The Detroit News reports:
Property values dropped statewide this year for the first time in nearly five decades, signaling that Michigan could be on the verge of its next fiscal crisis: the decimation of local government budgets.
As a result of the depressed housing market, assessed values dipped 1.3 percent across the state this spring, dragged down by a 3.9 percent fall in Wayne, Oakland and Macomb counties, according to the State Tax Commission.
That means local governments that have been accustomed to annual increases of 5 percent to 6 percent in the revenue raised by property taxes will see no increase this year.
"This will be the biggest financial challenge in Michigan history," said Mark Vanderpool, city manager of Sterling Heights.
"The state is going to have to work with cities to solve this problem. Some will have to drastically cut services and quality of life will quickly erode."
Vanderpool predicted votes on millage increases across the state and "service cuts in the big three departments: police, fire and public works."
The last time property values declined statewide was in 1962, state Treasury officials said.
Generally, about 60 percent of municipalities' operating budgets are bankrolled by property taxes.
Communities know the hit is coming, and are formulating plans to cushion it.
and this eye popping quote:
Last month, Detroit had more foreclosure sales than regular home sales.
You'll want to read the whole article.Local governments were counting on higher and higher home prices.In a state like Michigan,with bad weather,and union problems: where's the future demand for ever increasing home values? High taxes and regulations eventually deflated the housing industry in Michigan.Michigan governments are going to have to learn to live with less.5% budget increases can't continue on without ever increasing home prices.
