$8M Revenue Shortfall Blamed on Bad DB Entry

SierraPete writes "Yahoo! News reports that an improper database entry, most likely caused by an external user, has created an $8 Million USD revenue shortfall for a northwestern Indiana county because a house that was supposed to be valued at $121,000 showed a value in the database at $800,000,000. There's no specific suggestion that this erroneous entry was done maliciously, but it is leading to big problems in the local governments as they try to figure out how to drop that much money out of their respective budgets. As an aside, how would you like to be in the homeowner's shoes when he opens up his mail box and finds an $8M property tax bill? I'm sure there was a trip to the emergency room or the dry cleaners involved."

Comments

The homeowner

[WebHostingGuy]

I think the homeowner probably just laughed. In this day and age when you see a computer generated report which is totally outside the norm you can assume error. Maybe one day in the past someone would have sweat but it seems there are so many errors nowdays (we have accepted a certain level of fault with all things computer) that it just was -- they screwed up again.

Re:The homeowner

[bheer]

Good point. Example: $3 Million Comcast Cable Bill.

Re:The homeowner

[Anonymous Coward]

I find it a shame that the government can take away your property if you cannot pay its yearly 'protection' money. Error or not it's sad that the government has such abusive power.

This confiscatory policy hurts more than you would think. Ask the retired or any fixed income homeowner in areas with a high gentrification rate. If they still can live there of course.

Re:The homeowner

[FidelCatsro]

Yeah nobody would believe that one , unless Comcast had reduced their prices recently

Re:The homeowner

[The-Bus]

No... those are just their current regular charges for cable and internet. I should know, I'm a Comcast victim (customer).

Re:The homeowner

[remmelt]

Isn't it strange that we now talk about "computer generated reports" with a lot of disdain, almost assuming error by default, shrugging it off, while the good old human made reports are potentially much more prone to error? Isn't that why we went to automated systems in the first place?

I guess it's still the human factor though, like here, a mistake in the database, and the laziness of trusting computers to be right, all the time. No checks or double checks.

Re:The homeowner

[Anonymous Coward]

Property taxes pay for public schools. Should we just tax working people, or include those that have land property?

I think that we should tax property. You live on the societies land, and you pay society for that priveledge. You can do what you want with it to an extent, as long as what you pay reflects the value.

Its the little socialist things that make this country work. It doesn't work as well as we might want, but if we want to complain we'll have to find an alternative.

Re:The homeowner

[smittyoneeach]

I had MCI try to mug me for about $800 once, in 1998.
I was stationed in Japan, and had to send a laptop back for warranty service to someplace in Tennessee.
To judge by the bill, the computer never logged the ~15 minute call to get a service ticket number as complete for something like 10 hours.
Or maybe their accounting department was just sharpening its crayons, as subsequent boo-boos could indicate.
In defense of MCI, they agreed the charge was bogus and cleared me straight away.

Re:The homeowner

[Stephen Samuel]

while the good old human made reports are potentially much more prone to error? Isn't that why we went to automated systems in the first place?

Human errors (like addition problems) are more common, but they're rarely in the order of adding 4 extra digits to the value of a house. As one murphy's corrolary stated:

To err is human. To really foul up requires a computer

And probably the biggest advantage to computers is that you can do more things faster than you can with humans. Human errors will still mess up computer reports as long as humans are in the loop (and even when you don't think that they are).

Re:The homeowner

[bluprint]

Who, exactly, is this "society" you speak of? I would be happy to write him a check. And people who use a thing should pay for it. We don't take up a collection so I can golf every week, why should we take up a collection so you can feel good about being a parent?

Re:The homeowner

[TheBracket]

These things can have horrible cascading effects, especially if you are stuck with one local phone company who suck - SBC in my case.

When I first moved to the USA, I signed up for an MCI international-calling plan.

At the time, $3/month to reduce the fees to call England (where my family, and many friends remain) to $0.05/minute was great. The phone rep assured me that I was all set, and could start enjoying the rate - so I called my mother. It was her birthday, she wanted to know all about my new home, etc. making it a long call, around two hours. At the MCI rate, $6 was hardly going to kill me. Somehow, MCI's computer system failed to add me to the plan for another week - and I was landed with SBC's "you don't have an international plan, but we'll let you call me anyway" rate at $2/minute - $480! I bitched at MCI, they agreed that it was an error, and promised to get it taken care of. SBC, meanwhile, disconnected my service immediately - and wouldn't reconnect without a $1,000 deposit. MCI mailed me a credit for $480, leaving me with a +480 MCI balance - and owing SBC $1,480 (plus some fees they came up with) to be able to use it. Days of complaints came to no naught, and I ended up ponying up the cash, cancelling my MCI service (resulting in a cheque for $480). The deposit at least meant I didn't actually pay anything on my phone bill for most of the rest of the year.

Re:The homeowner

[andy_shepard]

Maybe you fuckers should tax parents.

Re:The homeowner

[Saanvik]

This has the be the most ignorant comment I've seen on Slashdot since the last thread.

If you live in nearly any country in the world you benefit from the government that you pay your taxes to. How you ask? Medical care so you don't catch TB walking down the street. Police services so you don't get shot by someone taking the law into their own hands. Emergency services like the fire department so your house doesn't burn down when your idiot neighbor falls asleep smoking and starts his house on fire. Government isn't perfect, just like any other large organizations, but it's better than not having any government. Vigilantism is rule by the mob, not by justice.

Society benefits from a government that is concerned with the well being of the people in society. State sponsored education, penal systems, and transportation networks all have great positive benefits on the quality of life of every person in a society. Education is the number one method to decrease crime. Public education assists you if you own anything, even if you don't have any children yourself.

In addition, because most governments regulate commerce, individual members of society are protected from unethical and hazardous business practices.

From the sound of your post either you understand this and you were just trying to yank someone's chain or you are some kind of anti-government zealot that belive governments are the root of all evil in society. If the former, nice troll. If the latter, get educated and stop spouting nonsense.

Re:The homeowner

[bluprint]

This has the be the most ignorant comment I've seen on Slashdot since the last thread. If you live in nearly any country in the world you benefit from the government that you pay your taxes to. How you ask? Medical care so you don't catch TB walking down the street. Police services so you don't get shot by someone taking the law into their own hands. Emergency services like the fire department so your house doesn't burn down when your idiot neighbor falls asleep smoking and starts his house on fire. Government isn't perfect, just like any other large organizations, but it's better than not having any government. Vigilantism is rule by the mob, not by justice.

And here I was talking about taxes being used to pay for public education. To be honest, I'm not sure what all property taxes pays for, but my understanding is that most if not all of it goes to the local school (I could be wrong, but based on the overall sense of your post I'm at least as educated on the subject as you are likely to be).

Public education assists you if you own anything, even if you don't have any children yourself.

It's been said before. Get some new material, or at least try and support the material you have. You know, use that great public education you received to, like, back up your argument.

In addition, because most governments regulate commerce, individual members of society are protected from unethical and hazardous business practices.

Again, here I'm not sure where this intersects with the issue of taxing people to pay for all kids. Perhaps my public education has failed me in this respect. Perhaps your public education failed to make you understand conversation and argument.

From the sound of your post either you understand this and you were just trying to yank someone's chain or you are some kind of anti-government zealot that belive governments are the root of all evil in society. If the former, nice troll. If the latter, get educated and stop spouting nonsense.

I am neither. It may be hard for you to believe, but for any scale, there is almost always more than two positions. Maybe if you had received a public education you would understand that.

My comment was a little too subjective to be ignorant. I don't think education should be publicly funded, there are a number of good reasons for that (in my opinion). More to the point however, is that the post I was responding to claimed that because the land "belongs to society", that we individually should have to pay taxes for "society". I find it amusing that, at times when people want the check book open, it "belongs to society", but when the yard needs to be mowed, or there is some toxic waste needing cleaned up, the land belongs to "not me!". How about some consistancy? If I am responsible for the land, then don't tell me it belongs to "society" and therefore I have to pay homage to society to continue to live here. If, on the other hand, it belongs to society, then why don't you get your fat ass over here and mow once in a while?

Re:The homeowner

[constantnormal]

It depends upon the age and technical sophistication of the homeowner. If my parents were to receive a bill like this, they would expire before reading to the end of the statement.

Re:The homeowner

[arodland]

Society benefits from a government that is concerned with the well being of the people in society.

Too bad there's never been one of these, and never will be. Governments are composed of people. And not just any people, people who've been told that they're powerful and important. They are, 99.44% of the time, going to perform in a way that's in their interest.

So what does that mean? Well, a government, as you've so nicely reported above, is in the business of "solving problems" -- regulating aspects of your life to make it more pleasant, so that you'll be happy with them. It wouldn't be smart for them to do a good job of this; then they'd find themselves largely unnecessary, without all kinds of clout, and without big corporations willing to give them lavish gifts. Instead it's in their interest to make sure that there are plenty of problems to solve, and that the public is convinced that government is the best tool for solving each and every problem. That way they can wedge themselves into every crack, take advantage of each and every transaction, and achieve as much power as possible for their own use. The fact that it hurts everyone else is only incidental. No government ever gives up power. They've invariably taken more and more control, until they've completely squeezed the life out of their fiefdoms, and then they've been replaced.

As a corollary, when it comes to war, the government isn't interested in defending any particular citizens; it's interested in maintaining itself first, and in maintaining enough of a citizenry to pay tribute second.

If it were my house...

[Murphy's Paradox]

I'd just shrug and make a phone call. Who in there right minds would really believe that they owe anyone $8 million? It is like this woman in England that got a utility bill for some $240 million. There is no way any person even mildly associated with reality would believe these to be legitimate and correct bills.

Re:If it were my house...

[Anonymous Coward]

RTFA - The city/county Treasurer's Office WAS notified of, and corrected, the error in their systems, but this correction did not propagate to whatever systems the Revenue & Taxation and Budget & Planning folks used. Poor, poor design.

Re:If it were my house...

[MrWa]

Have you interacted with real people in the US anytime in the last 6 years? Very few people seem to be mildly associated with reality...

Re:If it were my house...

[Vellmont]

My thoughts exactly. I'd pretty worried if the error was for 50%, or even 100% more than my home value because that might be a major pain to correct. You'd have to get someone to re-assess the value, all kinds of dumb paperwork, etc to prove that there's an error. But a ridiculous error of 660,000% is an easy fix.

Re:If it were my house...

[Anonymous Coward]

I'd just shrug and make a phone call.

And be legally stuck with the tax bill, no matter how absurd it is.

