How broke is Detroit? A few charts illustrate...

[sehender1]

Thought people in this forum would be interested in this. These charts come from the McKinsey report. they show how deeply revenue has plummeted, over several years..
For me, this is one of the things we're nto really talking much about during the city's financial crisis. If you don't boost revenue... cutting and restructuring will just not be enough..

http://www.freep.com/article/2011121...yssey=nav|head

[SWMAP]

I was interested to read this this morning. I live in Detroit and have been concerned about the many people who still live here and don't pay their property taxes. You can look up addresses on the Wayne County website and be alarmed. If you don't pay and no one bids at auction, you can buy your home back for $500 and let the cycle of not paying property taxes start again.

It's not just that people have left. Its also that people here don't have any incentive to pay.

I agree that cutting will not be enough. And some people on this forum seem to believe that an EFM will make the City run better. But the EFM just will cut and sell. How will we get street lights or better police protection? That's not the EFM job, is it?

[Flintoid]

I feel like this was the biggest "No duh" article ever written. In other breaking news from the Free Press, water is wet and the sun is hot.

[old guy]

I agree that cutting will not be enough. And some people on this forum seem to believe that an EFM will make the City run better. But the EFM just will cut and sell. How will we get street lights or better police protection? That's not the EFM job, is it?

If the Governor confirms the determination of a financial emergency, the Governor is required to declare the unit of local government in receivership and appoint an Emergency Manager who serves at the pleasure of the Governor.

Upon being placed in receivership, the governing body and chief administrative officer of the unit of local government are prohibited from exercising any of their powers of offices without written approval of the Emergency Manager, and their compensation and benefits are eliminated.

Within 45 days of appointment, an Emergency Manager must develop a written financial and operating plan.In addition to other powers, an Emergency Manager may reject, modify, or terminate collective bargaining agreements, recommend consolidation or dissolution of units of local government, and recommend bankruptcy proceedings.

[[From the Department of Treasury)

Not an ideal situation. A lot of slashing and cutting without compromise or compassion.

[313WX]

Exactly.

Detroit, as is, is essentially done and over with no matter which realistic options we take.

This crossroad Detroit is facing is really like asking which way you want to die.

[canuck]

You can look up addresses on the Wayne County website and be alarmed. If you don't pay and no one bids at auction, you can buy your home back for $500 and let the cycle of not paying property taxes start again.

It's not just that people have left. Its also that people here don't have any incentive to pay.

That's an interesting fact, a part of the equation, but is that a something that really happens a lot in Detroit?

[Detroitnerd]

The comments section on the Freep has some of the nastiest, most poorly thought out writing I've seen. Makes me grateful Lowell keeps up this site for our edification -- with very few of the yahoos.

[Richard]

So 14% of the general fund comes from collected property taxes where as in the other cities it is 60% , with that info and other collected here and there 26% of the residents are supporting the rest ,so the question is , maybe the reason taxes are so high is because you need to collect more from the ones that are paying to make up the difference from those who are not.

Population loss or not it is kinda hard to hit the highway towing a plot of land behind the u haul

EFM and or bankruptsy aside it is still not known how much fraud and theft going on and the most in your face changes that could take place right now are not even being addressed ,I am leaning more towards a massive propaganda show then anything else.

[Modusvivendi]

Wow. Those figures are really quite sobering, especially the 87% drop in value of home sales and the 80% or so drop in retail establishments. With figures like that, there really just might not be enough of an economic base for the city to generate the revenues needed to avoid insolvency. Honestly, Detroit would probably need a massive Marshall plan style bailout or investment to become a thriving city again.

I'm not from Detroit and, indeed, have never been there, but when I read about its troubles and see that nothing is being done on a national level to save a once great city it really makes me mad. I know this is cliche to say, but why the hell did we spend hundreds of billions of dollars in Iraq and Afghanistan to rebuild them when we need it in the USA? So long as we are going to spend that kind of money I want it spent to fix up American cities like Detroit. Many people unfortunately don't seem to have a problem spending money to blow a hole in the ground in Afghanistan, but if we use it to rebuild Detroit, well, that's evil socialism!

I wish our country had its priorities right. If we were willing to spend in Detroit money currently being wasted in two wars, imagine what the city would be like. Not perfect, but nicer, better functioning and with more jobs. Quite sad what our priorities are.

[Detroitnerd]

Wow. Those figures are really quite sobering, especially the 87% drop in value of home sales and the 80% or so drop in retail establishments. With figures like that, there really just might not be enough of an economic base for the city to generate the revenues needed to avoid insolvency. Honestly, Detroit would probably need a massive Marshall plan style bailout or investment to become a thriving city again.

