund is continually depleted.

Unfortunately, the State Auditor did not address the Teeter Fund status in their report, despite charging the State some $800k for the audit. So Ms. Cubbison and the Board have not been required to address it in their response to the State Auditor.

For now we have to trust that Ms. Cubbison and her overworked accounting staff can somehow stay on top of all these moving parts and hope that someday — now said to be maybe in 2027 — they will catch up with tax collections and replace the Teeter Fund payouts with a surplus that can be used to reduce some of the County’s General Fund budget deficit.

These accounting and collection processes alone sound like a very fragile and tricky arrangement to base County (and schools and special districts) operations on. When you add on the County administration’s poor management record, the pending financial office reorganization, management turnover, bureaucratic infighting, unworkable software, understaffing and the Board’s failure to stay on top of this basic function of local government, you have to wonder if the Good Ship Mendo can stay afloat.