Arbor Update

Ann Arbor Area Community News

Regional real estate slips big

18. August 2006 • Murph
Email this article

The Detroit News describes metro home prices “tumbling” 8% in the second quarter of 2006, for the biggest quarterly decrease in median sale value since 1989.

The DetNews doesn’t include Washtenaw County, but, fortunately, local realtor Todd Waller blogs some statistics for Ann Arbor. His market statistics page shows Ann Arbor to be, if only barely, the strongest of the submarkets he includes statistics for. His monthly charts for July show sales down and supply up this year, with year-to-date average sale price down 3.8% from 2005.



  1. This leads me to a question about another GIS project I’m thinking about. Does the county have a good feed or data source for sales, including addresses? Does the Board of Realtors? I’d like to map where in Ann Arbor and Ypsi things are selling (and at what price and appreciation), but I’m wondering about the best source to use.


       —Dale    Aug. 18 '06 - 07:34PM    #
  2. Dale, you mean something like this from this website? Looks like he uses data from the Ann Arbor Board of Realtors. His contour maps are pretty good, but unfortunately leave out chunks of the city (like my neighborhood for example). The city has some rudimentary GIS stuff here, but I don’t know how useful any of this info might be to you.


       —Juliew    Aug. 18 '06 - 07:55PM    #
  3. Those look good. I’d like to take it farther, ie which areas have appreciated fastest (and how has that changed), etc. He combines BOR with County data; I wonder if there’s a County resource that will take care of all of it (without having to hand enter things into a spreadsheet).


       —Dale    Aug. 18 '06 - 08:57PM    #
  4. Presumably this is the sort of thing you might ask the Registrar of Deeds about.

    ...........Whoa, sorry. I was just lost in a little daydream about having an RSS feed coming out of the County Registrar’s office. I’m back now.


       —Murph    Aug. 18 '06 - 09:03PM    #
  5. It’s been Register of Deeds (not “Registrar”) since territorial days, as ungrammatical as that may sound.

    What exactly do you have in mind for this? We had 82,000 deed-like documents filed last year, and will probably get about 75,000 this year. Many of these are mortgages or discharges of mortgages.

    There’s an index online now—check it out. Names need not be specified—you can get a list for a time period by specifying the time period. Buying copies costs, of course (a service used mostly by title companies), but you can come to the office and look at documents for free.

    I suppose an RSS feed could be worked up for updates to the index, but it might take a lot of doing, and interest in it is probably limited.

    We also have an Excel spreadsheet with 2006 stats available. I only recently got this posted online; it will eventually be expanded into a more useful time series.


       —Larry Kestenbaum    Aug. 19 '06 - 04:33AM    #
  6. I guess the real estate bubble has burst in MI and many other states.

    Harold Hunter Jr, Esq.

    Hunter Law Office, PLLC
    464 Eastway Drive
    Charlotte, NC 28205


       —Harold Hunter Jr, Esq    Aug. 19 '06 - 02:44PM    #
  7. Harold, not to harsh the bubble bursting crowd’s buzz, but Michigan has been ahead of the rest of the nation in this slide for at least nine months to a year.

    The rest of the nation’s decline looks more precipitous partly because the coast’s median house value is higher than our own. This view is exacerbated by how quickly the median values in those areas rose.

    Arbor Update – Thanks for the nod! Greatly appreciated.


       —Todd Waller    Aug. 19 '06 - 02:57PM    #
  8. I love the contour maps!

    I have a question on terminology. Contours showing equal barometric pressure are called isobars. Contours showing equal temperature are called isotherms.

    What are contours showing equal property values/selling prices called? Iso-what?


       —David Cahill    Aug. 20 '06 - 01:26PM    #
  9. This raises other sorts of questions. Will city and school property tax revenues be declining soon? How big a hole might this blow in local government and school-system budgets, and how soon?

    And does anyone know the impact of Headlee in the face of declining real-estate values? How will this affect both individual parcels and also the millage ‘rollbacks’? Will the previous automatic millage rollbacks get automatically reversed (thereby protecting local govt revenues even as property values decline)?


       —mw    Aug. 21 '06 - 01:12PM    #
  10. David: isobucks? isoquid? isoprice-os?

    mw: just reflexively, I expect that any slump we’re seeing now is not nearly enough to put home values below 1994 levels. We’ve probably got plenty of pent-up value increase that Proposal A has kept in the pipeline, only releasing a little value increase at a time, such that I’d think taxable value might increase even as “real” value comes back down, until they meet.

    I could be totally wrong, though.


       —Murph    Aug. 21 '06 - 02:09PM    #
  11. I expect that any slump we’re seeing now is not nearly enough to put home values below 1994 levels. We’ve probably got plenty of pent-up value increase that Proposal A has kept in the pipeline, only releasing a little value increase at a time, such that I’d think taxable value might increase even as “real” value comes back down, until they meet.

    For Headlee, the relevant date is 1978, but of course, most homes have been re-sold at some point since then. As I understand it, there are two issues. One is on individual parcels. If the market value of a parcel is actually declining but the Headlee-limited taxable value is still below the SEV, does the taxable value continue to increase even when the market value and SEV are declining?

    And then there’s the millage rollback mechanism—my understanding is that local millages are automatically rolled back when tax revenues increased faster than inflation. Are those automatic rollbacks then reversed when tax revenues increase more slowly than inflation (or even decline)?


