Thursday, December 9, 2010

Biting the Bullet

Since June of this year, I have been chairing a Michigan Government Finance Officers Fiscal Stress Committee. Working with the Senate Fiscal Agency (SFA) we have been looking at debt obligations in communities around the state.  Since the SFA has yet to issue the report, I'll leave out any specifics, but talk in generalities of what I have seen and discovered in the process of data gathering.

We looked at delinquent taxes around the State.  The data was relatively easy to get from Counties we questioned and revealed some interesting facts about increasing delinquency around the state.  The Oakland Press has been printing the Oakland County foreclosures with its paper.  That section will probably be even larger next year.

We also wanted to examine the taxing capacity of local units.  Was the local community levying its full allowable millage?  Unfortunately, they is no electronic data base available to get the information. 

Was the community levying the Property Tax Administration Fee?  That fee is allowed by the State to cover the cost of assessing property and collecting taxes.  Again, that information is not readily available.  Both of these issues are part of the political will of the officials.  Are they willing to make the tough choice of instituting or increasing a levy?

Pick up the Oakland Press over the last few weeks and there are stories of communities having a hard time balancing their budgets.  Having being a previous Township Official, I have had some experience on the issue.

Back in the early 1990's, West Bloomfield's Board decided to lower the millage they were levying.  I and the Supervisor at the time opposed the reduction.  We argued that there were legacy costs (retiree health care) and outstanding bonds for which the Township could use the cash.  Well, we were in the minority.  After all, 1992 was an election year and members wanted to brag that they lowered taxes.

I got a lot of very nasty phone calls.  The fact that the average homeowner savings was less than the cost of a 'happy meal' made no difference.  One angry woman called to tell me I was forcing her out of her home.

As the years went by and the Township considered the annual levy, the lower rate stayed in place.  After 911, with the stock market imploding and values of pension accounts dropping, the Board still took no action.  And then the economy really tanked with housing values and investment earnings plummeting.

And so as we move into 2011, communities struggle to make ends meet.  Have they cut all they could?  Have they 'bitten the bullet' and levied what is necessary to be fiscally responsible?  The extra half-mil levy on my property would cost me $4.00.  I do not know what the current Township tax-base is, so I do not know what the increase would generate, but I am guessing it would be over $150,000.  And the tax administration fee would easily generate over $500,000.

Elected officials, in every community, need to be the ones making the hard decisions.  That is what they are elected to do.  To pass it off on the voters, who may reject the idea of an increase as we have already seen in some communities, is irresponsible on their part.  Besides, by the time the voters decide to reject the idea, the community may be headed for a State takeover.  And that is of no benefit to the homeowner.

The goal of any public official should not be to get re-elected, but to leave their community, State, or Country, in better shape than when they arrived.

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