As if the people of Flint haven’t already been drowning in worries since the city’s water crisis began, the Detroit Free Press today publishes a highly misleading story that says residents will be hit with higher tax bills.
The Free Press story is based on a basic lack of understanding of Michigan’s property tax system.
It is true that, because new property assessments reflect market values that existed before the crisis, assessments are going up. But Proposal A of 1994 offers a protective cap that limits property tax increases to the rate of inflation.
And the inflation rate that applies toward the Taxable Value of Michigan property in 2016 is a meager 0.003 percent – three-tenths of 1 percent.
In other words, a homeowner with a house valued at $20,000 (not uncommon in Flint) will pay an additional $30 a year in property taxes this year. Those who pay through a bank-arranged escrow account will pay less than $3 more per month.
One would think the Free Press editors and reporters would know how a tax system that has been in place for 22 years functions. Instead, they offer an example of a man whose home assessment rose in value by $900, “a 7 percent increase.” In reality, that man’s annual tax bill will rise by $2.70.
Clearly, a tax hike of any kind sounds like a slap in the face to Flint residents after all the government dysfunction they have endured at the local, state and federal level. But an increase of $3 a year or $3 a month represents a minor distraction for a city with so many public health and safety issues at hand.
In addition, Flint homeowners should be careful what they wish for. Those appealing their tax assessments at the city Board of Review must realize that the only goal they may accomplish is a revised government document that shows their house is worth less than previously reported.
When plummeting property values anticipated due to the lead-tainted water kick in, the Flint housing market will likely fall to new lows. But that impact will be phased in because, as the Freep story explains in an opaque manner, the Flint assessor relies upon a 2-year market study that produces gradual changes in assessed values.
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One More Item:
Here’s the true worry in the Freep story – for Flint and for all of us.
The new inflation rate certified by the state Treasury Department is the lowest since 2010, when the Michigan economy was reeling. That year, prices actually dropped by three-tenths of a percent – the kind of reduction seen only during deep recessions.
So, the three-tenths of a percent increase in 2016 should stand as a troubling figure for the entire state of Michigan. It represents a sure sign that our economy is struggling, perhaps more than previously realized.