       —mw    Aug. 21 '06 - 03:14PM    #
  12. Since some would say that “property is theft”, I was thinking of isoklepts.


       —David Cahill    Aug. 21 '06 - 11:12PM    #
  13. A question and a comment: There are lots of teardowns and MAJOR renovations in AA Hills. Like a vacant lot suddenly grows a $900,000 house. Or a ranch disappears to make room for a Mcmansion. Sure these events much increase tax revenue. Also, every home sale brings the taxable value up to the SEV.

    When we bought our house, the SEV and taxable value was more than what we paid. I did a little resesarch and discovered that city had at some point undervalued older colonials, which were selling at three times the SEV. And had overvalued contemporary homes, smaller homes, ranches. It’s particularly bad in AA Hills and similar neighborhoods, where the most expensive homes pay a taxes on a small fraction of their value, while homes in other neighborhoods are taxed at a much greater rate.

    I filed a complaint with the state, and the city assessor was eventually told to apply new valuation formulas to AA homes to straighten this out.


       —Just a homeowner    Aug. 22 '06 - 11:57AM    #
  14. “It’s particularly bad in AA Hills and similar neighborhoods, where the most expensive homes pay a taxes on a small fraction of their value, while homes in other neighborhoods are taxed at a much greater rate.”

    Thanks for this ancecdote. This makes me feel much better as I have not and do not understand Michigan’s medieval tax assessment mathods. Add that to the Headlee amendment, and I swear, it’s amazes me that this State has not gone bankrupt.


       —todd    Aug. 22 '06 - 01:24PM    #
  15. The “pop up” experieced when one buys a new home creates situations where a homeowner who has been in the neighborhood for many years may be paying $4,000 per year in taxes while their new neighbor who has just moved in is paying $12,000 for the same city services, education system, library, etc. This is a result of Proposal A, pushed through under the Engler administration. Not only is it unfair to new arrivals it creates a huge disincentive to moving within or from outside of our state. Along with a slow economy in Michigan, Proposal A is a major contributor to the real estate slump. It is also hurting the economy by discouraging relocation.


       —Dustin    Aug. 22 '06 - 01:49PM    #
  16. No, it’s more than that. Look at the “pop-ups” versus the sales prices and you’ll soon discover that some people popup closer to market value than others. The more expensive the house, the less likely the Popup is close to market. Except for newly built homes.


       —Just a homeowner    Aug. 22 '06 - 02:54PM    #
  17. Still, if you bought your house 10 years ago for say, $200,000 and it is now worth $400,000, you will still be paying taxes based on a taxable value that has only gone up at the rate of inflation or less. If you buy the house next door for $400,000 you will be paying on the taxable value very close to the purchase price. Is this fair? Does it encourage people to relocate for a new job? Does it encourage economic activity?


       —Dustin    Aug. 22 '06 - 03:13PM    #
  18. “Are those automatic rollbacks then reversed when tax revenues increase more slowly than inflation (or even decline)?”

    No, local governments consider this a problem with Headlee but the anti-tax groups have fought any effort to change the law in this regard.

    “Is this fair?”

    Probably not but it’s what we voted for when we approved Proposal A. Was it fair to seniors and those on fixed incomes to get taxed out of their homes pre-Prop A just because property values and assessments skyrocketed in an area? Probably not. So we made a choice that benefits people who have been paying taxes in a community for a long time (until they want to sell their home). It’s not as if the effect is unknown. The exact same phenomenom occured in California under Prop 13. There’s no perfect system of property taxation.


       —John Q.    Aug. 22 '06 - 03:57PM    #
  19. And, though people refused to take this seriously when they voted for Proposal A, the cap applies to ALL property, including corporate headquarters, shopping malls, industrial parks, etc., etc.

    That vacant motel property out on Jackson Road near Weber’s had a taxable value of $250,000 (per the Ann Arbor News) when it recently sold for $5 million. That suggests the tax bill was 1/5 of what it would have been under the old system—and the proportion falls further every year.

    Okay, so it is finally changing ownership, and the taxable value will now be adjusted back up to something like $2.5 million. But had it stayed indefinitely under the same corporate ownership, as many commercial properties do, it would still be capped.


       —Larry Kestenbaum    Aug. 23 '06 - 02:23AM    #
  20. Er, I mean, 1/10.


       —Larry Kestenbaum    Aug. 23 '06 - 06:17AM    #
  21. Since this has turned into some discussion regarding taxes, I feel that it would help concerned citizens to take a look at an old letter to A2 news editor –

    http://www.a2buzz.org/city_financial.html

    Also, one should note that Washtenaw county revenue/per citizen increased 24% from 2001 to 2004.

    Michigan state spending increased 127% from 1990-2004. (Detroit Free Press 4/30/2006)

    It is time to hold tax and spend Democrats and borrow and spend Republicans accountable for creating this mess in Michigan.

    Srini


       —Srini    Aug. 23 '06 - 08:31AM    #
  22. Srini (& DeVos & the SOS prop. people):

    It is very true that governmental spending has increased in Mich. over the past decade, but it’s not as if we have a wealth of new social programs as a result (most programs in education, transportation, etc. have been deeply cut during the past decades).

    A large part (but definitely not all) of the “tax-and-spend” tax increases are due to extension of existing services (education, transportation, utilities, etc.) to cover the sprawl development that has largely characterized development in Michigan over the past several decades.