I've been stuck with absurd tax assessments on many occasions. As the manager for a regional wireless data company, I've encountered tax abuse that includes:

• being assessed a tax on a city-owned water tower: One county in Iowa hit us with a tax for the water tower and its property. When we notified them in writing (registered mail, always - these people will lose your mail and lie in court if you don't if their job depends on not being exposed as incompetent) that we didn't buy any city water towers but instead only had a single $400 antenna on top, connected to a radio down below, they switched gears and hit us with a made-up $20K "improvement value" to the tower. Where'd the $20K number come from? "That's what we figured it outta cost." Yikes, try that with your taxes! We disputed it and took the receipt in for the antenna to show its real cost. They rejected it and told me they have to because they need the tax money.
  
• being assessed 10 times the value on property: We bought a 50-year-old tower for $30K. Discovered it was assessed at $300K. Appealed and got it lowered to $90K - not worth fighting in court. Next year, they raised it to $500K by counting all the old horn antennas and pretending they're each making tens of thousands of dollars of revenue (they're all dead and have no waveguide to connect anything). Disupted and rejected - told "we need the tax money" - now we're suing them and costing them thousands in legal fees too.
  
• getting hit for use tax: The state of Nebraska sent a tax statement claiming their estimate of a business like ours was over a hundred thousand dollars in online purchases, and issued a tax bill on that made up amount. The only thing we don't buy local is for resale, and is taxed when sold to the customer (and paid to the state). Disputed and rejected again. Probably need the tax money.
  

It seriously offends me that we have bureaucrats making laws like Sarbanes Oxley to tell us business people what we can and can't do, while the same government agencies are cooking the books and making up numbers based on their alleged need for more money. Bernie Ebbers is in jail for making higher sales numbers up because he "had to" but when the department of revenue or the IRS does it, its OK.

My advice is to fight them for every dime. Eventually the local governments learn the lesson. I put up with a false 3x valuation and three times the tax because it wasn't worth the fight - now they're going to end up at the true value and spend three times that amount in legal fees. Only when they realize we're going to fight will they start to clean up their act.

Re:If it were my house...

[kimvette]

Both (informative AND funny) work, because it is obviously in reference to our government, but unfortunately we keep voting the same cretins into state legislatures and into Congress. Our government IS pretty much clueless when it comes to the real world - or they simply just don't give a shit because they're not reliant on social security and have nice fat pensions for life after serving even just ONE term.

Don't assume "troll" when "funny" works.

The sad thing is, many property owners are victim of over-valuation when it comes to property taxes. My business partner's home was just valued at a half million, but there is NO way it would have fetched even $375,000 during the real estate bubble because the lot is undesirable and small. He fought it and won, however so many people over-value their property in their own minds that they don't consider reality and don't catch those errors - and when there is a pattern of reevaluations rising significantly on small lots (even a very nice house on a tiny lot doesn't help resale value all that much) it's obviously intentional and not by accident, because the folks whose paychecks depend on tax revenue keep pushing to increase spending and try to sneak in unnnoticeable tax increases, and rely on people's egos saying "Oh wow, my home is worth a lot. This rocks, this means I have power!" resulting in their not doing a damn thing to hold a crooked system in check.

Re:If it were my house...

[kimvette]

That may be true except when the town officials think that your property that just happens to be next to Wal*Mart is a better use for the town if it could add more parking spaces so that you can have a WallyWorld StinkyCenter in town rather than a regular Wallyworld - then your property value could increase by 2x-3x and you have no way to fight it - and when they take it via eminent domain, they will reassess the value to below actual market value.

Re:If it were my house...

[kimvette]

being assessed 10 times the value on property: We bought a 50-year-old tower for $30K. Discovered it was assessed at $300K. Appealed and got it lowered to $90K - not worth fighting in court. Next year, they raised it to $500K by counting all the old horn antennas and pretending they're each making tens of thousands of dollars of revenue (they're all dead and have no waveguide to connect anything). Disupted and rejected - told "we need the tax money" - now we're suing them and costing them thousands in legal fees too.

Sue them for:
  - conspiracy
  - fraud
  - abuse of power
  - racketeering

And hit them up for HUGE punitive damages to double their budget requirements, which will prompt layoffs and turnover of elected and appointed officials because the rest of the citizens in town won't stand for tax increases and cuts in services over this.

Re:If it were my house...

[Anonymous Coward]

"Have you interacted with real people in the US anytime in the last 6 years?"

You obviously haven't, but being /. readers ourselves, we understand.

Re:If it were my house...

[Burning1]

Have you interacted with real people in the US anytime in the last 6 years? Very few people seem to be mildly associated with reality...

You are completely wrong. In my opinion, to understand why seventeen fairies consoled all their kitchen troubles in a yellow rock covered in a stylish freedom fighters dead skin with the phrase 'limbo chocolates for all' engraved in it.

Therefore: vibrating Norwegian horse box full of sea-cucumbers.

For further insight, send an email with the subject 'subscribe' to: burning1@usdachoice.us

*grin*

Re:If it were my house...

[Anonymous Coward]

Well, after moving into a new place with a prepay electricity meter, and calling the gas & electricity company to say that I was the new occupant, they kept sending a bill for ALL the electricity that the previous occupants had used - and already paid for. The bill even said "standard rate for prepay meter". I had to call about 5 times to say that they shouldn't send a bill for something that's already been paid... they finally stopped sending me things, but only because I wasn't the previous occupant.

Re:If it were my house...

[Anonymous Coward]

Be fair. It's a worldwide phenomonon.

Re:If it were my house...

[Vellmont]

And be legally stuck with the tax bill, no matter how absurd it is.


It's replies like these that I honestly believe there's a large percentage of genuinely retarded people reading slashdot. Did slashdot become popular in group homes recently?

Re:If it were my house...

[loraksus]

Sounds like a good idea, but you simply underestimate the power and immunity from prosecution that these people have.
For a good example of this - and a somewhat entertaining tale about corruption, lies and deceit, google around a bit for "New Rome". You will clearly see that these people are essentially untouchable by the courts.
It is sad to say, but in many cases the courts are not an answer - just shutting up and accepting it is the common solution. The only alternative is the strategic use of blackmail or bullets, and most people aren't prepared to use either.

Simple programming?

[Anonymous Coward]

Do they not have a trap for super low or high amounts, adjusting these traps over the years as values go up or down?

One would think these simple things are in place.

Re:Simple programming?

[Lehk228]

set the trap to require manual authorization by a supervisor for anything outside 2 or 3 standard deviations.

Re:Simple programming?

[alyawn]

I doubt it. I'm sure they use Access or Excel as their "DB" implementation.

Tax Rate?

[bmoon]

That's quite some tax rate... where does an $8M home translate into $8M of revenue for the county?

Re:Tax Rate?

[bmoon]

Ok -- with updated figures...

Where does a $400,000,000 home translate into a $8,000,000 in annual county property tax? Hmm... sounds bogus to me.

Re:Tax Rate?

[Midnight Thunder]

You need to read the article. The house was mis-valued at $400 million, and the tax on that was calculated at $8 million.

Re:Tax Rate?

[Anonymous Coward]

8 HUNDRED million, man. Learn to read.

Re:Tax Rate?

[hattig]

$400 million value homes -> $8 million tax income via a 2% property tax (I assume).

Unfortunately the house is only worth $121,000, so the actual owed taxes were $2420, and that's assuming that the 2% tax rate applies at all values. It might only be 0.5% at that low a value, for example.

Why not just add more to the national debt and ignore the $8m shortfall. It'd hardly dent the trillions of debt. :p (sod trying to be responsible with money, hehe)

Re:Tax Rate?

[mmkkbb]

RTFA, that would be 2%.

"A house erroneously valued at $400 million"

Re:Tax Rate?

[grommit]

You think a 2% property tax is bogus? I guess it would sound bogus if you've never had to pay property taxes before. Personally, my property taxes are at about 1.5%

Re:Tax Rate?

[SierraPete]

Human Error Acknowledged. Caffeine not found, operator halted. It should have been 400M rather than 800M. About a 2% tax rate. Pretty reasonable all things considered. We're getting ready to move and the tax rate in the country we're moving to is close to 3%. No smoke, no kiss.

Re:Tax Rate?

[Anonymous Coward]

Sorry to take this seriously, but some people may well wonder: Well, for one thing, it's a county government, not the federal one. For the other thing, the way you increase government debt is through selling bonds. Who the hell would buy a bond from a county or municipal government that made that big a screw up and never noticed it? Not me, for sure. The interest rate would have to be something astonishing - making them classic junk bonds. No thank you.

Re:Tax Rate?

[LurkerXXX]

Lots and Lots of places. Like the other responder said, it sounds like you've never owned a house and had to worry about property tax.

Re:Tax Rate?

[yndrd1984]

It should have been 400M rather than 800M.

Error correction failed - output expected:

$121,900 rather than $400,000,000

Please reboot operator.

400 not 800

[slinted]

"$121,000 showed a value in the database at $800,000,000"

Did anyone actually bother to rtfa, or is it just cool to make up numbers for post summaries now?

"A house erroneously valued at $400 million"
"The house had been valued at $121,900 before the glitch."

Re:400 not 800

[Anonymous Coward]

Um, you've been reading Slashdot for what, 9 years? And you've only just noticed that story summaries suck the giant horned choad of Satan?

Re:400 not 800

[Anonymous Coward]

Did anyone actually bother to rtfa, or is it just cool to make up numbers for post summaries now?

"A house erroneously valued at $400 million"
"The house had been valued at $121,900 before the glitch."

Oh! That settles it then. Nothing to see here.

Re:400 not 800

[Rocketship Underpant]

Give the Slashdot editors credit for ingenuity; I had no idea they'd come up with a way to misspell numbers. :)

Well, with today's taxes

[ral8158]

I mean, that's not a huge error, now is it?

Read the Article....

[shoemakc]

Read the article: It says the shortfall occured because the home was incorectly valued; The taxes on an 8 million dollar home are not 8 million dollars...but a fraction of that.

So here on Long Island for example, taxes would only be about 7 million...

-Chris

Read the article yourself...

[expro]

The home was 400 million. The taxes were 8 million.

Re:Read the article yourself...

[ipfwadm]

Funny? Clearly the mods didn't RTFA, since that's what happened - the home was erroneously valued at $400 million (not $8M as the OP said, nor $800M as the summary said), and the tax bill was $8 million.

Re:Read the article yourself...

[shoemakc]

Bah....no time to read articles when you're busy being a wiseass.

