Collecting Taxes Among Detroit's Financial Troubles

Transcript

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It's MORNING EDITION from NPR News. Good morning. I'm David Greene.

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And I'm Renee Montagne. Detroit is broke. But a federal judge is holding hearings to determine whether Detroit is broke enough to qualify for bankruptcy protection. The court is examining whether the city has done everything possible to put more money in its coffers. Quinn Klinefelter of member station WDET reports one thing is certain - Detroit is struggling to bring into its coffers tax revenue.

QUINN KLINEFELTER, BYLINE: In a hallway outside the tax assessor's office at Detroit's City Hall, Lerand Jacobs fidgets on a bench. He just got a tax bill from the city. But he's out of work and has been for years.

LERAND JACOBS: Oh, yeah. I've received letters, you know, that I owe back taxes and things like that, but hey, you know, you can't get water out of a rock. Pt it that way.

KLINEFELTER: Jacobs wonders whether there's really any point to paying city taxes with Detroit poised to go bankrupt.

JACOBS: You can't get any services anymore, you know, whether it be water, it be tree removal, you know, police department, fire department. You know, I mean, it's like this - you're on your own.

KLINEFELTER: Delivering services has grown increasingly difficult as Detroit's tax base eroded. The city lost a quarter of its population during the last decade alone. In 2010, Detroit Mayor Dave Bing launched the first in a series of tax amnesty and collection efforts to convince those left in the city to pay up.

MAYOR DAVE BING: We are owed a lot of money. We got some outstanding receivables. We went to the outside and we got a collection firm, quite frankly, that went out and collected. We thought we were going to get three million and we got almost seven million.

KLINEFELTER: But it has not been enough. A recent investigation by the Detroit News found in 2011 only about half of property taxes in the city were paid in full. But officials who deal with Detroit's tax problems say the city also shoulders blame.

DURENE BROWN: These are people that have to stand in line to beg the city to collect their money.

KLINEFELTER: Ombudsman Durene Brown says many Detroiters are taxed on property they no longer own, or never receive a tax bill at all. With Detroit forcing workers to take an unpaid day off every two weeks, Brown says she gets thousands of calls from residents trying to pay their taxes, like a downtown restaurant owner.

BROWN: He was furious. The finance office was closed because it was a furlough day. He left a check for us for $25,000. We're not even a revenue-generating department.

KLINEFELTER: Police say some inside City Hall are working Detroit's antiquated tax collection system to their own advantage. About $300,000 disappeared over a five year period from city hall cash registers, where residents pay taxes. When Michigan's governor appointed an emergency manager over Detroit's finances, Kevyn Orr found an income tax system that has been grossly mismanaged for many years.

KEVYN ORR: What shocked me was the tolerance for this behavior for decades. This has been going on for a very long time, and to say the least it is at best unorthodox. I know a lot of people are outraged at my appointment. My take - I wish there had been a lot more outrage over the past 10, 20 years.

KLINEFELTER: At a Detroit bus stop, Betty Waters says she and many others here know that financial calamity has been brewing for decades.

BETTY WATERS: This has been going on since 1960. It's not just beginning. With the different mayors we had, they tried to cover it up but they couldn't do it anymore.

KLINEFELTER: Waters says the lack of tax revenue trickles down to her.

WATERS: It was a time when the streets was clean. You didn't see no snow. Everything was clean off the street. Now you come down here, you have to have a cane to hold you up to keep you from falling with the snow on the sidewalk.

KLINEFELTER: Emergency manager Orr says Detroit needs more than $80 million just to fix its IT department - including the computerized tax collection system — and he wants to pump millions more into improving public services over the next decade. But Orr won't be organizing that. It's Detroit's future leaders who will have to collect taxes and provide services residents believe are worth paying for. For NPR News, I'm Quinn Klinefelter in Detroit. Transcript provided by NPR, Copyright NPR.