    Michigan has some of the most lax land use policies in the nation, and we have spent most of the past several decades paving over much of the green space between Detroit and Flint/Detroit and Lansing/Detroit and Toledo/insert your suburb or township here instead of using the infrastructure that was already in place within the older cities of the area. It’s very expensive to service and maintain low-density cities/suburbs that spread over huge geographical areas

    My point with all of this is that it isn’t solely about “holding legislators accountable” for spending…if we want to bring this situation under control we as citizens also need to be examining our own lifestyles to see if we are doing everything within our own power to live efficiently/sustain-ably/etc.


       —kena    Aug. 23 '06 - 11:52AM    #
  23. Kena, agreed.

    Srini, those numbers are hugely misleading unless reduced to constant dollars per capita. In particular, Washtenaw County’s population (and need for services) is growing rapidly—up 40,000 in the 1990s alone.

    Back in 1978, the Headlee amendment limited the state of Michigan’s tax revenue to a defined maximum percentage of the state economy. This limitation was seen, at the time, as something that would hamper many state government activities. But since then, state taxes and spending have fallen to billions of dollars LESS than that limit.


       —Larry Kestenbaum    Aug. 23 '06 - 12:11PM    #
  24. “Also, one should note that Washtenaw county revenue/per citizen increased 24% from 2001 to 2004.”

    I find a lot of this rhetoric deceptive. The vast majority of revenue in local and county government comes from local property taxes. We know that thanks to Proposal A, most units of government are not reaping huge windfalls from increases in the value of property. So if revenues are increasing, it reflects one of two things – new growth or voter approved tax increases. As Larry noted, new growth comes with new expenses. If the revenues are coming from voter approved tax increases, then you need to blame the voters for approving them if you don’t agree with them.

    As for this:

    “Michigan state spending increased 127% from 1990-2004. (Detroit Free Press 4/30/2006)”

    Why didn’t you include 2005 and 2006? Or why didn’t you break it down further per 5 year span? Because it would undercut your point?

    Anyone who has followed state government knows what really happened. In the early 90s, the state struggled financially and state spending did the same. As the economy boomed in the late 90s, so did state spending with the Republicans and Engler raising spending and cutting taxes. With the Dot Bomb collapse of the economy, followed by 9/11, followed by the auto industry implosion, state spending has once again come back to more reasonable levels. But we can’t reveal that John Engler was a profligate spender so we misleadingly lump all of the years together to hide that fact.


       —John Q.    Aug. 23 '06 - 02:12PM    #
  25. This Headlee amendment is the single dumbest tax law I’ve ever seen. Larry’s K.’s example is maddening.

    I want to tip my hat to Larry for being the guy who explained this mess to me in the first place.

    I’ve never heard of an environment that is more unfriendly to new businesses than Michigan. I don’t know how this law has stayed on the books for as long as it has. It makes zero sense, and Michigan has to be losing billions of dollars from all this undervalued land/property.


       —todd    Aug. 23 '06 - 02:26PM    #
  26. Oh, and I forgot to ask Larry:

    If the intent of this whole Headless thing is to keep old people from being taxed out of their homes, then why doesn’t the State just limit it to homes?


       —todd    Aug. 23 '06 - 02:36PM    #
  27. Why, Todd! Are you suggesting that maybe Headlee and Proposal A were really ploys by the sociopathic radical anti-tax right , intended to primarily help big property owners – the Ilitches and the Taubmans and so forth – and to set up a Norquist-style execution of government? Are you implying that the fluff about keeping old people in their homes was just a smokescreen to gain the sympathies of the electorate who hadn’t done the math?

    Them’s some awfully strong charges you’re making, Todd…


       —Murph    Aug. 23 '06 - 02:55PM    #
  28. I can no longer remember the talking points of the ‘Headless’ campaign with any detailed clarity from the era of its successful passage. Here’s a humble reconstruction, based on random scraps of surviving memory, which echoes Murph’s comment:

    Caps on property tax increases = financial protection for retired seniors and others on limited or fixed incomes who own their homes = strong, primary selling point to entice favorable votes, especially from middle-class property owners = the public face of the Headless campaign = the outside of a Trojan horse

    Caps also applying to tax increases on commercial property = a long-term bonanza for commercial land owners big & small = the understated driving force behind the campaign to make the state Headless [insert media blame here for general underreporting of this aspect] = the inside of a Trojan horse


       —hale    Aug. 23 '06 - 03:28PM    #
  29. Actually, Headlee didn’t limit increases in property values. Under Headlee, property values could shoot through the roof. But in theory, local governments were supposed to roll back taxes to help offset that increase (that’s the often mentioned Headlee rollback). As noted before, this isn’t a two-way street. When the tax base decreases, you don’t undo the Headlee rollback. Once it’s in place, it never goes back up absent voter approval. This “glitch” in the law was deliberately adopted by the Legislature and likely will never be fixed.

    It was Proposal A that introduced the idea of a capped property value. The truth is that Proposal A has worked in terms of capping property values for seniors, etc. But it doesn’t make any sense that it applies to commercial property.


       —John Q.    Aug. 23 '06 - 04:06PM    #
  30. If you have any interest in the arcane details of Michigan tax law, the history of how the laws have changed and how the laws work, check out the CRC web site here:

    http://crcmich.org/TaxOutline/index.html

    Well-written, researched and generally understandable to people who don’t spend their days immersed in the tax code.