-Chris

Get rich quick scheme

[technoextreme]

Sell the house at $400 million dollars. Pay the taxes and then run away never to be seen again.

Re:Get rich quick scheme

[Corporate Drone]

better yet... if the home should just happen to burn down, collect the insurance on its assessed value...

Re:Get rich quick scheme

[Anonymous Coward]

Nah, that's illegal.

Just don't pay the bill, wait for it to be foreclosed on, and then pocket the difference check.

Re:Get rich quick scheme

[mdfst13]

"then pocket the difference check"

The difference check from a foreclosure is based on the auction price. Since the house was only worth a $121,000 or therabouts and had an annual tax liability of $8 million, I suspect that it wouldn't have sold at auction. Even if it did, the money would go to the tax liability first, so you'd still just lose your house.

Too bad this didn't happen in West Virginia. Apparently they implemented something like Heinlein's suggestion: if you think that the assessment is too high, the assessor has to buy the house from you at that price. Unfortunately, I think that the assessor can also accept your assessment. Pity.

I know taxes are high there but damn

[Immercenary_2000]

Kind of OT, but as a resident of NW indiana, I can definately say that it's not a place you'd want to be buying a new home. About a year or so ago, Lake County sent out a bunch of appraisers and re-appraised every house in the county. The problem with this was that the people they hired to do it really had no idea knowledge of the area. A lot of people had their tax bills shoot up 100%-300%. The kicker is that a lot of these are in Miller, just a stone's throw away from the murder capital of the world, Gary, IN (Gary got the title back this year because New Orleans was underwater for a chunk of last year). On top of that, Miller really isn't much nicer than Gary.

Honest Mistake

[Jetboy01]

Of course its an easy mistake to make... the keys are like, right next to each other.

They didn't notice

[mac123]

If the county doesn't notice a sudden increase of $400 million...nearly half a billion in the grand list (which I'd imagine would be a significant figure), they may have many fundemental issues in the tax assesor's office that need to be addressed.

Re:They didn't notice

[MindStalker]

More importantly they SPENT the 8 million dollars extra that they probably didn't make the previous year, then say they have to layoff people to correct the problem. In a small town 8 million extra in a year would be big news.

Re:They didn't notice

[yelvington]

That's not how local property taxation works in the United States.

Local tax districts set a budget based on some assumptions about the tax base (the amount of taxable real property). After the budget is approved, bureaucrats in the taxation department compute the actual rate by dividing the budgeted revenue / taxable base. Generally there's a legal limit on the rate, but the actual rate that is charged is based on that computation and somewhat lower.

So your property tax rate isn't static (like sales tax, for instance), but rather dynamic from year to year.

In this scenario, the governing board sets a budget based on an assumption of base B.

But when the bills are generated, they're computed on a base of roughly B + 400 million.

As a result, everybody else in the county is just slightly underbilled ... and when the mistake in the database is discovered, it's too late to do anything about it.

Re:They didn't notice

[JeffSh]

i have mod points and i intended to use them because there are alot of great insightful posts, but i had a choice with yours. I could either just mod it down or reply.

I chose to reply.

I don't know what state you're from, and things may work that way there, but in Michigan, local taxes do NOT work that way.

There's an important thing to be said, and that's that alot of states do their taxes differently. Local municipal growth and municipal management was something that was allowed to grow organically. Townships and county's right next to each otehr don't even do the same calculations or use the same methods, sometimes.

In Michigan, there are certain state rules that every municipality follows (like when tax collection ends, for instance) but some municipalities just disregard the established rules. There's atleast one county in Michigan that computes interest completely wrong.

anyway, the point of this post is to say that there is no uniform method, code or law that dictates how local taxes are calculated. that may be the way they are there, but not here or other places necessarily.

Re:They didn't notice

[puetzc]

If you had read the article, you would find out that the error was noticed by the County office, and was corrected. Unfortunately, the programming was defective, as the corrections were not properly carried forward into the data that was used to set tax rates.

I don't know about Indiana, but in Iowa, subject to limits, the budgets are set in dollars, and the tax rate is calculated to raise the specified amount. The city didn't necessarily get a real increase in dollars, but now it will see a real decrease due to the error. Bad management - yes, bad programming - worse.

Time required to catch mistake

[Dan East]

The slashdot story is incorrect - the house was incorrectly valued at $400 million, not $800 million (meaning that the tax rate is double what the story made it appear to be - not 1% but 2%).

According to the article, the real problem was that while the error was caught in a timely manner by the tax people, the bad data had already made it into other systems. Those other instances were never corrected.

I'm curious why those involved with budgeting never questioned why they suddenly had an extra $8 million to play with. Someone more in touch with government and their community should have wondered what was going on.

Also, it seems a lot like counting their chicks before they've hatched. They had already distributed funds that hadn't even been collected yet. If any big player (particularly businesses) were to fail then the same problem would have arisen - funds were distributed and budgeted against that could not be collected.

Dan East

Re:Time required to catch mistake

[whoppers]

I'm curious why those involved with budgeting never questioned why they suddenly had an extra $8 million to play with. Someone more in touch with government and their community should have wondered what was going on.

Agreed, I do financial reporting for very large engineering and construction projects, I've learned not to jump to be the hero that just uncovered a huge windfall for a project, 999 times out of 1000 it's an error somewhere.

Whoever was supposed to be checking for errors just likely wanted to be a hero and was obviously new. You bet your ass he won't do it again (at this job if he's not canned nor elsewhere if he was).

Re:Time required to catch mistake

[Anonymous Coward]

Also, it seems a lot like counting their chicks before they've hatched. They had already distributed funds that hadn't even been collected yet. If any big player (particularly businesses) were to fail then the same problem would have arisen - funds were distributed and budgeted against that could not be collected.

It's called a budget. If you haven't heard of them, the way they generally work is that you predict how much money you will receive (income) and how you will spend that money (expense). Call it counting your chicks if you want, but most people call it budgeting, and governments are required by law to do it. As far as businesses being more responsible, or operating more efficiently ... only people who haven't worked in a large company believe that crap. There is just as much waste, bureaucracy, and bs at a large company as in the government. The company is worse though because you can't vote the managers out. The problems arise from large organizations that have people in control of them -- government or not.

Re:Time required to catch mistake

[xeniast]

Fire the Director of IT !

There should have been a IT AUDIT to assess access to data.
Why would anyone other than the Treasurer's office employees
have access to LIVE DATA for Update!

To err is human...

[linebackn]

To err is human, but to really foul things up takes a computer.

And to make a total disastrous mess takes a computer _operated_ by a human.

Re:To err is human...

[wan-fu]

Ah, but to really really foul things up requires a Slashdot editor.

Re:What's worse

[symbolic]

Is that there are systems that don't have the means to verify such "out-of-the-norm" transactions by presenting an alert of some kind.

bad local government

[Anonymous Coward]

Any comptroller that didn't notice such an out of character spike in assessments should lose their job. They're so hungry for the money they believe any fantasy. It's part of the illusion of the ever-expanding tax base taking care of the ever-expanding demand for resources.

Maybe it's just me

[Anonymous Coward]

but I think they should try to find the hacker that entered the "RER" code into the computer. From a public library, of course, to cover their ISP trail. Nice.

Crack Whore Budgeting

[Anonymous Coward]

Government budgeting should be based on objective standards, not "lets make sure we spend up every frigging cent we get in." This type of bad government budgeting always falls apart when some bubble bursts and all those dividends and capital gains disappear. Sounds like any real estate bubble will hit these crack whores just as hard.

Re:Crack Whore Budgeting

[SpacePunk]

If they don't spend every cent they get, the budget for the next year is cut by the amount they didn't spend. There's always a September scramble in the military to spend any unused budget for that reason.

Damn 2% tax rate.

[the eric conspiracy]

I wish my tax rate were that low. I'm paying more like 3%.

Re:Damn 2% tax rate.

[Dark Coder]

No better than living in ridiculously overinflated housing market with 1% tax bracket.

I'll take living in 7% housing assessment tax bracket with low housing value ANY DAY...

At least you can write more off of state taxes than you can with mortgages. But then again, IANAA.

But our National Debt is a-OK?

[Anonymous Coward]

It's a well known fact that the federal national debt is outrageous. They can say they're "following the leader" by using Federal Government accounting practices.

Crappy Software + Dumb People = Bad Stuff

[ChaoticCoyote]

The software system is badly designed. Internal verification should have caught such a ridiculous value, producing an audit trail or alert.

Of course, a human auditor should have been looking at the numbers as well, but the real human error is in failing to create software that recognizes potential problems.

Re:Crappy Software + Dumb People = Bad Stuff

[El_Muerte_TDS]

Great Software + Dumb People = Bad Stuff

So it's doesn't really matter in case of dumb people.

Although... we now have a problem.

Great Software + Dumb People = Bad Stuff = Crappy Software + Dumb People
Great Software = Crappy Software

Re:Crappy Software + Dumb People = Bad Stuff

[Loconut1389]

Overpriced house: $400,000,000
Budget Shortfall: $8M
Ancient Unprotected Auditor Page: $100
Leaving auditor page online and causing the entire city to suffer: priceless

ok.. could be better.. but oh well ;o)

It doesn't have to be that way

[msobkow]

Compared to the effort and expense of doing data range and argument validation, I don't think it's a big deal to have sanity-check warnings in assert-driven code. Just because a field can store a couple dozen digits doesn't mean that a flag shouldn't be raised when you see numbers more than 6-7 digits.

There are already similar checks in business code -- you can't sell a negative quantity at a cash register, you have to do a return. Operating systems make similar checks, asking for confirmation of "dangerous" or unusual situations (like permanently removing data.)

Why wouldn't a financial management/accounting system have similar rules enforced and monitored?

Re:It doesn't have to be that way

[plopez]

Why wouldn't a financial management/accounting system have similar rules enforced and monitored?
Because most of the DB monkeys/req. analysts/programmers hired are clueless. We are currently looking for a DBA/Data modeler and when you talk about data integrity in an interview many of them get the 'deer in the headlights' look in their eyes.

Re:It doesn't have to be that way

[timeOday]

Agreed. On the other hand, it's all too easy to ridicule a bug after it's discovered.

Re:It doesn't have to be that way

[Anonymous Coward]

I once worked on a multi-million dollar contract, where applications running on several developers' PCs accessed the same database for testing (by design by the hare-brained project supervisor). Of course, "transaction" was not part of their vocabulary. Of course, everyone ate up other people's work fairly frequently. The best part: no one really cared.

