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Shrink the Suburbs, Too?

The Detroit Free Press editorial page pushes an interesting idea this morning...

Michigan municipalities can't afford business as usual if they hope to avoid even deeper cuts in core services like police and fire and further asset losses, as well as higher local taxes and user fees. Barring a revolutionary new way to finance local government, sharing functions such as police and fire protection offers the best hope of maintaining core municipal services.

Southeast Michigan alone already has hundreds, maybe thousands, of examples of shared-service agreements and mutual aid pacts. But the region's more than 230 units of government will have to do a lot more. The financial pinch provides an ongoing incentive to reorganize government.

Many of metro Detroit's surrounding communities have tried large-scale combination of services before, of course. But the plans have too often faltered due to everything from arguments about funding to union contracts to many locals' belief that "home rule" inherently means a city/township/village has its own police and fire departments, its own library system. Still, many places could find themselves going broke trying to maintain this standard.

Which makes me wonder about a possible next step: Should some of our suburban communities consider merging? A lot of them have more schools and services than they can afford, and the area's steady population loss and declining property values aren't going to suddenly make those things cheaper. So do, say, Utica, Sterling Heights and Macomb Township really need to remain separate municipalities?

Oh, I know it would be the mother of all headaches to pull off this kind of consolidation, at least in some parts of our tri-county area. And this certainly isn't the Freep's "revolutionary new way" to underwrite local government. But given how high stakes are these days, is it worth consideration? I mean, wouldn't even a throbbing municipal migraine be better than slowly bleeding to death?

I'm not staking out a hard position on this, but just kicking around the idea. What're your thoughts? Does consolidating select suburban communities in metro Detroit make sense? Or do logistics, politics and/or economics make this idea impossible to pull off?

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  • 1

    Metro Indianapolis and Louisville crossed this tricky tightrope in more sweeping -- and controversial -- ways.
    In '69, Indy Mayor Richard Lugar got fellow Republicans in the Legislature to pass a city-county consolidation called Unigov. Key features:
    * County-wide mayor; 29 city-county council members.
    * Joint administration, planning and zoning, parks, and infrastructure development were consolidated.
    * Schools, cops, fire depts. excluded. (Police forces later merged.
    * 4 cities/large towns excluded, while allowed to vote for regional mayor.
    Louisville later followed a similar script, merging county-wide administration, planning and zoning, parks, cops, fire, infrastructure. (Schools consolidated earlier.)
    One side effect, obviously, was dilution of minorities' voting power and transfers of political power from the old central city to suburban counties.
    "Changes in local governance are often about power, not bureaucratic efficiency or effectiveness," two U. of L'ville scholars write in a 2004 report in Urban Affairs Review []. ". . . Elites often respond with hostility to attempts to distinguish between power and better government.”
    The professors also argue that mergers don't improve efficiency or bring cost or tax savings, Chicago blogger Aaron Renn wrote last month at 'Urbanophile.' [].
    Still seems worth kicking around here with a focus on neighboring suburbs only. Birmingham and Bloomfield Hills gingerly discussed a combo public safety department a year or two ago, but soon dropped that as too hot to touch.

  • 2

    There IS a way to finance local government and the idea has been around for years. Rather than base the local property tax on something as merucial as "market value" it can and should be based on Land Use. Under such as system, each zoning classification would be assessed an amount per square foot of lot area, i.e., $1.00/ s.f. for single family residential, and another for retail, another for industrial, etc. rather than an amount based on some assessor's best estimate of what a property is woth on the open market if someone would sell it.

    The logic of a Land Use based tax is simple and it is this. Each proerty requires a given amount of services such as garbage pick up, underground sewer and water service, street construction and maintenance, police patrols, fire department personell and equipment as well as the "shared" services like libraries, rec centers, administration, etc. Services to individual properties are a function of the area they have to cover to deliver those services...that's what this "downsizing" discussion os about at it's the more area of the city a property owner owns it makes sense that the more taxes they should pay. A simple assessment based on area of a given site would do that.

    A Land Use based tax would also be constant, It would not fluctuate because of market conditions which is the case today and is why cities are having a hard time collecting enough revenue to pay for services.