       —John Q.    Aug. 23 '06 - 04:11PM    #
  31. Why Headlee won’t be changed:

    http://www.michamber.com/ba/ibtax1.asp


       —John Q.    Aug. 23 '06 - 04:18PM    #
  32. The popup on expensive but older homes doesn’t work. There’s a house on Devonshire that sold in 1993 for $935,000. The city had its “popup value”, which is supposed to represent 50% of the market value, as $388,888.


       —Just a homeowner    Aug. 23 '06 - 07:16PM    #
  33. I don’t believe anyone is reading the links provided in my earlier post. Please look at the link below, courtesy Ann Arbor news Aug 18,2006 –

    http://tinyurl.com/flr4g

    “Proposal A is not the problem. This was documented in a June 2005 study prepared by state Sen. Valde Garcia, R-Howell, titled “Public Schools Education Funding – How School Education Funding Works.’’ In Garcia’s study, he documents that in the 10 years following the 1994 passage of Proposal A, total education funding in Michigan has increased by 41 percent vs. inflation of 27 percent. Thus, funding increases have outpaced inflation by over 50 percent. For the first eight years following Proposal A (1995-2003), per-pupil funding increased at 2.5 times the rate of inflation.”

    The other link provided earlier will also help.

    http://www.a2buzz.org/city_financial.html

    Michigan state has a spending problem, not a revenue problem.

    Srini


       —Srini    Aug. 24 '06 - 12:09AM    #
  34. “Michigan state has a spending problem, not a revenue problem.”

    Well, you can argue that if you wish, but the reason that this Prop A thing is stupid (in addition to lost revenues) is that it screws over new arrivals/young homeowners/new businesses.

    Essentially, people who buy new homes/property/businesses are paying for all those services and other goodies at an exponential rate compared to a native home/business-owner who has been in the State for a few decades or more. This is not a smart taxing strategy for a State that is desperate for new blood/business. (Tax abatements, anyone?).

    What a great Chamber of Commerce motto: “Come to Michigan because we sure as heck don’t want to pay for this stuff!”

    Mix this is with the absurd ban on city sales taxes (with so many cities with seasonal economies?????), and you get a State economy that wants to pretend that it’s still 1944.


       —todd    Aug. 24 '06 - 01:39AM    #
  35. Srini:
    I do agree in spirit with the first article that you link to.
    Michigan does have a problem with too many duplicative units of government.
    The article talks about schools…it’s right…there are way too many school districts in proportion to the amount of pupils we have. It’s time to talk consolidation so we can cut back on administrative costs (tough for me to say because I work for a governmental unit).

    The same goes for fire, police, transit systems, utilities, legislative bodies, etc.
    The problem is, nobody in Michigan wants to fix this problem by consolidating services because of two words: home rule.
    Nobody wants to give up control of their little fiefdoms (does Washtenaw County really need twenty-some units of government to handle 300,000+ people?) to work together on issues.
    We’d rather talk about how evil taxes are instead.

    We’re probably going to end up slashing state taxes again while keeping the same inefficient structures in place instead of trying to actually fix the problem by regionally consolidating units of government, schools, transit systems, police, fire, etc. If we don’t do something to break this cycle, it will continue on and on and Michigan’s services will go further down the tubes.

    However, Michigan also has a revenue problem. The feds have been continually cutting back funding in all areas to the states, who are passing those cuts along to local governments. I’d buy your argument (from the second article you link to) that we need to negotiate tougher public employee contracts (i.e. less benefits) if the government on the federal level maintained a balanced budget that wasn’t financed with debt to other nations (and we stopped creating these deficits by enacting tax policies on the state and federal levels that are targeted primarily toward the wealthy). There are more than enough federal revenues available each year to fund all of our domestic programs on all levels quite adequately…we just choose to spend most of our money on bombs and “security” instead.

    Maybe it’s time to deal with these problems by moving away from the “tax-and-spend” rhetoric?


       —kena    Aug. 24 '06 - 01:50AM    #
  36. Kena,

    Thanks for the researched response.

    I am clearly holding “borrow and spend republicans” and “tax and spend democrats” accountable for the mess. I am hoping that concerned citizens do the same and hold their legislators feet to the fire whether they wear a “republican” or a “democrat” hat. In my view, “not all of them” but many of these so called public servants (politicians, both at the state and federal level) are just a bunch of crooks lining their and their cronies’ pockets.

    Srini


       —Srini    Aug. 24 '06 - 02:41AM    #
  37. “I don’t believe anyone is reading the links provided in my earlier post.”

    Yes, I read the post. My response – “Get Real”. OK, that probably sounds harsh but letters like those are from people who live in a political fantasyworld where they craft alternative universes of how they want the world to operate, not how it should operate. The idea that every school district should be 20,000 students in size is not only politically unpalatable to the vast majority of residents, it’s also probably not as efficient as the letter writer would tend to believe. Do you really think that the UP would be better served by a district or two stretching across the entire peninsula? That such a structure would be more cost-effective than the small, community-oriented districts that serve the towns of the UP?

    Also, I love to read about how we need to be slashing benefits for public employees and teachers. It’s claimed that they enjoy benefits that far outstrip their counterparts in the private sector. In some cases, that’s undoubtably true. But advocates for this often ignore that public sector employees often are paid less than their counterparts in the private sector. These employees take less pay in exchange for a more generous benefits package. You slash those benefits and those employees will be demanding a pay that matches their private sector counterparts. There go your costs savings.