Nope. The bailout is for the criminals who profited off the real estate bubble and crashed home prices nationwide. Trillions and trillions of dollars for them, and not an extra penny for the people and cities who have to pick up the pieces. And no regulation for the criminals who are getting away with it, so they can do it again and again ...

[Flintoid]

Ok comments like the city is basically choosing "how it is gonna die" is showing how this discussion is losing perspective. Lets look at population loss [[since peak levels) for some other Rust Belt Cities and major US cities.

Cleveland- Lost 56.7% of population from a peak of over 900,000
Youngstown- Lost 60.6% of population from peak of around 170,000
Buffalo- Lost 55% of population from peak of around 580,000
Flint- Lost 48% of population from peak of around 196,000
Probably the most surprising statistic is Chicago[[in order to continue giving us perspective).
Chicago- Lost 26% of population from peak of around 3.6 million.

In perspective, Detroit has lost approximately 61% of its population, not a number shockingly higher than the rust belt cities listed. Now what is going on in the city is a terrible problem, but acting as though it is happening here and only here on this level is simply false. It is important to have perspective in this issue and I feel that we have lost it. Now lets get back to focusing on how we can fix this issue, not dramatize it beyond the terrible problem that it already is.

Source: 2010 US Census

[Flintoid]

Also, in respect to the drop in real estate values, this can be mostly attributed to a national decline in home values due to the mortgage market crash. Average home prices nationwide fell by almost 34% from 2006 to 2009. Factor in the Michigan economy and the situation the city is in, and a more dramatic decline is expected. However, the city has recently seen a rise in home prices, early signs of the stabilization of the housing market. The graph shown by the free press leads one to believe that the city has never had home prices this low, which is a lie. Remember when we were freaking out because the city had an average home price of $7,500 [[December of 2009)? As of December 11 of this year, the average home in Detroit is selling for $21,000. That is a threefold increase since the bottom in 2009 and much higher than the Free Press shows. Now are these numbers good? God no, they are deplorable. But giving this issue perspective is something that has been lacking. Armageddon may sell papers, but it does not foster educated discussion about the issue.

http://www.altosresearch.com/researc...-estate-market

[lilpup]

A major question is, of those not paying property taxes, how many are financially capable of doing so if tax collection were vigorously enforced? I have little pity for blatant scofflaws but also realize that some are just incapable of paying.

Also, what's the trend for average resident age in the city? I want to see vulnerable old folks protected as much as possible from the fallout of this mess and forthcoming changes.

[313WX]

I'll bet some of them have stopped paying taxes because they figure "what's the point" right about now. In this group, many of them are also weighing their options to leave the city.

The police still show up on time, the buses still won't show up on time, half the streetlights will still be out, the schools will still be crap, etc. It's almost taxation without representation.

[lilpup]

It's almost taxation without representation.

...if taxes were actually being paid, that is...

Now let's see what percentage of the general fund expenditures are covered by non-resident income tax and resident income tax.

[313WX]

...if taxes were actually being paid, that is...

I meant for those who are/were the right thing and paying taxes.

[corktownyuppie]

...if taxes were actually being paid, that is...

Now let's see what percentage of the general fund expenditures are covered by non-resident income tax and resident income tax.

Data from a few years ago showed non-resident income tax responsible for 1/3 of the income tax revenue of the entire city, which is CRAZY when you consider that there are 800,000 residents...but you don't have 400,000 commuting from the suburbs into downtown every day.

I don't have a problem with commuters paying income tax at all. But while you're talking about taxation without representation...well....

[Novine]

"For me, this is one of the things we're nto really talking much about during the city's financial crisis. If you don't boost revenue... cutting and restructuring will just not be enough.. "

This from the same Stephen Henderson who not that long ago was pushing the idea here on DY that Detroit could save itself by dumping the city income tax? Apparently after dumping the city income tax, the Trickle Down Angels were supposed to pass over the city dumping bags of money.

[Richard]

I have never really understood the whole live in the suburbs work in the city pay an extra tax aspect,nobody in the suburbs supports anything in the city?

Maybe on the tax aspect , retirees at a reduced rate until the property is sold then it would revert to the normal rate or if they downsize in sq ft and stay within city limits they can carry that currant rate , if they sell to a married son or daughter who then makes that their primary they can carry the retired rate for five years.

Anybody else that has listed primary can make 1/4 payments to lesson the lump sum aspect.

Investment or speculation properties if you cannot afford to pay the taxes after buying the property say goodbye to it .

