Tax revenue declines anticipated for Inkster in 2013-14 fiscal year

Inkster is anticipating a further decline in property tax revenue for the 2013-14 fiscal year. The city had already been dealing with persistent deficits and has been operating under a consent agreement with the state.

Inkster is a first-tier suburban community to Detroit. Usually, a primary suburb’s financial challenges will mirror those of its nearby major city just on a smaller scale. For instance, since 1950, Detroit has lost more than one-half of its total population, but still sits at more than 700,000 residents (based on 2010 U.S. Census). For many small communities the losses have, in fact, been even more dramatic. For example, Highland Park has lost more than 75 percent of its population.

That is why direct intervention is important in smaller cities and suburbs. Recently, Michigan State University Extension completed a fiscal sustainability workshop series with Inkster officials to help them deal with the city’s myriad financial issues.

Over the past 10 years, Inkster has lost approximately 5,000 residents. This is a community that was initially expected to see population growth based on the new residential development that was occurring before the housing crisis hit in 2008. It now has unfinished subdivisions, infrastructure bonds with no significant revenue, and vacant tax-reverted properties where new homes should have been constructed.

Aggravating the financial situation is the continuous decline in property tax revenue and reduced state revenue sharing. Inkster’s 2013-14 budget is anticipating a 6 percent decline in property tax revenue for the budget year starting in July. Declining budgets have resulted in furlough days for staff and a complete closure of operations on Fridays. The government has officially become a four-day operation for all but the most critical services.

Forecast from the Southeastern Michigan Council of Governments projected a decline for the region that includes Inkster in 2013. It anticipates values to be flat in 2014 and is projecting an increase in property tax revenue in 2014. Therefore, the declining property tax situation may be ending soon if forecasters are correct. Unfortunately, the changes cannot come fast enough for a city such as Inkster, which is battling increased operating costs and an active deficit reducing consent agreement with Michigan officials.

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