John Ransom

It’s fitting that on the day Washington, DC is cutting the budget by an agreement that they really didn’t mean, that the city of Detroit will finally get what’s it has needed for a long time: declaration of fiscal disaster.

Michigan’s Rick Snyder has appointed an emergency city manager to do for Detroit what Obama, Biden, the UAW, GM, Chrysler, the city’s council and mayor have not been able to even with a $80 billion bailout of the automotive industry.

“Snyder’s decision comes after a state review team report concluded last week that Detroit is in a financial emergency that it cannot fix on its own,” reports the Detroit Free Press. “The report detailed $14 billion in long-term bond debt and retiree pension and health benefits the city owes in addition to a $327-million accumulated deficit Detroit has been unable to tame. That figure could inflate by $100 million by July.”

The city has been powerless to stop plunging tax revenues. According to the Detroit News almost half of the city’s homeowners have not been able to pay property taxes:

“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.”

The article notes that delinquency is so bad that in one stretch of 77 blocks only one owner had paid their taxes. 

And it’s not just that residents can’t pay. It’s that many of the taxpayers say they won’t pay taxes for services they aren’t getting. 

More from the Detroit News:

"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."

Like America’s long decline into fiscal stupidity, Detroit’s problems didn’t have their start in the fiscal crisis of 2008. A combination union greed, corporate gluttony, short-sighted thinking from politicians at the federal, state and local level have combined to create a soup of fiscal insolvency. 


John Ransom

John Ransom is the Finance Editor for Townhall Finance.
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