IF you lose a property to tax sale you cannot purchase from the sale for 5 years without prior approval from a hearing officer , get caught having your sister putting it in her name to circumvent then big problems.

anything else?

[corktownyuppie]

"For me, this is one of the things we're nto really talking much about during the city's financial crisis. If you don't boost revenue... cutting and restructuring will just not be enough.. "

This from the same Stephen Henderson who not that long ago was pushing the idea here on DY that Detroit could save itself by dumping the city income tax? Apparently after dumping the city income tax, the Trickle Down Angels were supposed to pass over the city dumping bags of money.

I have to ask...what's with the anti- trickle down? I mean I understand that it's not a cure-all, and I'm certainly not advocating lowering taxes for households earning $500,000 per year. But you have to admit...some more wealthy people bringing business, bringing spending, bringing capital investments, and bringing jobs into the city is probably something Detroit's short on, no?

[lilpup]

If they provide investment that creates jobs for Detroiters, that's fine. Unfortunately the usual scenario is that the money brings its own people along and the immediate locals don't benefit.

[corktownyuppie]

If they provide investment that creates jobs for Detroiters, that's fine. Unfortunately the usual scenario is that the money brings its own people along and the immediate locals don't benefit.

I understand that sentiment. The question that follows is: "Who is a Detroiter?" If two doctors move from Farmington Hills into Midtown to be closer to work, and they decide to open up a new practice on Cass Avenue, hire 2 commuting college students and a few residents from Woodbridge, that counts as Detroiters, right?

When Slow's expands, and they hire 2 guys from Dearborn to bartend, and those guys end up buying or renting somewhere in Corktown, they're Detroiters, too, right? Now you've gained 6 more people who will start paying income tax, two of whom are making 4x the Detroit average, all of whom are either paying property tax or renting from someone else who is.

Because I think a lot of this investment from Gilbert et al is resulting in more money for Detroiters and Detroit businesses. But it's not Bobby Ferguson and his crew. And, unfortunately, it's not the poor and disadvantaged.

But Detroit can't take care of the poor without a center source of wealth to do it. For decades taht was the auto companies. It's not anymore. So any effort to make Detroit stronger will have to involve bringing wealthy people in from outside and keeping the already existing wealthy from leaving.

[Richard]

Thats a failure on the city side,most cities elsewhere tax credits are based on how many direct local new hires are produced @ 35k and above starting salary but it is also on the city to encourage an educated work force so they have something to bring to the table also,or it is easier to locate near your employable force if it is in the city or suburbs.

[Novine]

"I have to ask...what's with the anti- trickle down? I mean I understand that it's not a cure-all, and I'm certainly not advocating lowering taxes for households earning $500,000 per year. But you have to admit...some more wealthy people bringing business, bringing spending, bringing capital investments, and bringing jobs into the city is probably something Detroit's short on, no?"

Not only is it not a cure-all, there's little evidence that it's a cure-anything. We've had a national experiment for the past 10 years where the top of the income scale has enjoyed a huge reduction in taxes based on the argument that that wealth would flow down to the people at the bottom of the income ladder. To finance those tax cuts and a couple of wars, we've amassed massive amounts of debt while simultaneously scaling back investment in infrastructure, in our communities, etc. After this ten year experiment, where are we today?

Likewise, the state conducted an experiment with tax-free zones in Detroit. The wealthy had, and still have, an opportunity to move into Detroit and set up a home and business, in locations where they were largely exempt from state and local taxes. How did that turn out? How many of the wealthy took advantage of the NEZs and similar situations to invest in Detroit? Is Detroit better off today than it was when the state mandated cuts in the city income tax and undercut the city's tax base through the establishment of NEZs and Renaissance Zones?

If you're going to argue in favor of trickle-down economics, shouldn't you be able to back it up with some evidence that it actually works? We don't need more policies that help the wealthy get even wealthier. We need policies that ensure that we have working cities where all residents can benefit and prosper, not just those at the top of the income ladder.

[Dexlin]

Bing has one good idea in all of this, and that's farming out tax collection to the state, but Snyder hasn't shown any real interest in this. Even with property values as far down as they are, there is absolutely no reason in which the only real and consipicous thing of monetary value in the city is the actual land that only property taxes should only make up 14% of the general fund. To me, farming out collections is one of the first things that should be done, and, like, right now.

BTW, we'd all known that the cost of housing had plummeted, but to see a number put to it over 6 years [[down 87%) is just mind-blowing. To imagine a time when the average housing price in the city was nearly $100,000 seems like many years ago, when all it was was back in 2003. Prices are crawling back up, but painfully slow.