I cared enough that the resulting psychological strain forced me to quit after seeing, repeatedly, several hundred thousand dollars being pissed away on unused software to over specced hardware to wasted labor to bullshit customer presentations. Apparently, for most contractors, that is their business model. I do say "most", because in my subsquent interviewing, all the contracting businesses I looked at were all working on the same B.S. pork.

Re:It doesn't have to be that way

[Anonymous Coward]

The use of Asserts in code is used in DEVELOPMENT for things that SHOULD NEVER HAPPEN, this is for DEBUG flavors not RETAIL LIVE SYSTEMS, that is range checks not ASSERTS u dumbarse.

2 different things you seem to have confused. I bet you still have trouble with WIDECHARACTERS :D

Re:It doesn't have to be that way

[Anonymous Coward]

As an expert on this subject (I work at a software company writing Tax & Appraisal software like this), I can tell you that there are probably several reports that are available to the Appraisal and/or Tax Office where this could have been caught. It's not the programmers/analysts job to prevent the system from allowing a property to go up in value, but it's definitely their job to make finding properties like this easier.

If they're like any of our clients, they don't look at their reports very closely, or don't have a report that makes finding this very easy. We have a Top N taxpayers report they can run to see who generates the most money for the various taxing units, and you can run this by outstanding amount to see who still owes the most. This problem makes me wonder if our system has a "Value Increase Report" or something, that allows them to see the top N properties that went up in value, ordered by how much they went up. That would have popped this property to the top of the list. I may have to propose that to someone on Monday. :)

This probably could have been caught earlier, but with tens of thousands of properties to manage, one can be hard to find.

Re:It doesn't have to be that way

[John Hurliman]

Because people do own $8M homes. You could ask the user to confirm the entry any time a home is +-2 standard deviations, but having to confirm a dialog every 20 entries would be tedious and cause users to blindly click through it each time. +-3 std. devs. might not catch errors like this.

Re:It doesn't have to be that way

[mallardtheduck]

$8M is the tax bill.
The "valuation" was $800M.
Is there a private house anywhere worth that much?

Re:It doesn't have to be that way

[DeafByBeheading]

This is Indiana, where the state legislature passed a law decreeing that pi (as in the ratio of the circumference of circle to its diameter) is 3. Just 3. No messy fraction. No messy transcendental. Just 3.

That was Alabama, not Indiana. *And* it's just a myth...

Re:It doesn't have to be that way

[DeafByBeheading]

The "valuation" was $800M.

$400M. The summary is off by a (binary) order of magnitude. Check the article. But I'm pretty sure you're still right--I don't think I've heard of any home worth anywhere near that much.

Re:It doesn't have to be that way

[belmolis]

Not quite. In 1897 the Indiana House of Representatives actually did pass a bill redefining pi. The bill didn't become law, but it still reflects rather badly on the Indiana House of Representatives. The Snopes article confirms this at the end.

Re:It doesn't have to be that way

[andy_shepard]

No, it was Indiana, and it really did happen.

Re:It doesn't have to be that way

[andy_shepard]

Maybe not quite that much, but some come close. Bill Gates' property records

Re:It doesn't have to be that way

[bill_mcgonigle]

Why wouldn't a financial management/accounting system have similar rules enforced and monitored?

Lowest bidder. Poorly specified requirements document.

Yeah, I think that about sums it up.

Re:It doesn't have to be that way

[joecr]

Lowest bidder. Poorly specified requirements document.

Yeah, I think that about sums it up.

So are you saying they didn't use Intelligent Design in building this application. I'm not going to say how to prevent it as I lack sufficient knowledge to perform that task, but still it does prove that Intelligent Design is needed.

Re:It doesn't have to be that way

[PingPongBoy]

It is nice to have software that spots human error, and if a certain human error is common, software is designed specificly to prevent that problem. However, there are rare problems that cannot be seen until software is smart to the n-th degree. The probability of an n-th degree error is so small that the cost of the error is weighed against the cost of protecting against it. Even if special protections are built for a predictable error, there will still be rare bugs in other parts that can cause just as much harm. Computers are used to enable handling more items or more detail. This makes it harder for people to double check for problems.

Caveat emptor - the analogy is, if you have a lot to lose, don't just trust a computer or a bureaucracy. You have to put in your own checks and balances

Not surprised...

[alyawn]

One would think that the government officials would have noticed the dramatic increase in their available budget from the previous year. Of course they only saw dollar-signs. Sounds like every other local government I've known. How much do you want to bet that they won't reduce their individual budgets completly below the $8 million overage. Anyone?

Re:Not surprised...

[Peyna]

To repeat what I said earlier just to clarify this, the city did not bring in more money, they actually brought in less money this year than the previous year. The home values are determined, then the city figures out what they need to tax in order to meet their costs.

The $8 million overage is actually an $8 million shortage, because if the mistake had not been made, they would have had that $8 million. Since they thought this home was more valuable than it really was, everyone elses taxes were lowered by a collective $8 million.

There was no "windfall".

Re:Not surprised...

[alyawn]

Ah.. thanks for the clarification. So this simple mistake actually lowered everyone's property taxes? If so, then watch out for next year's taxes.

Stop Blaming the Database!

[Proudrooster]

I get sick and tired of everyone blaming everything on the database. It's not the databases fault people! The programmers that wrote the front end should have done better checking on the data entry. Something like,

if (home=single_family_dwelling AND new_appraisal >= current_appraisal *1.30) then
' Don't UPDATE THE DATABASE and contact data entry employee manager
' Send warning message to data entry operator
else
' Update the Database
endif

This county should spend some time and money looking for other data entry holes. Also, exception and audit reports should probably be implemented as a stop gap. Maybe report on parcels that have appreciated more than 30% and do a manual double check before publishing the tax revenue numbers to the budget office.

And at the risk of repeating myself, "This problem was not caused by the Database! Call it "human error", "programmer error", or "lazy auditors" but calling it a "database entry error" implicates an innocent database doing it's job properly. Thank you, you may now return to Slashdot and STOP BLAMING THE DATABASE!

Re:Stop Blaming the Database!

[SierraPete]

First, Breathe.

Second, read the title of the Article:
$8M Revenue Shortfall Blamed on Bad DB Entry . Data doesn't just flow into a database through the services of FM. The primary way that data gets into a database is through it being entered by a human. Like my human error where it was 400,000,000 valuation instead of 800,000,000 (caffeine not found, operator halted). For it to be an entry into a database (and if it's screwed up) it was probably a human that did it. And even if the db was screwed up, it was a human who screwed up the db.

Databases, like anything else on the computer, does only what it is told. GIGO applies.

Re:Stop Blaming the Database!

[dbdweeb]

Yeah, why do people always blame the database? I get the "it's the database" accusation all the time from Duhvelopers.

A friend of mine was suffering iron toxicity because he took too many iron supplements. He went to the doc to find out what was wrong and went through a battery of tests. A week later he got the report in the mail saying that he had liver cancer. He had a week before his next appointment and started reading up on liver cancer only to find out that it's almost always fatal and it involves a long drawn out time of excruciating suffering before the ultimate demise. So for a week he lived with that knowledge until he went to the doc only to find out that it was a data entry error. It turns out that the code behind the checkbox for liver cancer defaulted to the affirmative and the data entry person had just clicked submit after they complete a separate section of the form. So what programmer bozo would default such a data entry field to yes? Was he/she not thinking or was it sadistic humor?

Re:Stop Blaming the Database!

[iggymanz]

when most people speak of "the database", they are talking also talking about the front-end, middleware, back end services and routines, and maybe even the machines that host these things. Just like "the network" is used to mean file, email, internet and print services by most people. Get used to it.

Re:Stop Blaming the Database!

[Anonymous Coward]

According to the article it was a permissions problem. They gave the public access to a program that can change property values.

Were the programmers supposed to forsee this?

Re:Stop Blaming the Database!

[akarnid]

^^ Wish I had mod points for you. That is truly crappy design.

Re:Stop Blaming the Database!

[Kurt Granroth]

I agree, to a point. This is just an example of some bad software design. There's no real excuse that it should even be possible for something like this to happen. Typing 'R-E-R' instead of 'R-E-D' causes it? Yeesh.

Anyway, I'll disagree that x1.3 the house price automatically means that something is wrong. In our neighborhood, house prices shot up over 130% (x2.3) in some cases. The house across the street was valued at $218,000 last year but got an offer for $500,000 just a few months ago (they turned it down because they were asking $540,000). Yes, I know that "appraisal != home price" but still...

Re:Stop Blaming the Database!

[buysse]

Sell. Now. The bubble will burst. Take the money and run.

Re:Stop Blaming the Database!

[Anonymous Coward]

As someone who works on Tax & Appraisal software (not the company from the article), I can tell you we would all be happy to add in your miraculous code, but there are a few things you have to consider:

1) only single family homes? shouldn't this be on other things too? Well, which of those other categories. There are about 30, let me know which ones.

2) Why a 30% increase? Shouldn't that be a user-configurable option? Maybe it should be a different option for each type, that would be the best. But the people working at the office won't want to do that, they'll call our support people and have them set it up, since it will be "too hard" to do for the people who work in the office. (Remember folks: most of the people that do the work have up to and including a high school education!)

3) Alert operator? Which one? The one the kicked off the job before they left the office for the day, well, they're gone now, it's 3 AM and this job has been running all night. Maybe they should be attached as output to the job, so they can view the report. Wait, they always ignore the report on the job, because they don't think it's important, and the last 5 times there was nothing in it, so they won't look.

I know the comment was meant as funny, but in all seriousness, these are very complicated software systems. It's impossible to anticipate everything that will go wrong, or to try to figure how every bad piece of data being entered into the system will affect the rest of the system.

Usually the determination of the tax rate and revenue is done with a lot of guessing. Some people don't pay their taxes, other people will pay taxes from previous years that are still due. No one knows exactly how much they will get this year, or when it will come in. This is a big problem, but I'm sure they will survive. It's hard for the government to go out of business.

Re:Stop Blaming the Database!

[Anonymous Coward]

Zomg! Databases must never make errors, cause God placed them in the world for man to use, and they were perfect. No human has ever seen or touched the inside of a database to sully its perfection. Databases must not use memory or harddrives since that could have errors, or have bugs, since these would make you look stupid...noob. I mean EVERY SINGLE DB uses error checking memory and raids 0+1 and never has logic problems...

Re:Stop Blaming the Database!

[barzok]

o what programmer bozo would default such a data entry field to yes? Was he/she not thinking or was it sadistic humor?

