Political moves have drawn some financial data to the surface about Detroit as the city’s long spiral downward continues. Detroit’s Financial Review Team, appointed by Michigan Governor Rick Snyder, filed its report after a study of the ailing city’s finances.
The review team essentially gave the city an “F” and pointed to multiple instances where actual spending did not match budgeted spending (see Table 3 in the Report). Part of this is because Detroit public officials had very little control of the budget process and the city has substantial deficits and declining revenues. However, one bright spot in the numbers is how city’s expenditures have been declining. You can see this in the chart below:
These numbers don’t look like the city has problems, but they also don’t tell the entire story. There are other expenses that have created deficits. There have been bond offerings to fill the deficits, which have increased annual debt service to about $150 million per year. But operationally a lot of credit must be given to Detroit Mayor Dave Bing for tightening the fiscal ship.
The Detroit News ran a groundbreaking story on Thursday, “Half of Detroit property owners don’t pay taxes,” that found that $246 million in property taxes went unpaid last year. From the story (emphasis mine):
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.