Detroit — Nearly half of the owners of Detroit’s 305,000 properties failed to pay their tax bills last year, exacerbating a punishing cycle of declining revenues and diminished services for a city in a financial crisis, according to a Detroit News analysis of government records.
The News reviewed more than 200,000 pages of tax documents and found that 47 percent of the city’s taxable parcels are delinquent on their 2011 bills. Some $246.5 million in taxes and fees went uncollected, about half of which was due Detroit and the rest to other entities, including Wayne County, Detroit Public Schools and the library.
Delinquency is so pervasive that 77 blocks had only one owner who paid taxes last year, The News found. Many of those who don’t pay question why they should in a city that struggles to light its streets or keep police on them.
“Why pay taxes?” asked Fred Phillips, who owes more than $2,600 on his home on an east-side block where five owners paid 2011 taxes. “Why should I send them taxes when they aren’t supplying services? It is sickening. … Every time I see the tax bill come, I think about the times we called and nobody came.”
This week, a state-appointed review team concluded the city can’t fix its financial problems. Any emergency manager appointed by Gov. Rick Snyder would have to grapple with a broken property tax system. The city’s share of uncollected taxes last year was $131 million — an amount equal to 12 percent of Detroit’s general fund budget.
A four-month News investigation found:
Detroit has the highest property taxes among big cities nationwide and relies on assessments that are seriously inflated. Many houses are assessed at more than 10 times their market price, according to new research from two Michigan professors.
Detroit relies on a shrinking sliver of businesses and neighborhoods to pay the bulk of the bills. The three casinos, General Motors Corp., DTE Energy, Chrysler Group LLC and Marathon Petroleum Corp. paid 19 percent of collected property taxes. Five city neighborhoods, most of them downtown and along the river, paid 15 percent of the city’s taxes and represent only 2 percent of the city’s total parcels. In all, only 41 percent of the city’s parcels produced tax revenues last year because of delinquencies and a large number of tax-exempt land.
Detroit’s delinquencies are so pervasive that some owners have been allowed to keep their property even if they don’t pay taxes. Wayne County treasury officials are so overwhelmed by foreclosures that they ignored about 40,000 delinquent Detroit properties that should have been seized last year and said they will look the other way on about 36,000 this year.
Lou Schimmel, Pontiac’s emergency financial manager, said Detroit needs to fix its property tax system — and fast.
“It’s broken,” Schimmel said. “It has to be fixed. You need the revenue.”
“It’s just plain simple. Your revenues are falling so fast you can’t afford to provide basic services.”
Frustrated by the system
Leola Wesley questions what services she gets for her taxes. Bill Lee pays out of his civic duty. Both are frustrated by the system.
Wesley paid $810 last year for her snug home near Chalmers. She was the only resident on her 32-parcel block who paid.
“It makes me not want to pay,” said Wesley, 85, who would move from her home of more than 20 years if she could afford it. “If nobody else is paying, why should I?”
A streetlight on her corner is out. Potholes are deep. She lives next to two vacant lots and rarely sees police patrol her block.
“There are so many empty houses, there’s nobody to pay,” Wesley said. “I’d like to know what is going to be the solution.”