2 options from what I've seen in my experiences:

#1 - Outsourcing. Programmer codes exactly what the spec says.
#2 - Management. Programmer says "hey, uh, this really doesn't make sense" when he sees the spec. Management says "we don't pay you to question the process, write what the doc says."

Re:Stop Blaming the Database!

[abirdman]

The problem appears to be simply that someone left an executable that updates the database in place after they updated the code. TFA mentions that the program was originally written in 1995.

I'm going to guess this is not a program that's written to a "modern" database, where the database itself can validate updates. It's likely an old Access or Foxpro or dBase or whatever app. The data has stayed in the same place, but the application (which holds all the validation logic) has changed. The old and new systems were probably left side-by-side (and the executables named similarly) to help during the transition. By the time the system was deemed satisfactory, the programmer was likely on another project.

That could also explain why the county agent fixed the mistake, but the fix wasn't replicated. He probably used the NEW program to fix it, and it's more isolated than the old one, and doesn't know it needs to fix the related data.

What seems strange to me is TFA implies that the old executable is available "remotely," and that there's some kind of command line, if the user has to type the name of the program (R-E-D or R-E-R). That's just stupid, and someone, either the IT staff or the programmer/consultant who wasn't diligent enough to hide/disable/delete the old executable, needs to be slapped.

The rest of the story is just the results of sloth and greed- the higher valuation resulted in a slight decrease in the mil rate, everyone thinks it's great so don't check to see if it's a mistake, tax bills go out, clusterfsck ensues.

The place where I work has a system that has a similar problem-- we paid for a large update to a legacy system, but it was never implemented, and instead the old system was replaced and is about to be discarded. The original (unused) update was written to do an automatic in-place one-way schema update when first run, however, and for years we joked that if someone was so rash as to run the wrong executable, the system would self-update, and we'd be toast! Obviously, that excutable isn't anywhere the users can find or execute.

Re:Stop Blaming the Database!

[Kurt Granroth]

Don't think it's not tempting! The main sticking point is this: where do we go? All comparable houses in a reasonable distance have similar ludicrous prices. My commute to work is currently 30 miles. I would have to move a minimum of 20 more miles out (probably more) to sell our house, buy a new house, and make a profit. The profit I'd make wouldn't be worth the 100 mile round-trip every day.

Plus, kid in school that she can walk to, beautiful neighborhood, finally got the house decorated like we wanted, finally got a pool put in, etc...

Re:Stop Blaming the Database!

[NuclearDog]

"Anyway, I'll disagree that x1.3 the house price automatically means that something is wrong. In our neighborhood, house prices shot up over 130% (x2.3) in some cases."

Well, obviously in some cases houses can double in value.

And in some cases, there may be a reason to allow a user to input a string into your program that is longer than the input buffer can hold.

And in some cases, there may be a reason for a complete stranger to have your bank account details.

And in some cases, you may want arsenic in your pop.

Yet, it seems that we are constantly trying to get rid of buffer overflows, we tend to not give our bank details to strangers and we (as a rule of thumb) do not have arsenic in our pop.

Err, I seem to have forgotten what my point was exactly. It was something along the lines of: Who gives a fuck about edge cases? This incredibly simple validation would be very effective in the majority of cases (the majority being the key) and should not be ignored because of a few examples where it would not be effective.

ND

Re:Stop Blaming the Database!

[bradk500]

Garbage in garbage out

    Don't forget government contracts goto the lowest qualified bidder...They have no idea about this stuff, or this could well have been done in access or something by a town IS employee who just took a course at a local college.

    The other thing is, if 8m is big deal to them, then that is a fairly signifigant portion of their budget, and an increase of that amount should have been noticed. In new york city it would be easy to miss, in EBF not so easy.

conspiracy theory:
  maybe there was an election and someone used the mistake to their advantage..fund everything, get reelected, ooops clerical error, sorry seniors you lose your center, etc...

Comforting

[Anonymous Coward]

This illustrates why we should be uneasy about massive systems like ADVISE, sifting through e-mail, phone conversations, etc. The system complexity will not be understood by those who use the system, and there will be the inevitable errors, false positives, etc. The danger will be when the government has the power to act on what the system is saying ... "You have been detained because ADVISE has given you a class-5 rating as a threat" ... next stop Cuba ...

Data entry problem

[linebackn]

Lippens said the user probably tried to access a real estate record display by pressing R-E-D, but accidentally typed R-E-R, which brought up an assessment program written in 1995. The program is no longer in use, and technology officials did not know it could be accessed.

And this is why you shouldn't make potentially modifiable live data available to just anyone. And why you need to audit and maintain any such programs very closely, which apparently they didn't. And then you still should audit the data because even an experience user can make a simple typo that throws everything off. Who knows what kind of people they had entering data.

They indicated this person wasn't supposed to be doing data entry but I get a never ending laugh out of how some folks would rather have every blow joe enter their own data rather than use an experienced data entry clerk. And then those same folks expect the data to be 100% correct!

Re:Data entry problem

[raftpeople]

As a designer/developer/implementor/trainer that has worked on large enterprise systems most of my career, I am surprised by your statement that anexperienced data entry clerk should enter someone else's data.

The person that owns the data/transaction and is responsible for that data/transaction should be the person to enter it. That is the person closest to it and it reduces the amount of paper transactions before the data actually gets entered.

The problem, in this case is most likely (based on the available information) a complex set of systems that have some sort of interface. Even though the problem was caught quickly in one system (probably due to reasonable auditing procedures), the data had already been replicated to another system (either in summary form or detail) at which point those same audits were probably no longer applied because the designers did not consider the situation.

GIGO

[nanojath]

I'm curious why those involved with budgeting never questioned why they suddenly had an extra $8 million to play with. Someone more in touch with government and their community should have wondered what was going on.

Maybe it's the same blind acceptance of numbers spit out by computers that will find a slack-jawed, gum-popping cashier blithely telling you you owe $58.60 for your soda, twinkie and magazine.

Similar thing happened to me once

[laing]

I purchased a home and it was subsequently reassessed for $100,000.00 more than I paid for it. There was no way to reason with the assessor's office so I had to take my fight to city hall (assessment appeals board). It's very much like a courtroom environment where you are the defense attorney and the assessor is the prosecutor. I had prepared my case well and the "prosecutor" settled and gave me everything I was asking for just before the hearing. He didn't want the board to see how badly he had screwed up. It still took over a year for the proper assessment to take effect (retroactively) and for the tax lein to be removed (I refused to overpay). I eventually got several checks from the county for my overpayments.

I think there is a culture of corruption in some areas where they will deliberately overassess your property thinking that you will not bother to fight it. Obviously in this case it was taken to an extreme.

Re:Similar thing happened to me once

[acaben]

If you refused to overpay, why did the country refund the money you overpaid?

Re:Similar thing happened to me once

[Anonymous Coward]

...because they put a lien on his house. This means the city *has* been paid, by a type of mortgage, as to clear the lien he will need to transfer the money from those cheques to the city, perhaps plus interest.

Re:Similar thing happened to me once

[Anonymous Coward]

Wait, you bought a house for x, then it was reassessed at x+$100,000. So if you'd immediately sold the house you'd be $100,000 richer... and you argued against this?

Re:Similar thing happened to me once

[carleton]

Unfortunately, there's a big difference between what a bank/real estate person/house buy will assess a house at and what the government assesses it at. For the first couple years I owned my home, the value the government placed on it was significantly lower than what I paid for it or what similar houses in the same neighborhood were going for; this did not bother me since basically the government was about a year behind what the market would bear. The flip side sucks; it's entirely possible for the housing market to crash and have the government take a couple years to lower the appraised value to match the market (and at that point, my taxes probably wouldn't change too much as I expect they'd have to raise the rates to compensate for the lost in tax revenue). From what I've heard, it's even worse in the case of whatever it's called when the government forcibly buys your land (in normal cases, to built highways etc.; in abnormal cases like in the Supreme Court Case, to then resell to a commercial developer).

Re:Similar thing happened to me once

[laing]

Because the original assessment was more than the value that we finally settled upon and I continued to pay the regular assessments (just not the supplemental ones).

Re:Similar thing happened to me once

[laing]

I'm not sure why I'm bothering to reply to this since you obviously don't know a whole lot about real estate. The tax assessor's assessment is for tax purposes only. If the house were up for sale, a real assessment would likely be done and would hopefully come in somewhere near the selling price.

Re:Similar thing happened to me once

[Anonymous Coward]

Yeah it's definitely worse in those cases. My grandparents and their neighbors had their land seized for Governor Dodge state park in Wisconsin... evntually. They had fun for several years signing land over to each other, so the state would show up and have some seizure form.. "oh, we don't own this land anymore.. that form is invalid, sorry". The state paid a good price eventually but they were trying to buy for like 1/10th of what the land was worth initially.

My thoughts on the story

[Antony-Kyre]

First thing I notice is how much property taxes a cheap $121,900 home would have to pay. That amount doesn't seem progressive, $1,500 in taxes.

Second thing I notice is the spending issues. Didn't the government realize that a lot more tax revenue was coming their way this year than in previous years? Didn't that raise some eyebrows? Shouldn't they be trying to spend less, instead of spending 100% of what they think they will get?

Re:My thoughts on the story

[JeffSh]

i pay $2500 on my home i paid $135,000 for. for some reason the village thinks we need 3 full time police officers.

for 900 people..

i hate living in a village.

Re:My thoughts on the story

[Peyna]

Read the story, they didn't add the amount to their budget, they used the figure to determine what tax rates needed to be to raise enough money to meet their budget. So the problem was that as a result of thinking they were getting all of this money, they were able to lower taxes all around and still raise the same amount of money.

In the end though, what they did was lower taxes and raise less money because the house wasn't worth what they thought it was.

The assessments come in first, then they determine what the tax rate needs to be in order to meet their needs and then collect the money.

Re:My thoughts on the story

[easter1916]

Jesus man, that's high. I paid $1,800 on a property valued at $165,000 here in Maryland Heights, MO (western St. Louis county), and that's jumped dramatically since I bought the place (was $1,250 in 2002).

Re:My thoughts on the story

[paeanblack]

i pay $2500 on my home i paid $135,000 for. for some reason the village thinks we need 3 full time police officers.

for 900 people..

You need at least three of anything if you want 24/7 availability. The town population isn't really relevant.

Re:My thoughts on the story

[Antony-Kyre]

I guess I should have read the whole article. Things are different where I live.

I think in the counties in Washington state, it's pretty much fixed, more or less. The governments have to deal with the amount of money they get. If they need more tax revenue, I think they would have to try raising the values of the home, not the taxation rate (which I "think" is limited by state constitutional law, lest they do a levy or something).