       —John Q.    Aug. 24 '06 - 03:33AM    #
  38. Was there a marijuana festival in ann arbor recently ? May be some people are smoking something or just the air in Ann Arbor is filled with it!

    Get real – I am quoting from Ann Arbor news 3/16/2003 “Then, when Berlin negotiated the early retirement program with the unions, he allowed retirees to use their highest hourly rate to determine their salary to be used for pension calculations. It meant employees who worked as little as one day at a higher rate could use that amount as a full year’s salary.

    “When I heard about it, I said, ‘You got to be kidding me,’ ” pension board member Bob Amburgey later said. “I’ll give you that it is a weird way to do calculations.”

    That stipulation allowed several assistant fire chiefs to boost their pensions through short-term promotions before retiring. For instance, Thomas Schmid saw his annual pension rise to $133,816 from $100,783 after his promotion to interim fire chief, which lasted only 50 days.

    Former Democratic City Council Member Chris Kolb blames the labor woes on two things: the Human Resources Department and an adversarial relationship between the unions and upper management”.

    If you want please read the full article, or are you one of those who benefitted from the one day fire chief position which gave 100,000+ pensions?

    http://tinyurl.com/rgx26

    Srini


       —Srini    Aug. 24 '06 - 09:49AM    #
  39. JonhQ: A fantasy world of regionally consolidated governments and regionally consolidated schools? Get real yourself!

    In the 1990s Ontario consolidated redundant townships and cities to form larger regional entities. Cities are now geographically larger, but there are no longer hundreds of units of government managing handfuls of people in some areas.
    Apparently Canada is Fantasyland according to your analysis!

    Many states throughout this country use consolidated school systems which cover larger geographic areas (mostly the high schools are consolidated into larger districts, with elementaries remaining more localized). More Fantasylands?

    Nobody is saying that the entire UP has to be consolidated into one district. Taking a one-size fits all approach to the entire state will benefit no one.

    Let’s take a more relevant example for potential consolidation than the extreme UP example you give:
    Washtenaw County currently has about five or six public transit providers.
    Does it make sense to have to pay for multiple bus garages, maintenance facilities, executive directors, office facilities, etc?
    Does it make sense for a rider to have to contact several different agencies to coordinate a trip from one area of the county to another?
    Does it make sense to fund transit in Washtenaw through disparate sources with no coordination or consistency (so service levels vary drastically from one area to another – even within the heavily populated areas of the county)?

    We’re not talking about getting rid of drivers or buses. The county could be divided into operating regions under a centralized authority with many of the employees of current providers managing the divisions. Yes, some administrative people may probably be laid off, but the result would be a much more efficient entity that actually provided a uniform service over a more expanded area than is currently served.

    Why can’t/shouldn’t something like this be done for various governmental entities in Michigan?


       —kena    Aug. 24 '06 - 02:03PM    #
  40. “Why can’t/shouldn’t something like this be done for various governmental entities in Michigan?”

    Kena – It’s not a question of whether it SHOULD be done in Michigan, it’s a question of whether it WILL be done in Michigan. I’m a big proponent of regionalization for all of the reasons that you outlined. I’m sure I could provide you with dozens of examples of consolidation in other states that could be role models for Michigan.

    But we don’t live in Ontario or those other states. We live in Michigan where strong home rule is enshrined in the state constitution and has a long history in the state. There’s little political support in Lansing to change the constitution or state laws to encourage and allow consolidation of schools or municipalities. Nor does there appear to be support among voters for such changes. Even when the benefits are obvious and voters could see money in their pocket from tax savings from consolidation, they almost always vote against it.

    You can count on one hand the number of successful consolidations of local governments or school districts in Michigan in the last 25 – 30 years. The only successful mergers of local government that I can recall is the City of Battle Creek/Battle Creek Township annexation in 1983 and the Iron River consolidation in 2000. Many other mergers have been consistently rejected by voters across the state.

    My intent is not to bash the benefits of consolidation. But people who point to consolidation as “the solution” to the fiscal woes of local governments and schools aren’t offering a politically viable solution. You might as well propose mining for moon rocks as both have about an equal chance of success. The art of politics is being realistic about what can be achieved and in my view, consolidation proponents, while well-intentioned, aren’t very politically realistic about what can be achieved.


       —John Q.    Aug. 24 '06 - 02:51PM    #
  41. “If you want please read the full article, or are you one of those who benefitted from the one day fire chief position which gave 100,000+ pensions?”

    If I was enjoying a $100,000+ pension, I would have better things to do with my day, thanks.

    As far as your examples, they are the exception to the rule. I would never defend them. But other than making for good newspaper headlines, they don’t represent the reality for the vast majority of public sector employees any more than the massive golden parachutes given to CEOs of failed corporations represent the reality for most private sector employees. Should I start posting all of the news articles about CEOs fleecing their companies for retirement as a justification for private companies to slash the pay, benefits and retirement of their regular employees?


       —John Q.    Aug. 24 '06 - 02:57PM    #
  42. Srini,

    It is refreshing to read your remarks on this blog, I agree with everything you said, and I am proud to say I voted for the Headlee Amendment. Municipal governments need to rein in their spending – taxpayers incomes can’t keep up with their spending habits. Regardless of the law, tax revenues have increased much faster than inflation.

