Detroit Expected $55 Million in Property Tax Revenue; It Brought in $6.7 Million

Capitol Confidential ^ | 8/27/2014 | Jarrett Skorup

[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!"

[Attention Surplus Disorder]

My Dad retired in 1980 and worked continuously since 1940. His monthly SS is about $2180. He was a chemist and earned pretty top non-management wages when he retired, I think that number was in the $80K/year range. Not astronomical. My Mom worked far, far less and much more intermittently and here SS was in the $1430 range.

A 30 year mortgage payment on a $150K home right now is under $750 given 20% down. A similar payment on a $100K home w/20% down is $485. I can’t get a rate for a $70K home.

Back to the $150K example, assuming other expenses are $250/mo, the housing nut is about $1000 a month and there are few places in the country where anything but a room in a private house is less than that.

For people to have lived to their retirement without having saved $20-$30K (which is close enough to nothing to be called nothing) they haven’t taken many steps during their many years to prepare.

[ontap]

Conservatives are all about small government and personal responsibilities and against leeching off one neighbors.

And I was referring to a moving van!!!

[Hot Tabasco]

My Dad retired in 1980 and worked continuously since 1940. His monthly SS is about $2180.

I seriously doubt that but I'm not going to argue with you............

With that being said, $80K in 1980 is the equivalent of over $200K today...........

And the retired folks we're talking about still living in the city limits did not have the schooling or job position your father had. In fact, it's quite likely they were your father's low income hourly workers.............

Apples and oranges bro.......

[Attention Surplus Disorder]

Sorry, $2180 was the combo of Mom & Dad’s SS. Mom passed, Dad now receives $1850 at age 97. I would have to boot my old computer and scan the bank stmt because my scanner doesn’t do WDOs 7.

My Dad’s father was in the Russian army, emigrated with almost nothing in the 191x period, worked as a wheel maker at Ford, started a grocery and laundry, both of which failed, own 4 multifamily buildings (including one 4-plex he built and used to leverage the purchase of the three others buildings.....this was a very very common format of rental RE in the Detroit area...and was foreclosed on every one of them during the depression. He still ended up with a rental duplex in 1965 and died, in about 1975. He lived on 8 mile road in Detroit and there is every likelihood his property is a burnt wreck today.

If you are telling me that folks who never did anything beyond what their jobs provided in an attempt to provide for their retirement....no investments, nothing like that....then they probably won’t do anything to make their retirements any easier the day they retire, either.

[Jack Hammer]

“It’s a combination of many factors,” said Bill Nowling, spokesman for Orr.

Yes - bad government, decades of Democrat policies, and outright stupidity.

And it’s all coming to a city near you, thanks to socialism.

[Svartalfiar]

So why doesn’t the state just require them to base their budget on money actually brought in? Eliminate spending money they think they might get. Make them only spend money they already have.