For low-income communities, legal settlements mean residents pay twice
People in the city of Inkster are being made to pay extra property taxes for a settlement between the city and motorist Floyd Dent. Dent was beaten during a traffic stop in January, and the assault was videotaped.
The city has said it's passing along the cost of the settlement to taxpayers because Inkster's insurance policy won't cover the $1.4 million payout. Inkster officials, who haven't returned calls for this story, have said previously that the policy only covers claims over $2 million.
As it turns out, cities in Michigan don't have to carry insurance at all, much less a policy that would be likely to cover the majority of claims by residents harmed on city property or by city officials.
Michael Forster is the director of risk management at the Michigan Municipal League. The organization runs a non-profit insurance pool towns and villages can buy into to make insurance more affordable. Inkster is not one of the cities in that pool, and Forster says a city like Inkster would be considered incredibly high risk by any insurer. That makes insurance incredibly expensive, hard to find, or both. Forster speculates that may be why Inkster ended up with a policy like the one it has: essentially, one with an incredibly high deductible.
When a city purchases an insurance policy, taxpayers are of course where that money comes from. But in many communities, residents are likely not getting much value for their money. Things that make a city's insurance policy expensive are, for example, lots of interactions between the police and citizens. Or, lots of unsecured city-owned property where people could get hurt or property could be destroyed. Those things are common in low-income communities.
Residents of high-poverty cities like Inkster already pay in other ways, like poor health and unsafe streets. And as more communities across the state find themselves in tough financial straits, residents in those cities may find themselves on the hook for a high tax bill when a city, or a city official, acts irresponsibly.