    Further is would eliminate the built-in disparrity in the amount property owners pay for tha same service as is now the case. Currently, one homeowner may pay one amount while another homeowner a block away pays considerably less or more simply because the assessor estimated two different "market values" for the two properties. Yet the same garbage truck that goes to one house goes to the other, the same cop that drives by one drives by the other, the same sewer and water pipes that run by one run by the other, the same street that runs in front of one runs in front of the other, and both homeowners can go to the same library or rec center, etc.

    A land use based tax would also encourage a more economic use of land in the development of cities. Since a bigger lot would be assssed a larger tax it would make sense for developers to use the land more efficiently or, if people prefer the current "sprawl" paradigm they would have to pay for it.

    The biggest advantage would be the predictability of such an arrangement. Cities would know exactly how much revenue they would be getting and taxpayers would know exactly how much they would be paying. There would be no more surprises as there are now when yearly assessments are made. Changes in the rates for eache type of zoning classification would have to be vvoted on publicly by the governing body and each property owner could easily calculate the impact of that change. No more mythical "$100,000 property would only increase $36.00 baloney" that is essentially meaningless.

    Merely co-joining suburbs into lager suburbs and maintaining a stupi, convoluted taxing system makes no sense. We need to look at ways to make it predictable and fair.

  • 3

    Wait, I thought the idea was to get all the people from the suburbs to move into the City. Has that changed?

  • 4

    I tend to think that we ought to shrink a few heads here... that would provide more space.

  • 5

    Napper1's land use tax proposal makes a lot of sense to me. Detroit needs a steady, predictable source of tax revenue and land owners need an accurate, fair and reliable tax bill. Maybe Detroit City Councilwoman JoAnn Watson's $68 tax bill would be more in line with the $6,000 tax bill paid by some of her neighbors. It might also force slum landlords and owners of vacant lots to pay their fair share or leave town altogether.

    • 5.1

      It's not just Detroit that needs a predictable and fair tax system. Every muncipality across the State is facing a situation where revenues based on market values are falling at the same time costs are rising due to previous contract negotiations or other factors. All municipalities are therefore forced to cut services which in some cases can help accelerate the market value even more....who wants to buy a home or a business in a place with crappy services, shuttered libraries and rec centers, poorly maintained parks, pothole filled roads, etc.?

      Tax revenues should be completely separated from market value. If we've learned nothing in the past two years we should have learned that the myth about how house values always rise and a house is a good investment is false. Hopefully municipalities have learned that they cannot continue to assume a continuous rise in values and thus in revenues.

      This land use base tax is not a new idea. Downtowns across Michigan often form a DDA or some other form of merchants group and assess themselves what is essentially a tax to pay for things like public parking facilities, streetscape improvements, banners, advertising, and numerous other things. It is often done on the basis of the land use classification and the area of each parcel of land.

      In any municipality every parcel of land is recorded in the plats and each is described in great detail including the total area for each plat. The Master Plan, which is required for every municipality under Stae law, determines the allowable land use and can easily be overlayed to determine what can be built on each lot and thus, what services are required for each. I don't think it would take much to determine a formula of assessments for each type of land use and come up with a dollar/square foot property tax based on the relative cost of delivering services to those properties.

      Jeff is right in asking why a vacant property pays virtually nothing when the street still runs in front of it, the cops still drive by it, the garbage truck drives by on the way to the occupied lot, and the guy that owns the empty lot can still go to the rec center or library as a llegal property owner. Currently, the silly tax system we labor under rewards someone for purposely decreasing the market value of a property either through neglect or simply leaving it vacant. Even if or when property values return to pre-crash levels this situation will remain the same.

      Likewise with the inherent disparity built in to the current system. Under the ill conceived Headley Amendment, one property owner can pay significantly more or less than his next door neighbor even though both receive exactly the same services. A land use based tax would eliminate that and we'd all pay our fair share.

      I hope somewhere in this state someone in municipal government is looking at the root cause of the revenue mess we all find ourselves in and has the guts to look into it in detail. I first heard of this idea back in an Urban Studies class at UD in the 1970's when Detroit was rewriting its charter. he idea wasn't even considered seriously then....wonder what might have happened if it was.

