What Are We Doing?

Flint sent tax funds to wrong units (March 19, 1999)

By Ron Fonger, JOURNAL STAFF WRITER

Auditors and Flint officials believe the city misdirected some property tax payments for several years, potentially making more than $1 million in incorrect payments to entities including the Flint School District.

A study of the distribution problem by city officials and the auditing firm Dupuis & Ryden, while incomplete, has the potential to affect the finances of the city, the Flint School District, Bishop Airport and other agencies that collect a millage from city residents.

Top aides to Mayor Woodrow Stanley confirmed Thursday that the problem dates back at least to the 1996 tax roll. They said they have been working with state officials to resolve it.

Peggy Jury, a representative of Dupuis & Ryden, said a final calculation to determine which entities are due money and which have been overpaid has not been completed.

She said the problem could amount to more than $1 million.

Stanley aides would not speculate about how much money may have been distributed incorrectly. But both City Administrator David H. Ready and Budget Director Matthew Grady said the tax dollars will have to be redistributed.

Some entities may owe and some may get, Ready said.

The problem involves money collected in areas that were exempt or partly exempt from paying certain millages.

The amounts collected were correct, Jury said, but the disbursement of those taxes is at issue.

The confusion about distribution formulas was compounded, she said, by the settlement of a tax appeal by General Motors, by Proposal A and by the retirement of a longtime city assessor, she said.

Resolving the problem could lead to a roundtable meeting with entities that receive property tax payments — a meeting to come up with a fair and equitable plan to redistribute the property taxes, Grady said.

As of Thursday, the city had notified just one of the entities that they may be due a windfall or may have received too much of the tax pie.

Grady said the city wants to have a final balance sheet to present to those affected before making those contacts.

The property tax distribution problem is the second financial bombshell to hit city hall in a matter of days. Both raise new questions about the city’s ability to distribute money.

Last week, Stanley was forced to order the transfer of nearly $1 million from city coffers to the to the Flint pension system because of a failure to transfer employee and employer contributions.

The $1 million represented uncollected interest — unrecoverable money — that the pension system lost because of the city’s failure to make proper transfers.

Former city Finance Director Marc Puckett resigned abruptly after the failure to transfer became public and on Thursday, Ready said Stanley has ordered a comprehensive review of practices in … Marc’s department.

The city’s Finance Department, which Grady is heading on an interim basis, was responsible for the property tax distribution, Ready said.

When Stanley picked Puckett to lead the department in 1992, he chose him from some 100 applicants, saying he was impressed with Marc’s grasp of the finance discipline …

City Council President Scott Kincaid declined to comment on the tax distribution, saying the details have yet to be fully uncovered.

I just know there’s a problem, Kincaid said. The auditing firm is determining how big the problem is.

Ron Fonger covers Flint city government and Bishop Airport. He can be reached at (810) 766-6317.

Copyright Flint Journal / MLive Media Group (mlive.com). Used with permission.