April 1 Detroit residents pay the highest local
taxes on a per capita basis compared to other Michigan
municipalities, while the city collects the biggest chunk of
state shared revenue, according to an analysis released on
The report by the Citizens Research Council of Michigan, a
public policy group, comes just days after a state-appointed
emergency manager stepped in to try and resolve Detroit's fiscal
problems. The council found that Detroit's tax rates --
including property, income and other local taxes -- are high
versus other Michigan cities.
Its residents also bear a bigger tax burden as a percentage
of income than those in other large U.S. cities even as the city
struggles to stay fiscally afloat.
"They get a lot of money on a per capita basis. They just
can't control their spending," said Bettie Buss, the council's
senior research associate and the report's author.
Detroit revenue from property, income and other local taxes,
including those levied on casinos, topped $1,000 on a per capita
basis, well above other cities such as Dearborn and Ann Arbor,
which collected under $800 per resident, according to the
Detroit's state and local tax burden as a percentage of
annual family income surpassed the average for other large U.S.
cities. For example, the tax burden at the $25,000 income level
was 13.1 percent in Detroit versus an average of 12.3 percent.
Buss said that Detroit has seen a significant expansion in
deficit spending over the last two years, reaching an
accumulated $326.6 million at the end of fiscal 2012 from an
accumulated deficit of $196.6 million in fiscal 2011. The city
has had a budget deficit every year since 2003.
The report concluded that improved tax collection could help
the city's near-empty coffers, but warned the potential for
raising additional tax revenue is limited.
Buss said Detroit's chances of getting the
Republican-controlled Michigan Legislature to approve hikes to
income and other taxes "is probably somewhere around zero." The
city would need voter approval to raise its property tax levy to
the legal limit mandated by the state constitution, but Buss
said residents may be reluctant to approve such a move because
an emergency manager is running the city.
"It may be hard for voters to approve a tax increase if they
don't feel local officials are in control," she said.
Bankruptcy lawyer Kevyn Orr took the reins in Detroit as its
emergency manager a week ago after a state review process
concluded Michigan's largest city was in a financial emergency
and lacked a plan to solve its problems.
Orr has extensive powers, including the ability to reject
collective bargaining agreements, sell city assets and recommend
the city file for municipal bankruptcy.
Total revenue in Detroit has fallen sharply over the last 10
years by over $400 million or 22 percent, according to the
analysis. State revenue sharing has also been cut, although the
city, which accounts for 7 percent of the state's residents,
gets by far the biggest amount on a per capita basis -- $335 per
resident -- far more than other Michigan cities with populations
Half of Detroit's top 10 employers are governmental entities,
led by the city itself with nearly 11,400 workers, down from
20,800 in 2003, followed by the Detroit Public Schools at
10,951, the report said. Two health care systems and the federal
government round out the top five. Chrysler, the only automaker
in the group, ranks eighth, employing 4,150 workers, a drop of
more than a half from 2003.
Buss said a subsequent report by the council will examine
the expenditure side of Detroit's fiscal problem.