Comments on property taxes, and yes, this is definitely whining I'm doing.

They should really try making it progressive. I'm not sure about other states, but I know what they could do in my state. In my state, I think they should try having a constitutional amendment doing the following. Split property taxes into two categories, residential and non-residential properties. The following for residential properties only. Exempt the state median home value from state property taxation. Exempt the county median home value from county property taxation. Exempt the city median home value from city property taxation. Leave the levies alone as it would be too messy trying to do homestead exemptions with those. Uncap the state, county, and city property taxation rates allowing the state, county, and city governments adjust as necessary.

Re:My thoughts on the story

[Antony-Kyre]

I should have probably said, "I would think a $400 million increase in local assessment values would raise a few eyebrows."

Re:My thoughts on the story

[LurkerXXX]

The question is if they really NEED 24/7 availability. I used to live in a village of 300 people and we wouldn't have even dreamed of having one fulltime cop. The county sherrif used to drive through once a month just to make sure the place was still there. That was about the extent of the use or need.

Re:My thoughts on the story

[yndrd1984]

There's $821,867,640 worth of residential property in the county, and $1,733,624,770 total.

You'd think an additional 400M would be rather obvious.

Re:My thoughts on the story

[abirdman]

But you're talking about pols and civil servants. Do you think any of them is motivated to go and search for that 400,000,000 error when everyone else is standing around high-fiving each other and popping their cuff links? The article indicates this piece of software has been chugging along since at least 1995. I think all the human staff just figured the increase was a result of their good work and positive attitude, and probably meant their homes and businesses were worth more and their taxes would be less. Heck, real estate has a mind of its own, right?

Tragic system design

[dbdweeb]

A friend of mine was suffering iron toxicity because he took too many iron supplements. He went to the doc to find out what was wrong and went through a battery of tests. A week later he got the report in the mail saying that he had liver cancer. He had a week before his next appointment and started reading up on liver cancer only to find out that it's almost always fatal and it involves a long drawn out time of excruciating suffering before the ultimate demise. So for a week he lived with that knowledge until he went to the doc only to find out that it was a "data entry error."

It turns out that the code behind the checkbox for liver cancer defaulted to the affirmative and the data entry person had just clicked submit after they complete a separate section of the form. So what programmer bozo would default such a data entry field to yes? Was he/she not thinking or was it sadistic humor?

Re:Tragic system design

[Anonymous Coward]

Too late, you posted this item with the unnecessary and childish slam against developers earlier. Kinda ironic to be questioning the competence of those that practice an entire field of work when you apparently can't be troubled to look at which buttons you're pushing onscreen...

property tax system

[dfghjk]

Property taxes are something that should be done away with anyway. It's just one more unfair tax that creates extra work for everyone effected and introduces opportunities for abuse on both sides.

In my state, larger properties are almost always exempted from taxes anyway. That leaves the upper middle class paying the bulk. After all, the poor don't own valuable property and the rich manage their ag exemptions by hiring professional exemption maintainers. If you don't want to play the game you're gonna get screwed, just like dealing with the IRS.

Interesting thing, if the victim of this mistake wasn't watching what was going on, he could have been in a world of hurt. Where I live, there's a relatively short window of time to dispute a valuation. After that you're in real trouble.

People need to realize that a consumption tax is the way to go. Infrastructure for that largely exists already and cheating is hard to do. Wealthier people consume more so therefore pay more and there's a builtin incentive to save. The fewer hidden taxes we have the better since it gives us better visibility to how much we really pay.

Re:property tax system

[isn't my name]

Interesting thing, if the victim of this mistake wasn't watching what was going on, he could have been in a world of hurt. Where I live, there's a relatively short window of time to dispute a valuation. After that you're in real trouble.

It could be even worse. I live in the county right next door and I do not actually see my property taxes. They are sent directly to my mortgage company, who adjusts my escrow payments based on the property taxes. So, if the person had a mortgage handled by some mega-corp in some distant state, they may not have realized until they go the adjustment notice on the mortgage payments.

People need to realize that a consumption tax is the way to go. Infrastructure for that largely exists already and cheating is hard to do. Wealthier people consume more so therefore pay more and there's a builtin incentive to save. The fewer hidden taxes we have the better since it gives us better visibility to how much we really pay.

Yes, a rich person probably buys more in a year than a poor person. However, as a percentage of income, the rich person spends much less of their income buying things that would be taxed in a consumption system. That's why sales tax based schemes are known as regressive taxes because they generally impose a higher tax burden on the lower incomes. Toss that into your calculations, and the tax rate is going to have to be very high to make up the difference in what you are losing on property/income taxes.

Re:property tax system

[jombee]

I'm not certain about your situation, but as for me, I think my local property taxes are about the most fair and well-used taxes I pay. What I pay each year in property taxes is much more meaningful to me, my family, and my community compared to what I pay per WEEK in federal taxes.

My current property tax is ~1% (was ~2% before a primary residence credit) of the value of my land and home. Of that tax >50% pays for the local school system, ~20% for firefighting and police protection, and the remainder goes to the local library, roads, parks, and government offices. Honestly, I'd be willing to pay more if it was used for an even better library, well maintained roads/sidewalks, parks, more teachers, firefighters, and policemen/women. I've known many teachers, firefighters, park rangers, and members of the police force... I have no doubt that they all deserve more money/equipment for the outstanding work they perform for my community.

Not long ago, the local library proposed an expansion project and was voted down because property-owners were in uproar about the 34-cent property tax increase/year. Apparently the public held similar principles as you... it seems a pittance to me. Hell, in comparison, I'd pay an extra $5/year (or more) if it meant the firefighters/police could get to my property faster with better equipment to save my family or my neighbors life in an emergency!

IMHO, property taxes are not the first place to start when trying to reduce the public's tax burden. Look anywere else.

= jombee

Re:property tax system

[innocent_white_lamb]

I do not actually see my property taxes. They are sent directly to my mortgage company,
 
Strange. Around here people who have their property taxes paid through their mortgage payment receive a copy of their tax notice, as well as the mortgage holder.

Re:property tax system

[Anonymous Coward]

Honestly, I'd be willing to pay more if it was used for an even better library, well maintained roads/sidewalks, parks, more teachers, firefighters, and policemen/women. I've known many teachers, firefighters, park rangers, and members of the police force... I have no doubt that they all deserve more money/equipment for the outstanding work they perform for my community.

You are f-ing kidding me, right?

In my area, all the teachers are overpaid. They start at $~35K a year. Which other private sector job starts at that for a mediocre liberal arts graduate with those benefits? After 15 years work and getting a masters (paid by the district), they can earn $86K a year.

Plus healthcare. For the whole family + spouse.

All this for a job where they only have to work ~9 months a year, all holidays off. So they can earn some extra income during the summer (~10K).

Oh wait, the summer has workshops/etcetera. Which means a donut conference at Atlantic City, Las Vegas, etcetera.

I know a teacher who recently quit because she hated the Vice-Principal, went Private sector and is now moaning how she has no healthcare and is earning about 1/2 as much.

WTF is it about teachers where everybody in this country parrots the line that they are under-fuckin-paid. That has to be the most cushy job around!

Nearly the same applies for many government positions.

Re:property tax system

[JimBobJoe]

Property taxes are something that should be done away with anyway.

I'm not really sure where to start off here. Property taxes were the preferred method of taxation for about 150 years. To this day, many think it's the only type there should be. (Although with changes...personally I'll be happy to end the property tax and replace it with a land tax though in my home state that would require a change to the constitution. Land taxes would allow for a more efficient use of land.)

Property taxes tend to pay for very local things (schools and city services.) They are also the most stable tax (whereas consumption and income taxes, depending on the latter's progressivity, go through wild fluctuations that make for difficulty in budgeting.)

Though the federal government has never had a tax on wealth, I wouldn't mind a national property tax to replace the income tax. C'mon...it'd be fun. :-)

Re:property tax system

[Saxophonist]

There are several problems with going to a consumption tax as the sole basis for revenue. By consumption tax I think you are referring to what is generally called sales tax where I am. Another poster pointed out (in so many words) that sales tax is regressive. A greater percentage of a poorer person's income goes to sales tax than of a wealthy person's income simply because the poorer person does not save much money and because wealthier people probably spend a greater percentage of their income on services (and real estate!), some or all of which is not subject to sales tax, depending on the state's tax laws. This regression happens (to a lesser degree) even if there are exemptions on basic needs like food.

Further, property taxes do affect the poor more disproportionately than one might imagine. Often, they do not own real estate, but rent instead. You can be sure that landlords pass along the property tax bills to tenants through their rent. In my state, homeowners qualify for a homestead exemption for their primary residences (limit one per homeowner), which reduces the property tax bill some. Since the poor are more likely to be renting, they do not benefit from the homestead exemption and therefore pay a greater share of taxes.

It probably looks as though I am arguing for the income tax. In a way, it seems fairest, but the fairness of the income tax system in the U.S. is certainly debatable. Is income tax a good way to fund municipalities? I don't know; it seems like it would cost more for most small- to medium-sized cities to administer than it would be worth. In my state, school districts can charge a surtax that is tacked on to the state income tax bill. The surtax can be up to 20%, but it has to be approved by voters (actually, the school board can pass the surtax, but if enough citizens petition, a vote is required; the vote almost always happens in practice). There are still many problems with the income tax system, but it seems quite preferable to using sales tax for everything.

Re:property tax system

[The Master Control P]

As a refugee from California (now living in Oregon), I agree that schools need more money. But I also think there need to be strings attached and/or more oversight to stop them from wasting it.

Exhibit A: My old high school. They had enough money to totally rebuild the football field/track with astroturf, and enough bling left over to buy almost every class brand-new P4 Dell computers (that no-one uses for education except the CompSci classes). On the other hand, we didn't have a class set of French books and it's only a matter of time before the PIF (Portable Invasion Force) forces the Parking Lot Alliance to surrender unconditionally.

Murphy's law

[jamesl]

The county treasurer's name is Murphy. Jim Murphy. You can look it up.

Did you even read the article?

[porkThreeWays]

It's such a short article, please read it...

There's no mention of the home owner getting pissed off. The problem is, they assumed they were getting 8 million dollars in property taxes they weren't. They planned their budget around this and now many departments are being told to give money back. Some departments are saying to accomidate giving money back, they might have to do some lay-offs.

