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.

[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.

[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.

[Wesley Mouch]

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.

What does the death of the municipal union called Detroit matter. What matters is that a method for the current residents to obtain critical public services. Police, Fire, Animal Control.

The cost of these services must be paid. This is just a political decision.

So the thing called Detroit dies. It will actual enable the residents to prosper, unburdened by the debt and bad decision to turn government into a jobs machine, not a service machine.

Unless you're a retiree who expects to continue receiving better benefits than the residents you served, you'll do better when the city-entity dies.

[313WX]

What does the death of the municipal union called Detroit matter. What matters is that a method for the current residents to obtain critical public services. Police, Fire, Animal Control.

The cost of these services must be paid. This is just a political decision.

So the thing called Detroit dies. It will actual enable the residents to prosper, unburdened by the debt and bad decision to turn government into a jobs machine, not a service machine.

Unless you're a retiree who expects to continue receiving better benefits than the residents you served, you'll do better when the city-entity dies.

It matters because more people will just leave the city when faced with these austerity measures [[as if there's anything else to cut in terms of services for Detroit citizens).

It matters because Detroit will no longer be a big city. That means the big city amenities many around here get here for cheap [[relatively speaking) already will likely be history. That will mean more of our younger population will continue to flee the region for other big cities.

[Wesley Mouch]

It matters because more people will just leave the city when faced with these austerity measures [[as if there's anything else to cut in terms of services for Detroit citizens).

It matters because Detroit will no longer be a big city. That means the big city amenities many around here get here for cheap [[relatively speaking) already will likely be history. That will mean more of our younger population will continue to flee the region for other big cities.

I prefer to think that the death of the dysfunctional municipal unit currently hanging around the neck of 'Detroit' doesn't deliver big-city amenities and is itself the main impediment to reducing the bleeding.

Mercy killing is ethical.

[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

[beachboy]

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

Based on how many home sales? Are these "fire sales" or substantial improvement in the sale of new homes?

From: http://mjperry.blogspot.com/2011_09_11_archive.html









:

And the trend seems to be downward nationally [[from http://www.numbernomics.com/nomicsnotes/?p=2064):



And here's the Case-Shiller data, from: http://www.housingviews.com/wp-conte...Release-21.pdf

Fortunately, employment seems to be growing in "clobbered metros" such as Detroit:
from: http://insights.truliablog.com/



How much of the uptick in Detroit home prices is due to "fire sale" activity, versus more fundamental support from increased employment? Or some other cause?

[iheartthed]

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

There are some nuances to those cities and their lost populations. I think there are really three tiers of Midwest Rust Belt cities: one tier which includes cities like Buffalo, Pittsburgh, Youngstown and the other Pennsylvania steel towns, another tier which includes the larger population centers like Detroit, Cleveland, St. Louis, finally, the third tier is Chicago itself. The cities in the first group are located in metro areas that have had consistently declining regional populations since the 1950s. The cities in the second group have centered around central cities that have consistently lost population since the 1950s, while not necessarily the regions themselves.

The first tier really doesn't need much explaining. They were all cities that had economies centered around steel. Domestic steel industry implodes and... You get it.

The second tier is where things get a little murky. If you measure from 1950 through 2010 the growth of the metropolitan area populations for the Midwest Rust Belt, Cleveland [[+97%) performs the best out of any of those cities followed by St. Louis [[+67%) and Detroit [[+52%). They ALL outperform Chicago [[+41%) -- Chicago was in fact the worst performing large metro area for population growth in the Midwest between 1950 - 2010 [[Pitts and Buffalo excluded). The irony is that the central cities of those cities have all posted population declines far greater than Chicago's -- about 30% for Chicago versus 60 - 65% and above for the tier twos. The other irony is that all tier twos made the bulk of their gains between 1950 and 1970. The population growth in the metropolitan areas of Detroit, Cleveland and St. Louis basically shut off post 1970.

Why does Chicago deserve its own tier? Well Chicago's bust doesn't closely mirror any of the other groups. Chicago's lull between 1950 and 1990 is probably closely related to the tier one group because Chicago was a major steel production center like Pittsburgh, Buffalo, etc. Chicago grew by 25% during this period of time, Buffalo grew by 4% and Pittsburgh by 7%, so all were significantly below the population gains in tier two. In just pure numbers both Detroit and Cleveland posted larger absolute population gains than Chicago between 1950 - 1990 [[+1.8Million for Detroit, +1.39Million for Cleveland and +1.37Million for Chicago).

But in another twist, Chicago's growth between 1990 - 2010 [[+1.45Million) far eclipses Detroit's [[+0.03Million), Cleveland's [[+0.02Million). Chicago added more people in the 20 year period from 1990 - 2010 as it did during the 40 year period of 1950 - 1990. Chicago's 1990 - 2010 growth mirrors the northeast m Chicago's absolute number of new residents was on par with the major metros in the northeast, which all added over 1 million people each with the exception of the Philadelphia region.

Used this link for the population stats: http://www.demographia.com/dm-usmet-fr50.htm

[Bham1982]

Chicago's 1990 - 2010 growth mirrors the northeast m Chicago's absolute number of new residents was on par with the major metros in the northeast, which all added over 1 million people each with the exception of the Philadelphia region.

I agree with your entire post except for this part.

It's true that Metro Chicago's growth rate since 1990 has been roughly proportional to the growth rates in the Northeast, but the growth distribution is radically different.

Metro Detroit, for that matter, had roughly proportional growth rates to the Northeast until about 4 years ago. But, again, I think you're missing an important distinction.

In NYC, the core city and surrounding inner suburbs are driving much of the growth. There's much more limited exurban growth than in other parts of the country. In contrast, Chicago's core city and inner suburbs are emptying out, and the exurban fringe is providing the growth.

Chicago's growth since 1990 very closely resembles the growth patterns of Detroit, St. Louis, Cleveland, and other Midwest cities. Yes, the metro rate of growth is also comparable to cities in the Northeast, but, looking deeper, the spatial distribution of growth is purely Midwest.

[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.

[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?