Oakland County’s real estate market is worse than expected and while that’s bad news for residents there, it’s worse news for Michigan. Plummeting house values and increased foreclosures means less tax revenue collected and in turn less money for schools, roads and other critical services provided by local governments.
If the state’s most affluent county is suffering, it’s bound to be worse for those that aren’t as financially stable.
Oakland County, which expected property values to increase by 1.5 percent for the year, instead found that they’d dropped 0.39 percent through the end of September. County officials said Friday that they’ll now have to trim an additional $5.7 million from the county’s $768 million budget.
In 2009, the county expects the collective property tax value drop to force cuts of $8 million, says Robert Daddow, Oakland County deputy executive, and that’s if the declines are stopped.
The impact of reduced property values is significant because local governments and public schools rely on property taxes for the lion’s share of their budgets. If schools can’t meet their base per-student allocation through the collection of property taxes, the state must step in and fill the gap.
While there are no magic solutions to stop the real estate slide in Michigan, Oakland County’s news is a wake-up call for the rest of the state. Proactive solutions must be sought, and that starts with local and county governments getting a grip today on the magnitude of their real estate losses.
Oakland County is aware of the problem and able to adjust because it regularly monitors its finances using real estate data collected from its cities, townships and villages.
Having a centralized system allows it to see trends and troubles long before tax bills come due.
By contrast, most other counties have little idea how significant the issue is for their cities, towns and villages because they don’t get that data until the end of the year. By that point, it will be too late for many to do anything but make drastic cuts.
That’s why municipal and county officials should start planning and crunching real numbers.
Every department head at every level of government needs to audit his or her departments to find efficiencies and potential cuts.
Doing some belt tightening today might lessen the cutbacks that are needed tomorrow. If anyone is unsure of how significant the issue is or what to do about it look toward Oakland County for guidance and a warning of what’s ahead.