    Another thing that needs to be changed is the fact that many public employees (such as the sheriffs) can retire after 20 years. At 40 years old, they can get another job in a new municipality. Often it only takes ten years to be completely vested in the new municipality and they can then receive 2 full pensions. At 50 years old, they may even obtain a 3rd full pension for an additional 10 years. To add further insult, many work less than 10 years and “buy into” the additional years to qualify for the full pension. Police and Fire chiefs often play musical chairs with their positions. They work long hours and take comp time in lieu of overtime so that when they retire all their comp time is paid at the highest possible salary. By no means is double or triple dipping the exception to the rule.

    New businesses shop communities until they get long term tax abatements. Ypsi city repeatedly gives out abatements on their consent agenda without any discussion whatsoever. Then the company moves or folds before the abatement expires. Now, in spite of the highest tax rate in the county, they want to add an income tax. They have the AA News writing editorials promoting “regionalization” of their services so that other communities that don’t even use their services can be forced to help pay. (e.g. County taxes for bus services in communities where there is no bus service and no demand.) How many millions does it take to manage 3.5 sq miles??

    Enough is enough!


       —Karen Luck    Aug. 24 '06 - 04:11PM    #
  43. Hey, Karen—I’d like to hear some perfectly illustrative quotes from non-existent 18th century Scottish legal scholars to understand your point better.


       —Dale    Aug. 24 '06 - 05:24PM    #
  44. “By no means is double or triple dipping the exception to the rule.”

    Again, those cases are indefensible but they are not the rule. Police and Fire Chiefs are a small percentage of municipal employees.

    As far as the early retirement age for police and fire fighters, the argument is that you don’t want 60 year olds driving squad cars or trying to pull you out of a burning building. If there’s not an incentive for people to leave, some will stay around long past the time that it is safe for them to be serving in those positions.


       —John Q.    Aug. 24 '06 - 06:18PM    #
  45. Karen—
    Are you a beneficiary of subsidized township policing?


       —Young OWSider    Aug. 24 '06 - 06:36PM    #
  46. Young OWSider,
    I pay for policing and subsidize giant jails.

    John Q.,
    The double/triple dipping applies to administrators as well.

    Dale,
    Funny how a non-existant quote has thousands of hits on the internet.


       —Karen Luck    Aug. 24 '06 - 07:15PM    #
  47. “The double/triple dipping applies to administrators as well.”

    Administrators represent what percentage of public sector employees?

    As I said before, does the fact that some CEOs crash-and-burn private corporations and still get rewarded with huge compensation packages provide a justification for slashing the pay, benefits and retirements of private sector employees? That’s the equivalent argument. I await your response.


       —John Q.    Aug. 24 '06 - 08:11PM    #
  48. Dale himself has a certain, uh, way with things that don’t actually exist .


       —David Boyle    Aug. 24 '06 - 08:12PM    #
  49. If I remember correctly from the last time Karen commented on a transit-related thread, she now lives in a township (ypsi?).

    If that’s correct Karen, you’re benefiting from my subsidization of your roads, police, fire, parks, etc. through the county and state (as i live in a city, which has to pay much larger percentages of the costs of those services than townships do).

    Karen…we all benefit from what you call “subsidization.” I pay for roads, airports, seaports, schools, universities, etc. that i will probably never use because by building these pieces up we make the entire system stronger.

    Every time you drive your personal car on a road and your trip time is reduced because a bus has taken 60 cars out of congestion, it’s fair to say that you’re indirectly benefiting from people using that transit system. Yet by living in one of the townships that surrounds AA, you’re only paying a fraction of what I do to benefit from that system. Sounds like a subsidization of your lifestyle choice to me…


       —kena    Aug. 24 '06 - 08:28PM    #
  50. John Q
    Golden parachutes for CEO’s of private corporation are the concern of the shareholders. It’s not coming directly from the private trough or directly through my pocketbook. I don’t like the practice either, but unless I am a shareholder I don’t have the means to effect change. I do have input concerning public officials. Your point is a fallacy. Try telling the cop who pulls you over for speeding that the guy in the next car was speeding too.

    Kena
    This was discussed in a previous link. Urban environments require more roads, the higher traffic wears out the roads quicker, thus higher costs. High density urban environments have far greater rates of crime and therefore police services cost more. I believe the sheriffs back up city police far more often than they ever come near my neighborhood. I think it’s equitable for public services to be charged to taxpayers in proportion to their use of those services. I now have a county commisioner who will help restore justice to the system. I didn’t initiate use of the term subsidize, I was responding to Young OWSider’s use of the term. The buses don’t run in my neighborhood or on the roads I drive on. Everybody in my neighborhood drives cars. There is no congestion. If there were 60 more cars on the road it would still be fine. I don’t personally benefit from busses. I pay equally as you for roads, airports, schools, universities. (I’m not sure how I pay for seaports?) There are many things that I gladly pay for that don’t directly benefit me and many things I pay for which I do receive benefits from. Where do you draw the limit? Why stop at the county line? Why not get the residents of Ohio to help the city of Ypsi pay for the bus service between Ypsi and Ann Arbor? They benefit as much as I do.

    I just want local municipalities to spend tax dollars wisely showing concern for the financial struggles of many in their communities. There are numerous examples of misuse of tax dollars at every level of government. Look at the system we have for state representatives. They get a full pension if they serve two terms. It should be a part-time temporary job. Citizens who are elected as representatives should return to their private sector jobs. However, as it is today, they return to their districts with full pension and are further rewarded by being paid as lobbyists by just about every community they once represented. Does anyone know how many communities pay Kurt Profitt to lobby in Lansing? Is he still paid by the city of Ypsi even though the city can’t keep its pool, senior center, or recreation programs funded?

