Posted on 09/08/2014 6:36:44 AM 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!"
$6.7 million. They’re lucky they got that much. LOL.
Fire the government..start over with judeo christian values. Jail the hoodlums..
as china waits for the auction.
Rounding error.
It sounds like they "projected" the tax revenue based on what they needed to balance the budget. It would be interesting to find the tax revenue history. (I looked for a few minutes but could not find it) Was the 55 million projection realistic based on previous 4th quarter revenues?
Turning the US into just another third world sh&^hole ... one city at a time.
Detroit is THE shinning example of what decades of Liberal leadership will get you !
How much clearer does it have to be?
shouldn’t be a surprise to anyone. that’s what happens when your property values plummet. They’ll probably raise income taxes as a solution.
$6.7 million for a city of 688,000? That’s $10 a head! My daughter’s Girl Scout troop made more than that on their last bake sale!
How depressing it must be to have lived there and watched your city die.
I wonder if they have a clue as to the reason why?
Must be the “new math.”
And let me guess, they already “spent” the 55 million because they were so sure of their book keeping.
Imagine getting paid once a year. Now imagine you worked all year thinking you were making $55 an hour, but when you got your annual pay check it reflected $6.70 an hour.
This is gonna leave a mark.
Detroit once was the most prosperous city in America and the centerpiece of the USA’s industrial might. Now it’s an international embarrassment, thanks to decades of corrupt DemocRAT rule and union thuggery. It’s how Obama and his fellow travelers want to “transform” the entire country.
I wonder if they have the nerve to sit around and look shocked?
Those bastard Republicans!
WRONG! Notice that all of these geniouses who talk about Detroit never address how Detroit became a "non-third world" city to begin with? Instead they try to reinvent what I call the "Port-au Prince" model! Very sad!
If they had a clue it would have never happened.
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