Posted on 08/27/2014 1:19:59 PM PDT by MichCapCon
In the fourth quarter of its fiscal year 2014, the city of Detroit projected it would bring in $55 million in property taxes. Instead, it collected just $6.7 million, about $48.3 million short of what it expected.
The city revealed the shortfall in its most recent filing with the Michigan Department of Treasury by Emergency Manager Kevyn Orr.
“It's a combination of many factors,” said Bill Nowling, spokesman for Orr. “Clearly, collections is an issue, but so it is the assessment process itself. In many cases, the city is carrying assessments for properties that are blighted or abandoned and those amounts go into making up that $55 million number.”
That shortfall in property taxes played a big role in why the city was $50.2 million in the red in the fourth quarter, which ran from April to June.
In the third quarter, the city of Detroit fell $19.3 million short of property tax revenue collections. However, in the first two quarters of FY 2014 (July through December of 2013), the city took in a combined $52.1 million more in property taxes than projected.
Robert Inman, a professor of finance, economics and public policy at the University of Pennsylvania's Wharton School, called the recent shortfall "extraordinary."
"While there are surely many possible explanations for the extremely low yield of the property tax recently observed for Detroit, the fact remains that a 10 to 15 percent collection rate for the city's property tax compares to that in many third world cities," Inman said. "And perhaps for third world reasons: abandoned properties, declining values and thus an inability to pay, and finally, simply tax cheating. Detroit has its work cut out for it."
James McTevia, a financial consultant and turnaround specialist, said the revenue projections aren't surprising since they came during a period of insolvency.
"It will be years before Detroit is stable enough for anyone to make realistic projections and so I am not at all surprised the projections are substantially off," McTevia said. "One of the worst things an insolvent company/city can do is base a restructuring plan on poor projections. They will soon be back to court unless someone has a tight hold on the checkbook!"
Every dollar that Detroit would take from the Democrat Party is a dollar that won’t be used by the Democrat Party to make more messes like Detroit. The Democrats like that money, but they can’t manage a lemonade stand.
Sorta short-sighted, eh? About 50 million bucks worth.
Projections should be based on actual historical collections. Not on assessments.
OUCH, how can they afford all those union pensions?
Property taxes are collected all year long in MI? I wonder how they determine who pays when!
And all these clowns are still drawing paychecks. Think you would keep your job if your sales came in at 13% of your projections? Clowns will probably project 75 million next year and get large bonuses.
Note to all Michigander taxpayers: Quick! Hide your pocketbooks!!!!! If you can escape to another state...do so immediately.
Yep, those who did the estimates will get raises
Does your comment also include the elderly who have been living in the same neighborhood for the past 50 and 60 years, who are too poor to move to the suburbs and are now living in homes that have virtually no value left?
The same elderly who DID work their entire lives in the city, paid their taxes and tried to raise their kids in a crime free environment?
What makes you so sure THEY voted democrat unless you're applying the typical racist stereotype that anyone left in Detroit is black and thus they are democrats........?
Sorry bro but there are people trapped in Detroit and it's thru no fault of their own..........The very least YOU can do is give them credit for trying to survive in an environment that even YOU admit you could not live in.........
This is incredible. My town in CT, has a population of 16,000 people. It expect $36,000,000 in property tax collected. We have less than 1/30 of the population of Detroit, but we have to collect nearly 2/3 of what they expect to collect.
Correction, it seems they do this quarterly. Therefore, our property tax is 1/6th of Detroit’s.
An appraisal of $1000 on a house and land is not going to net much property tax revenue.
To paraphrase the old philosophical question, if an urban mayor screams “gimme gimme gimme” in the middle of a desolate wasteland of a city and no taxpayer is left to hear him, does he get the money?
I give them credit for electing democrat vermin to run their city and sorry but that’s the way things are. I might have some feelings for conservatives who were caught in the middle but most of the people in Detroit were doing what liberals in any of these cities do and that’s tax and spend and let the next generation worry about it.....this bunch just happens to be the ones that got stuck with the bill and I’d be willing to bet they voted democrat the last election. Big union strong hold voting themselves raises and sticking the taxpayers with the tab. Sorry about the few innocents that got hurt but that’s what they make moving vans for!!!
What the news isn’t telling you is that Detroit’s collectors essentially vacationed or did work slow-downs during Detroit’s insolvency process...because they could.
Quarters before and Quarters after the insolvency process will see regular property tax revenues.
...but that’s what happens when public “servants” are corrupt and lazy and unethical.
Privatize collections and the problem disappears.
The Detroit neighborhood blight should just be bull dozed over and sold off as farm land, Detroit is a dead city hanging on by it’s finger nails. Some one should just stomp on those fingers and let it fall once and for all!
A small affluent suburb would be many times more; amazing to think that this Democrat hell-hole was once called the Paris of the Midwest.
I’n today’s world of SS and welfare no one need live trapped in this blight.
Kinda tough living out of a van........But what the hell, conservatives are all about toughness right?
I'm curious, what do you suppose the monthly SS income is of someone who retired, say, 30 years ago? And what do you suppose is the the relative value of their current house in the city of Detroit?
Considering that a move to a close suburb such as Eastpointe or Roseville will likely involve purchasing a home at a minimum of $70K, where they gonna get the money?
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