    When Ford’s lays off 25% of it’s workforce it will devastate many of our neighbors. Shouldn’t we all try to make local governments more responsive to the plight of the less fortunate?Wouldn’t we all benefit the most by cost conscious, efficient government? Keeping the most of our hard earned money to spend on services of our own choosing should be the goal, while of course providing for the needs of those less fortunate. However, if we continue to allow local governments to spend exorbantly, we will soon all be included among those less fortunate.


       —Karen Luck    Aug. 24 '06 - 10:05PM    #
  51. My bad – I meant to say public trough in the 1st paragraph.


       —Karen Luck    Aug. 24 '06 - 10:12PM    #
  52. “Golden parachutes for CEO’s of private corporation are the concern of the shareholders. It’s not coming directly from the private trough or directly through my pocketbook. I don’t like the practice either, but unless I am a shareholder I don’t have the means to effect change. I do have input concerning public officials.”

    Absolutely. But John Q. didn’t say that such golden parachutes weren’t a problem; what he said was “does the fact that some CEOs crash-and-burn private corporations and still get rewarded with huge compensation packages provide a justification for slashing the pay, benefits and retirements of private sector employees?”

    In other words, the correct response (in both cases) is one that deals specifically with the problem employees, instead of one that cuts pay for everyone across the board.


       —Bruce Fields    Aug. 24 '06 - 10:13PM    #
  53. I like the passion in all the responses. Now that we are all in agreement that something has to be done, how about we challenge ourselves to do something about it.

    I suggest that we take up a local (can be just a county level election candidate) candidate and support that person and work towards getting that person elected. No party affilitiation – just an independent! If we can make one small stride by kicking out someone who is not good, it should send a message. We can even suggest someone that we know, to contest. Remember, the last day to get the name on the ballot is approximately two weeks before election day (Write in).

    Srini


       —Srini    Aug. 24 '06 - 10:17PM    #
  54. Bruce,

    Thanks, that was the point I was trying to make but that Karen seemed to have missed. I don’t blame the employees of private corporations for the abuses by the CEOs. Likewise, I wouldn’t blame the employees of public corporations for the abuses by the Administrators. Karen also hasn’t addressed what percentage of public employees are benefiting from double or triple dipping on pensions. She’s been painting with broad strokes but hasn’t backed up her claims with any numbers.


       —John Q.    Aug. 25 '06 - 03:35AM    #
  55. You’re right – I did miss your point. Has anyone suggested to slash the pay, benefits and retirement of all public employees? Bruce was correct, fix the individual problems. How about if the state passed a law prohibiting public employees from receiving more than one pension funded by taxpayers? They could retire and take the same job in a neighboring community, but would then be forced to choose which pension they would receive?

    I have no idea what percentage of public employees are benefiting from double or triple dipping on pensions. You say it’s minimal, but you haven’t backed up your claims with any numbers either. Why are you setting a standard for me that you haven’t met yourself? By the way, are your views expressed on this blog your personal opinions or are you paid to influence this discussion to promote a particular municipality and it’s history of poor fiscal management?


       —Karen Luck    Aug. 25 '06 - 11:44AM    #
  56. “Urban environments require more roads, the higher traffic wears out the roads quicker, thus higher costs. High density urban environments have far greater rates of crime and therefore police services cost more. I believe the sheriffs back up city police far more often than they ever come near my neighborhood.” K. Luck

    Your implication here is that it costs society more to support urban areas than it does to support rural areas; which is absolutely NOT true. A road does not wear out twice as fast due to twice as many cars. Utilities do not wear out in direct proportion to the number of customers they serve. The truth is that the overall cost to society, including all environmental concerns such as, water quality, erosion, energy usage, etc. is a lot higher when people live in rural settings.

    I think it’s equitable for public services to be charged to taxpayers in proportion to their use of those services.” K. Luck

    Karen I wonder if you really believe that. Would you pay twice as much for your ambulance service because you live twice as far away? Would you pay by the foot for your utilities because you are further from the city center? Will you pay Comcast more because they need more cable to get to your house? Maybe you should pay $.62 for your mail because it takes a lot longer for rural mail to be delivered and it can’t be done on foot. Clearly there are more roads, street lights, snow plowing time, road maintenance, fuel costs, etc. to support your choice than say, mine. So if you really want equitable (and I don’t believe you do) open your checkbook I have a refund coming.

    I, on the other hand, would be quite happy to have these sorts of equitable adjustments to our system. I have long held that the same size 40 suit should cost less than a size 60; think of the extra fabric and stitching. I also believe that you should be charged for airline tickets based on weight; fly me by the pound, I’m fine with that.

    So when you speak to your new county commissioner [2 s’s] you ask him or her to restore all the justice to the system not just the ones in your benefit.


       —abc    Aug. 25 '06 - 12:45PM    #
  57. “Has anyone suggested to slash the pay, benefits and retirement of all public employees?”

    Yes, the letters that Srini linked to advocated exactly that.

    “Why are you setting a standard for me that you haven’t met yourself?”

    You were the one making the claims without providing any numbers. Since you were making the claim, I assumed you had the numbers to back it up. Are you saying know that you made the claim with nothing to back it up?

    “are your views expressed on this blog your personal opinions or are you paid to influence this discussion to promote a particular municipality and it’s history of poor fiscal management?”

