Detroit audit unveils deep financial pitfalls

DETROIT—Days after the Motor City won an award from a national public finance magazine for making a “Deal of the Year” that postponed payment on a $400 million bond, details of a year-late audit reveal what Detroit News reporter David Josar calls a “startling glimpses of how quickly the city is burning through cash, losing revenue and failing to implement seemingly routine controls of spending.”

As The News reports, the audit unlocked nearly $24 million in revenue sharing dollars from the state upon completion, but it also exposed a number of serious financial pitfalls the city faces.

The audit showed that the city does not refund those who overpay on property tax. A property owner must ask in order to get the surplus refunded, the report found. Additionally it’s been five years since the city turned over unclaimed monies and property to the state, as Michigan law mandates.

Some of the oversights are embarrassing: The audit found that the city has no record of all the bank accounts it has and it has not pursued collection of 2.2 million bad checks written to the city.

The problems revealed in this audit date back to when former Mayor Kwame Kilpatrick was in office. A spokesperson for Mayor Dave Bing told The News that, “The city will utilize every tool available to get its fiscal house in order.”

With the sour results of the newly submitted 07/08 audit fresh off the press, the 08/09 annual financial report is due by the end of the month and could reveal even more discouraging news. Maybe there’s a reason the city has a tradition of filing audits late.