They think that the mistake was made on a public terminal for public information lookups. A typo of a similarly named program that hadn't been in use for years came up and allowed this un-authorized person to make the change. They don't think it was intentionally malicious.

Re:Did you even read the article?

[Anonymous Coward]

Did you even read the parent comment or the article summary?

It's such a short comment, please read it...
It's such a short summary, please read it...

There's no mention of the home owner getting pissed off.

So what are you commenting on?

Re:Yes, but there is good news

[catwh0re]

since when was $800,000,000 $8M?

How about being 100x off the mark.

Re:Yes, but there is good news

[Loconut1389]

Article says house was listed at 400,000,000, summary says 800,000,000. Apparently property tax is 2% -> 400,000,000 * 0.02 = 8M

Article says $8M tax.

So basically, the city was expecting to get another $8M that they now wont.

Re:Yes, but there is good news

[Anonymous Coward]

The home's VALUE was $800M (actually $400M in the article)
The TAX on the home was $8M.

That means that there's a tax rate of 1% (or 2% if you RTFA and get the home's price right.)

Re: Try closer to 50%

[Poisonous Drool]

If you divide the property taxes I paid last year by my house payments, you get 48% and that number is low because property taxes go up almost every year and my house payment will eventually go to zero. If you live in your house for 40 years, the taxes could easily exceed what you paid for your house including interest.

Both Ends

[Karma Farmer]

It sounds like the county has multiple databases, and the database available to the public records, and the database used to compute the actual tax bills, were separate databases. And, it sounds like there was a single property valued at $121,000 in one system, and $400,000,000 in the other.

This is interesting to me, because I suspect I bet the totals in both systems come up pretty close to the same. In other words, I bet there's one property "accidentally" valued at $400,000,000, and a lot of properties "accidentally" valued at $0. Who in the county might actually own one of those accidentally undervalued properties is left as an exercise to the reader.

Re: Try closer to 50%

[the eric conspiracy]

Yeah, I hear you. I did the calculation based on current assesed value. My father is living in a house he bought for $15,000 in 1955. He now pays $7,000 per year in real estate taxes - so I'd guess he has paid 10-15 times the original purchase price in taxes. Factor in mortgage interest and it's probably 5 - 8x.

Re:It doesn't have to be that way (stock trading)

[mikael]

Why wouldn't a financial management/accounting system have similar rules enforced and monitored?

That's one issue I can't understand - there have been several stories reported recently where traders mixed up the number and price of the shares they were trading:

Traders typing error costs Japanese brokerage firm millions

You would think it would be possible for the system to check the selling price against the current going price.

garbage in, garbage out.

[oyenstikker]

Why is this a big story?

Wow!

[xenoxaos]

I think thats the house down the street from me. Another weird thing, I used to work for the Den Dude.

It's happened before...

[Anonymous Coward]

Something like this happened in Sata Fe, New Mexico, a few years back. I wish I had a link to give you, but it was basicly the same. In that case a man died and willed VERY little house to his son that just happend to be just off the Santa Fe oldtown plaza (read VERY EXPENSIVE PROPERTY at any size). When the county was updating the entry in their database, one of the workers changed the size tag from 1200 sq/ft to 1200 acres. I forget how much that changed the tax estimate, but it was actually a noticble blip in the STATE bungdet. To make matters worse, the taxation and revinew department sent the bill to the residence of the decesed and it took over 6 months to learn he was dead and then track the mans son down. At that point the police were called in to bring the man in for questioning. The rest is a bit of local color and history...

Re:Yes, but there is good news

[Anonymous Coward]

i think what he's pointing out is the confusion between the author writing 400M and 8M tax. versus almost a billion dollars. it's got very little to do with RTFA and more to do with the summary not being written properly.

This sounds SOOOO familiar...

[ClickOnThis]

Long ago, I read of an episode that was very similar to this, only the input medium was punched cards, and the item assessed for taxes was a car. The keypunch operator accidentally punched a digit in the leftmost column of the field used for the market value of the assessed item. The remaining blank columns were interpreted by the software as zeros, and as a result, the car was assessed for taxes of $7M.

And just like the current story, there were opportunities to discover the erroneous entry and fix it. But it never happened, and as a result, the local government in question over-budgeted based on an incorrect projection of tax revenues. When the error was discovered, they just had to "tighten their belts".

It's just so unnecessary. Software may work correctly, but if it allows the user to input nonsense, then it's a design flaw -- just like a buffer overflow.

At least in this case the only loss was money. Not like the Scottish girl who was
overdosed with radiation while she was being treated for cancer. It's not clear yet what the problem was, but I wouldn't be surprised if it's a case of software working correctly but accepting incorrect input, as it was for a similar case of radiation overdose in Panama a few years ago.

Re:This sounds SOOOO familiar...

[Ph33r th3 g(O)at]

I was thinking along those lines, but there are parcels of real estate worth $800,000,000. So we're not talking a general if (valuation > MAX_VALUATION) here--catching this would have taken some (admittedly rudimentary) comparison with neighboring property values.

Re:This sounds SOOOO familiar...

[Wilson_6500]

The long and short? People never learn.

Re:This sounds SOOOO familiar...

[The Master Control P]

if(land.value / land.area > MAX_AREAL_VALUE) { flagForHumanReview(land); } // I don't imagine too many parcels of land in an area legitimately exceed a certain value per area. FIXME: Add a flag to the structure for those that do?

Not to worry!

[therage96]

Not to worry, I am sure the database was in error here, not the editors.
 
Silly database, why can't you just store the data correctly?!

Re:budget committee

[Anonymous Coward]

Forget the homeowner. Why didn't the budget committee notice such a gigantic leap in year over year projected revenue?

I imainge it sounded something like this: "Swwwwweeeeeeeeet! We just increased our budget by X%! Let's hurry up and spend it before anyone notices."

The newsworthy portion of this story falls squarely on the budget committee.

Mod Parent Down

[Overzeetop]

Man, where do you live? In the few places I've been (including MD, VA, and CA) property taxes are based on a percentage of the home value. Othewise, you would never be able to predict what your taxes would be. That may not seem like a big deal to you, but the mortgage companies, who hold escrow for most people with mortgages, are quite keen to make sure they have you have enough in escrow to cover your taxes (and then some). Having been involved with several local governments and budgeting, I have yet to come across a "floating" tax system like this.

Re:Mod Parent Down

[aaronl]

That's what the GP said, actually. Your house has an certain assessed value, and a certain tax rate, which accounts for the maximum taxable amount. Many places will only allow the collected property tax revenue to go up a certain amount over the previous year, regardless of new development or raising of assessments.

What could happen is to say that at your tax rate, the locality is able to collect $50 million, but only needs $30 million. They would have to adjust all of their taxes to only collect the $30 million, so nobody would pay the 100% rate based on their assessment. However, if they collected $30 million last year, but need $38 million this year, they may need to perform a special procedure to raise their tax revenue by the $8 million over the previous. In both cases, the maximum possible tax revenue would be $50 million, they levied a tax for that amount internally, and had to do a calculation to drop that to only the exact amount required.

So you see, you have a maximum possible tax, but would like not pay that full rate.

The entire state of MA does it this way, for example. I would be very surprised if most of the US didn't do it in a similar fashion.

Re:Mod Parent Down

[Anonymous Coward]

Rather, with property taxes based on a fixed %, you can't predict what your taxes will be unless you happen to know what your property's value will be in the future.

As in the parent's experience, mine is the city starts with the budget and determines the tax rate needed to fill it. This way the dollar amount of one's property tax bill does not change significantly each year, unless the property's value changes at a different rate than the city average.

Re:Mod Parent Down

[afidel]

Huh? Where I live you pay x% of y housing value. If they collect more than the budget for this year due to new home development they slush it into next year and use it to pay for the extra services that will be needed to support the people from those new developments.

Re:Mod Parent Down

[Overzeetop]

You have localities that spend less than they take in in tax revenue by chance? Y'all need to come talk to floks down south of the mason-dixon line, and let them in on your secret.

No, I take that back. My tax rates are less than $8 per $1000 of assessed (assessed at full mkt value, which translates to about $40-50k under actual resale). On second thought, you'd better stay up north! ;-)

Validation...

[hotarugari]

If their software was smart enough to do validation checks, it would flag things that were outside of the standard deviation per size and area.

They didn't see $8 million in new revenue

[Solandri]

The error was caught and corrected, but not before the error had propogated to the tax revenue projection algorithms. Those revenue projections were done with the error in place. These projections were then used to set the tax rates - presumably so as to maintain about the same amount of revenue as the previous year.

Then it was found that the error made it into the projections. That meant the tax rates were too low, meaning the affected communities are receiving less revenue than projected.

Someone could've noticed the tax rate was lower than in previous years, but they might've attributed that to the red-hot real estate market inflating property values.

Yeah Suing works when they don't have to pay...

[tarranp]

A government employee is shielded from liability for damages caused by their official actions.

So if you sue them, you will help pay for their defense (their lawyers are paid for with tax money) and if you win, you will pay part of the judgment as it is paid with tax money.

So, it costs them absolutely nothing, and they even will use some of your money to pay for their propaganda to the effect that thanks to the greedy telecom company refusing to pay its fair share, the people will face higher taxes and reduced services.

Bottom line: governments are protectionist rackets par excellance. There is little that one can do to threaten them.

Re:Yeah Suing works when they don't have to pay...

[PerfectSmurf]

I've heard of many lawsuits rejected because of this, but to date I've never heard of anyone challenging based on inappropriate actions. You know, if a position has a strict, documented, procedure and this isn't followed then the individual wasn't performing his job and the agency wasn't performing its job in supervising. Seems this would allow government officials abusing power to be sued beause they weren't acting in their official power and capacity. I always wonder if this has been argued and has failed, hasn't been argued, or is just settled and hushed enough that it's not common knowledge.

The title is wrong too

[ashpool7]

$8M != $800,000,000

Don't you just love this "informal" setting we have here at slashdot...

Re:The title is wrong too

[General Wesc]

Maybe the tax rate isn't 100%? After all, this isn't in Massachusetts.

Dry cleaners?

[Rich Klein]

"As an aside, how would you like to be in the homeowner's shoes when he opens up his mail box and finds an $8M property tax bill? I'm sure there was a trip to the emergency room or the dry cleaners involved."

Dry cleaners? For what? Underwear? Dry cleaning is for delicate garments; it doesn't necessarily clean better. If you're not sitting around in lacy lingerie every day then just throw your undies in a plain old washing machine. If they're tighty whiteys, use bleach.