    All of my comments are my personal opinions. But thanks for trying to imply that my comments are just paid propoganda.


       —John Q.    Aug. 25 '06 - 01:30PM    #
  58. New businesses shop communities until they get long term tax abatements.

    This is, indeed, a nationwide issue, and would be nice if we could get communities to stand down. Especially in regions where local governance is as fragmented as in, say, Michigan, though, it’s hard to do. (“No, you stop your business recruitment program first!”)

    Ypsi city repeatedly gives out abatements on their consent agenda without any discussion whatsoever.

    Examples? I’ll offer a few prominent ones, to get us started. There’s the Exemplar plant, for one. Exemplar went out of business after getting a multi-year abatement…but have been replaced by GW Kent , who are moving to Ypsi City from Pittsfield Twp, without abatements. And, of course, as the ultimate example of profligate handouts, there’s Peninsular Place, whose developer came to Ypsi’s Council after development was complete and asked for $1m to cover unexpected costs. Oh, no, wait. Ypsi said “no”. Bad example. But, still, I’ll let you offer more?

    They have the AA News writing editorials promoting “regionalization” of their services so that other communities that don’t even use their services can be forced to help pay.

    Ypsi City has a fire department, Ypsi Twp has a fire department. How exactly would regionalization, by, say, combining those into one centrally dispatched fire service, involve making Ypsi Twp pay for services they don’t use? Ditto police. Ypsi City has police, Ypsi Twp uses police services (though not for much longer, since they apparently don’t want to pay the real cost of them…); why not combine those? Does it make sense to have the 911 call go to a different agency based on a 1-block difference in location? Not to me – too much confusion built into that.

    How many millions does it take to manage 3.5 sq miles??

    Oh, I like this standard! NYC has a budget of $53.392billion for FY2007, and an area of 321 square miles. So that’s $166.33million per square mile. Ypsilanti City has a budget of $14.5million for an area of 4.5 square miles. So that’s $3.2million per square mile. Hot diggity! Ypsi’s government must be practically a libertarian wonderland, based on those numbers!

    Oh, no. Maybe budget per area is a silly measure of governmental efficiency. And maybe Karen’s rhetoric is just completely without merit.


       —Murph.    Aug. 25 '06 - 11:01PM    #
  59. GW Kent is SUCH a great business, run by a husband and wife team. They’ve haved steady, consistent growth in what could be termed a really difficult market (they wholesale tanks, barrels, etc. etc. for the beer and wine industry….more for wine, actually).

    They are super people. They will be a terrific asset to Ypsi.


       —todd    Aug. 26 '06 - 01:29AM    #
  60. Um, I don’t think that ‘haved’ is a word, so feel free to turn that in to, say, ‘had’.


       —todd    Aug. 26 '06 - 01:33AM    #
  61. You’ve been haved!


       —Bruce Fields    Aug. 26 '06 - 02:31AM    #
  62. “Ypsilanti City has a budget of $14.5million for an area of 4.5 square miles.”

    My value of 3.5 sq. mi excludes approx. 1 sq. mi. covered by Eastern Michigan. Your comparison between New York City sure doesn’t support abc’s claim that urban areas have lower costs.

    “How exactly would regionalization, by, say, combining those into one centrally dispatched fire service, involve making Ypsi Twp pay for services they don’t use?”

    Consider pre-existing contractual obligations to unions, underfunded pension obligations, and upcoming infrastructure repairs as just a few of the liabilities that the township would inherit from the city and assume 75% of the payment.


       —Karen Luck    Aug. 26 '06 - 05:45PM    #
  63. Karen, I think you missed my point, which is that through accounting and political conventions over time, we (collectively) have chosen to count costs in ways which leads us to make uninformed choices and to be ignorant about the true ramifications of our decisions; you don’t really think it costs the same to make a size 40 suit and a size 60 suit do you? Of course not, so why do they sell for the same amount? They sell for the same amount because the clothing manufacturer doesn’t want to fart around with trying to prorate each suit to the number of stitches and area of fabric, and the seller cannot deal with every suit being a slightly different price, among other things.

    So with respect to the decision of urban or rural costs, the numbers are not available (at least to me) to mathematically prove it. However until you have all of the categories then you cannot make a proper assessment. Jumping to the city’s budget per area, or person, doesn’t work as it has none of the other costs that have been built into our system over time by the accountants and politicians. Utilities and maintenance costs are not surcharged by distance, nor is the cost of mailing a letter. City budgets do not include the costs to build and maintain county, state, and federal roads which rural residents need and use more. Real fuel costs are not factored in anywhere as they are subsidized at the federal level. So to conclude that living in Pinckney (or wherever) is actually cheaper and more efficient is still bad math.

    Karen, maybe it is true that “budget per area is a silly measure of governmental efficiency.” I tend to agree.


       —abc    Aug. 27 '06 - 11:48AM    #
  64. “My value of 3.5 sq. mi excludes approx. 1 sq. mi. covered by Eastern Michigan. Your comparison between New York City sure doesn’t support abc’s claim that urban areas have lower costs.”

    Oh, good grief. The cost per square mile is obviously going to be higher for in a city that has more people per square mile.

    A better measure is cost per person. That’s roughly what’s going to determine taxes, for example.

    A road that’s used by more people is almost certainly going to be cheaper per person or per use than one that’s used by less; the fact that it’s more expensive overall is totally beside the point.


       —Bruce Fields    Aug. 27 '06 - 09:39PM    #