August 10, 2005
Cutting property taxes in Detroit is no longer an option but an absolute must, if our beloved city is to compete for middle-class families and return to its heyday.
For far too long, high levies have helped spur native sons and daughters to emigrate from Detroit to surrounding suburbs and still others to disqualify the city as a place to call home.
That stubborn trend has resulted in this sobering reality: For the first time since 1900, Detroit is not among the nation’s 10 most populous cities.
Today, according to the U.S. Census Bureau, Michigan’s largest municipality is home to 900,198 people – 25 percent fewer than the 1.2 million people who inhabited Detroit as recently as 1980. This persistent plunge continues a course that dates back to 1950, when the city was at its population zenith with more than 1.8 million residents.
Clearly, it is past time for us to stop this hemorrhaging of our population by addressing the critical issues that prompted former residents’ exodus and continue to dissuade others from living here.
One such culprit: High property taxes.
Indeed, with a homestead property tax rate of a little more than 67 mills, Detroit’s levy ranks among the highest in Michigan.
It is especially burdensome for new homeowners, who often also must wrestle with a sudden surge in their property’s taxable value because of Proposal A of 1994.
I want to cut property taxes to remove one of the monetary hindrances to families investing in Detroit. … I have a comprehensive strategy to provide such tax relief that has the backing of Detroit’s business community, namely the Greater Detroit Regional Chamber of Commerce. … And I have been asking the Michigan Legislature since last December to pass my plan to afford current and prospective Detroit homeowners immediate and meaningful tax savings.
Specifically, this bipartisan legislation aims to amend Michigan law – the Neighborhood Enterprise Zone (NEZ) Act – to include “homestead facilities” among the types of properties that can qualify for NEZ certificates. Equipped with said documentation, some new and future homeowners in Detroit could see their tax rate drop from 67 mills to 52, resulting in a significantly lower tax bill.
Consider, for example, how the owner of a home with a taxable value of, say, $200,000 would save $3,000 – the difference between a $13,400 tax bill and one for $10,400. Multiply that over the lifetime of the NEZ certificate – which under my plan could last up to 15 years – and that equals a significant savings for working-class families.
Logic dictates that reducing the cost of living in Detroit – where insurance and educational expenses can be exorbitant, too – should spawn more people putting down roots in the city and mitigate the downward spiral in our population.
That, in turn, will …
- Stabilize established neighborhoods in Detroit and breathe new life into beleaguered ones.
- Facilitate mobility of current city homeowners to better neighborhoods in Detroit – not outside the city limits.
- Promote owner occupancy over renting of homes in our city.
- Stunt sprawl, which neglects re-investment in urban core communities and, thereby, weakens cities’ tax bases.
Admittedly, cutting property taxes in and of itself is not a panacea for Detroit’s myriad of challenges. But it is part of the solution and something we must do to retain current residents and attract new ones.
It is in that spirit that I ask you to pass House Bills 4538, 4539 and 4540. No less than Detroit’s very future depends on it.
Thank you. I am happy to entertain any questions the panel might have.