  • 6

    I have been a advocate for one state school district, one state police department, regional municipal exchanges based upon a fixed land usage fee/tax

    Great Idea by napper1

  • 7

    We do a lot of talking on this site and a lot of good ideas and comments are posted but little if anything comes to pass. I am certainly not an expert on taxation or politics but the land use tax that napper1 has detailed so well is one idea that could benefit Detroit and the entire state of Michigan. It would be a shame if it ends here.

    I would hope that this TIME blog has a higher purpose than just providing a vent for our frustrations. It should be a vehicle for action. I don't see any problems with napper1's tax proposal but, as I said, I am no expert. Assuming it is as good as I think it is, how do we take it to the next level?

    Napper1, Darrel Dawsey, anyone?

  • 8

    I agree with Jeff's post..I get slammed a lot on this site for having an alternative opinion yet good ideas deserve to be acknowledged.....

  • 10

    For the idea to work there would need to be a sizable, positive correlation between the tax that is imposed and the level of services that are received. Would there be issues of equity? What about a small, cheap house that sits on a large lot versus a luxury, urban condos sitting on a tiny patch? The most direct tax is a user fee that is roughly proportional to the services that are received (e.g., the water bill). If you use more water, your bill is higher. Local governments certainly need a stable source of revenue, and the property tax used to provide that, but no longer, at least in the short run. My guess is that the crisis will be over in a few years when the local economy recovers somewhat and property values stabilize. Local governments will muddle through this crisis (e.g., hiring freezes, reduce capital expenditures, cut some services, impose new user fees, cut overtime, contract out, shared service agreements) but in the end will want to stick with the devil they know--the property tax--rather than the ones they don't.

    • 10.1

      Unfortunately, jstrate is probably right. Municipal governments will just muddle through the current crisis applying bandaids where necessary and ignore the real problem. This recession can be a turning point if our leadership takes the long view of things rather than the immediate, political, short term view.

      It is even more unfortunate because this situation will surely repeat itself or simply linger for years to come. The idea of ever increasing real estate prices and the resultant ever increasing "market value" which our tax system is based on is a post WWII paradigm which, though it has lasted for 50+ years, has finally come to an end. It simply cannot be counted on anymore to produce the revenues necessary to provide the kinds of services that we've come to expect.. Our leaders need to ask themselves if they will ask us taxpayers to do with less or will they be creative enough to look for other ways to raise revenues to keep the services we have.

      I am not a computer expert but I suspect that it may be possible to actually run a simulation of a Land Use based tax system on one of our smaller communities to examine what might result. Virtually every property in a city is recorded in a data base as is the underlying zoning classification for each. It seems to me it wouldn't take much effort to compile the data and then apply a formula....or several trial that data to determine a cost per square foot assessment. I think something like this could be done by a team of students at a local University as a semester project if a city doesn't have the resources to devote to it. The idea isn't so far fetched as it may seem....ever play SimCity?

      Perhaps someone like Robin Boyle, professor of Urban Planning at Wayne State might be interested in taking on the idea.

  • 11

    Arriving to this discussion very very late. On the off chance that anyone is paying attention, here goes...

    1. Why has no one mentioned the (rather extremely) regressive nature of the suggested land use tax? It is like the "flat tax" idea in that respect -- championed by the likes of Steve Forbes, whose ilk would no doubt benefit tremendously from it. The owner of a $2 million house on a modest lot might wind up paying the same, or only slightly more, than the owner (just barely surviving) of a dilapidated hovel on a generous-sized lot.

    2. Someone wrote:
    "Jeff is right in asking why a vacant property pays virtually nothing when the street still runs in front of it, the cops still drive by it, the garbage truck drives by on the way to the occupied lot, and the guy that owns the empty lot can still go to the rec center or library as a llegal property owner."

    Except that:
    a) the physical street itself represents almost entirely sunk costs; maintenance is relatively minor
    b) cops driving by it, likewise, is a very minor expense; the cost of cops is for OCCUPIED dwellings that actually make calls for help from police
    c) same for garbage truck; no cost to drive by
    d) no water or sewer use by vacant lot
    e) etc.

    Vacant property incurs almost zero services costs, so why should it be taxed the same as occupied lots?

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