Detroit Fails To Collect 20 Percent of Property Taxes Owed

Other cities routinely collect 100 percent or close to it, but 'things aren’t normal in Detroit yet'

By Evan Carter | January 26, 2018

The city of Detroit collected 80.1 percent of the property taxes it levied on its property owners during the fiscal year ending on June 30, 2017. This is the highest collection rate achieved by the city in six years, up from 78.0 percent of property taxes it reported in the previous fiscal year.

The city’s property tax collection rate is still well below the 95.1 percent rate it claimed for fiscal year 2007. In fiscal year 2013, when the city declared bankruptcy, it fell to 68.3 percent.

Detroit’s property tax collection rate is well below that of other cities in Michigan. For fiscal year 2016, Kalamazoo, Grand Rapids and Howell had a rate of nearly 100 percent, while Saginaw collected 99.0 percent of taxes levied, according to the cities’ financial records. Flint collected 81.5 percent of the property taxes it levied in fiscal year 2016.

As a result of not collecting about 22 percent of the taxes it levied in fiscal year 2016, Detroit would have lost $43.5 million except for a state law that shifts the burden. The law requires local governments to turn over their delinquent property tax accounts to a Delinquent Tax Revolving Fund run by either the county or state, in return for which they get an upfront payment of the entire amount of unpaid taxes. Detroit turns its unpaid accounts over to Wayne County, which then gets to keep all the eventual proceeds from fees, fines, interest and the eventual sale of tax-foreclosed properties.

According to Detroit’s annual financial report for fiscal year 2016, the $205.5 million in total property tax revenue the city collected made up 15 percent of its total revenue of $1.4 billion.

Detroit’s property tax collection rate is not affected by parcels of land owned by the city’s land bank or by residents who are given an exemption from paying due to hardship.

“It is important to note that collection percentages are on the rise,” Detroit’s Treasurer Christa McClellan said in a statement. “The economic downturn devastated the collection rate of the City's taxes, reaching a low in 2013.”

McClellan said the city is trying to improve its collection rate by letting residents pay their property taxes online and at kiosks in the city.

According to fiscal analyst James Hohman of the Mackinac Center for Public Policy, property tax collection rates are just one of many issues facing Detroit.

“It’s one of the many challenges facing the city and its residents, and a sign that things aren’t normal in Detroit yet,” Hohman said.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

Michigan House Votes to Protect Electronic Data

Nearly unanimous in support of prohibiting state cooperation with illegal federal searches and seizures

By Kahryn Riley | January 25, 2018

The Michigan House of Representatives recently passed a bill to protect personal electronic data, with nearly unanimous support.

The House Bill 4430 would “prohibit state agencies, local governments and their employees from assisting or providing material support to a federal agency in collecting electronic data or metadata concerning any person, except with a warrant (or under a legally recognized exception to a warrant) or with an individual’s informed consent.”

As people shift more and more of their personal information to digital devices and virtual storage, it is critical that electronic data and metadata receive the same constitutional privacy protection as homes, persons and any other personal property.

The need for protection has become greater in light of the apparent increase in federal surveillance. This measure, then, is an important step toward ensuring that Michiganders’ state government is not complicit in the illegal search or seizure of electronic personal information.

The bill’s definition of electronic data includes “information related to an electronic communication,” such as the contents, sender and recipients of an electronic communication, and the location or identity of the sender or recipients. “Metadata” would refer to details that describe the history or tracking of an electronic document, things that are generally not contained in the document’s text.

The United States Supreme Court has repeatedly held that people are protected by the Fourth Amendment from unwarranted intrusions on their privacy by the government. It is well-established in law that these privacy protections may only be breached when the government has probable cause supported by a warrant issued by an objective magistrate. This measure would clarify that Michiganders have a property right to their electronic data and an expectation of privacy when they create and share it. Protecting that right, in this case, means setting a policy that agents of our state government will not assist federal agencies when they seek to violate it through illegal searches and seizures.