If you can afford to send *all* your clothing to the dry cleaners, then you can probably afford the $8M property tax bill! (I'm just being contrary, of course)

HTH.

Re:Dry cleaners?

[grimJester]

Instead of bothering with underwear, I usually just wrap my pink silk tuxedo around my waist to go out for the mail. The neighbors keep complaining but hey, it's silky smooth.

Re:Dry cleaners?

[Rich Klein]

Silk... That's so money! :)

Re: Try closer to 50%

[Anonymous Coward]

If you divide the property taxes I paid last year by my house payments, you get 48% and that number is low because property taxes go up almost every year and my house payment will eventually go to zero.

The property tax rate is not a function of what your house payment happens to be. It's a function of the government assessed value of your house. It'd be interesting to hear what your actual property tax rate is. For the situation you describe, I suspect two things are true: 1) your property tax rate is quite high; 2) you don't have a standard 15 or 30 year fixed rate mortgage, because you've been suckered into buying more house than you can afford using an interest only loan or a loan with a very low teaser rate.

Do I understand this right?

[Simonetta]

Do I understand this right? Some local county bureaucrats planned their budget on the assumption that they would be receiving property tax from a entity that went from a $121,000 valuation to a $800,000,000 valuation in a single year?

    Wasn't there anyone in the process who had a 'reality' detector working? Are any of these people still working for the county? Can anyone really be that dumb?

    How can I take advantage of these morons?

    And, please, keep these people out of the federal government. No one there would notice an error of such magnitude, or they would be too scared to make it public.

Re:Do I understand this right?

[belmolis]

The people who planned the budget probably didn't know how large a contribution to the property tax base that one house made. They just get a total base value and from that compute the tax money that they have to work with. Of course, if the change in the base is much larger than expected, you'd think that somebody would look into why, but I suppose that there is a range of changes that are small enough that nobody thought to look into the reason for the change but large enough that their being in error could cause some significant budget problems.

It seems fairly plausible that the people doing the budget were not negligent. The people who set up the database, on the other hand, should have had sanity checks for things like this. I also wonder about the timing. In the jurisdictions that I am familiar with, you get an assessment notice for your property months before the tax is actually do, so if there is a problem you've got time to deal with it. For the same reason, it seems like they shouldn't be calculating tax revenue only a short time after assessment.

Re:Do I understand this right?

[afidel]

Incorrect, in a town where $8 million is a significant chunk of the budget how the HELL do they miss an increase in property value of $800 million? My town of 28,000 has a median housing value of $175,000 even with a low average of two residents per house that only comes to ~$250 million for the entire town!

Re:Do I understand this right?

[mev]

I'm not sure how Indiana works, but in some places, the overall tax rate is set based on the total assessed value. Having that $400M valuation may have meant that everyone elses taxes were set lower, not that there was an extra windfall of tax income.

Re:Do I understand this right?

[belmolis]

To begin with, the house was over-assessed at $400 million, not $800 million. Suppose that the town's budget was $100 million. The article says that the real value of the house as about $121,900 on which property tax of $1500 had been paid the previous year. That gives us a tax rate of 1.23%. So the town's assessed base is about $8.13 billion. A shortfall of $8 million on a budget of $100 million could be "significant", yet the disparity in the assessed base is only 4.9%. So, yes, there could be a significant problem from the shortfall with a sufficiently modest (apparent) change in the assessed base that it wouldn't raise eyebrows if one didn't know that it was due to a single house.

Well I'm not surprised...

[TBulldog]

As a developer in the GIS industry, a lot of our clients are County Assessors who use these appraisal systems on a daily basis in conjunction with GIS software to manage the physical land in their respective counties. I'm not in the least bit surprised by this. These CAMA (computer assisted mass appraisal) systems are not only ridiculously overpriced, they are also hilariously outdated. How overpriced? Oh, they range anywhere from 500K to 1.5M. How outdated? Try green screens and as400. What you have is a small office of little blue haired Bettys entering data with no front-end or even back-end data validation going on. The market leaders for this software, such as Manatron, are just beginning to release SQL-based versions of this software. It's truly embarassing. Try hitting your county/twp appraiser's website and see how many spelling variations you can find of your own street. I think the record is about 37. At least this property owner got an $800M value. In some cases the assessors can undervalue their buddies' commercial properties, meaning they will have to pay less taxes than the average property owner...a subtle display of corruption.

because of how people think

[kpharmer]

> Why wouldn't a financial management/accounting system have similar rules enforced and monitored?

I think the issue is that most people seek to address data validation problems through simple business rules such as "no property can be over $20,000,000 in value"
    - in which you know that sooner or later this rule will become obsolete

or they try to add additional workflow steps such as "any property worth over $10,000,000 must be validated by supervisor prior to be added to property rolls"
    - in which people disagree about workflow, the extra complexity & cost usually cause it to be killed

Personally, I prefer for data like this to keep a separate data quality attribute that gets flagged due to certain checks - and not necessarily boolean logic either - something like - if the value of this property is three standard deviations over all other property values then flag it as abnormal. Now, anything flagged as abnormal should then cause additional flags to trip so that it's easy to draw people's attention to this problem.

Then again, hell - there's also the use of extremely simple trending reports - which should have made this obvious. Didn't anyone get a little curious about this county having its total property value increase an average of 2% every year for 50 years then increase 10% (or five times the historical average) in a single year? Just guessing at the numbers here, but come on - it should have been glaringly obvious to anyone responsible for finances in the city. And that's without using this application at all.

Re:because of how people think

[Anonymous Coward]

> I think the issue is that most people seek to address data validation problems through simple business rules such as "no property can be over $20,000,000 in value"
> - in which you know that sooner or later this rule will become obsolete

Well, I happen to think that a rule that said "No property can get an increase of 800000% in value in a year" would have catched that problem...

Re:because of how people think

[kpharmer]

> Well, I happen to think that a rule that said "No property can get an increase of 800000% in value in a year" would have catched that problem...

sure, but what about 100%? 30%? 2000%? Where do you draw that line *exactly*?

Re:because of how people think

[Anonymous Coward]

> > Well, I happen to think that a rule that said "No property can get an increase of 800000% in value in a year" would have catched that problem...

> sure, but what about 100%? 30%? 2000%? Where do you draw that line *exactly*?

The rule should be asked to people writing the functional specification. If they forgot such rule, dev should suggest:

if previous_value > 10000 and current_value > previous_value*10 then
    ask for validation by authority
endif

The '10000' and the '10' should be in the static data of the application.

Any other question ?

Don't want to be harsh, but I happen to work with plenty people that have the same kind of reasoning as you gave, adding complexity, questions and red herrings to escape making decisions or proposing concrete solutions.

Re:because of how people think

[msobkow]

Actually I'm not talking about reject rules, I'm talking about confirmation-required flagging. So the only time an operator has to intervene is if flags are getting raised while processing a particular piece of data.

In some environments, there might even be multiple digital signatures required to approve such abnormal requests.

Some businesses just consider such checks and balances to be essential for fraud prevention and detection, but they can be used to catch a lot of other potentially expensive data problems early.

Re:because of how people think

[kpharmer]

> Don't want to be harsh, but I happen to work with plenty people that have the same kind of reasoning as you gave, adding complexity,
> questions and red herrings to escape making decisions or proposing concrete solutions.

The problem with your approach:

> if previous_value > 10000 and current_value > previous_value*10 then
> ask for validation by authority
> endif
> The '10000' and the '10' should be in the static data of the application.

is that it is an arbitrary static threshold - based on gut reaction and probably never to be updated. It'll either be so high that it is almost never used, or so low that it generates tons of false positives. This is why a statistical approach is far better - just compare the increase in value to the increase in value of all the other homes. If > 3std then trigger your exception action.

Of course, if you can get the user to accept a deviant workflow to handle these approvals, then fine. In my experience the realization that you need this often happens late in a project, and they won't want to make any changes at this point. That's why I'd recommend a data quality approach instead, which is easier to add on (again, in my experience).

Re: Try closer to 50%

[Anonymous Coward]

Whaddaya know? 2% times 50 years = 100%

Don't complain about taxes, they're essential for society and usually pay for necessary things or go to good causes. Complain if the money's spent on stupid things, or inefficiently. And don't complain on /., write to your politicians or the local paper.

Zonkers

[Anonymous Coward]

He is probably pissed that you pointed this out.

Re: Try closer to 50%

[PhreakOfTime]

This is why you are on slashdot, and not working in the real estate industry...

Many states have what is called a 'homestead exemption'. This allows a benefit to those who settle down in one place, as opposed to flipping houses every few years. Not all states have this exemption, and the time required to qualify varies. But if you are STILL paying the same amount in taxes as if you just moved into a house that you have been living in for over 10+ years you are horribly managing your personal finances.

Why dont you do your father a favor, and connect him with a tax professional so he doesnt get screwed paying taxes he doesnt need to? But hey, who am I to talk? Im sure the rest of the people in the town he lives in enjoys the smaller tax bills on their own property beacuse of the large amount of people who just dont know any better.

I bet you take the standard deduction on your income taxes too... itemize what? Its not my job to talk your father out of paying more than he has to in taxes... ITS YOURS!!!

A comedian once said there should be such a thing as a 'stupid tax'... Im not calling your father stupid, but if he is paying $7000 in taxes on a house he has lived in for 50+ years... well, lets just say that there is no reason to create a 'stupid tax'. Obviously, it already exists.

Spending it all

[John Jorsett]

It's evident from this incident that the county government isn't spending what's needed to provide necessary services, it's spending whatever it gets. That tells me that nobody is looking at what the money is being spent on and saying, "do we really need to be doing that?" This pretty much assures that taxpayer money will get wasted on things that the voters would never approve if they were on a ballot.

Re:Spending it all

[peektwice]

I wholeheartedly agree. Government spends money inefficiently. Plain and simple. When the people vote themselves largesse from the government, it spends it even more inefficiently. My libertarian ideals do not permit me to even believe in property tax in the first place. I paid income tax on the money I used to buy the property, then probably a sales tax too, and a real estate tax, why should I have to pay property tax to keep it. Didn't we have a tea party a long time ago about something very similar?

Re:Spending it all

[Anonymous Coward]

BINGOOOOOO!!!!!!!!!!!!!!
No freaking budget, just spend all you get no matter what.
The real story is why the folks who behave this way have positions in the government at all. Boneheads.

Re:It doesn't have to be that way (stock trading)

[Anonymous Coward]

there have been several stories reported recently where traders mixed up the number and price of the shares they were trading

This happens a lot more often than corps like to admit... especially with electronic (automated) trading systems. It is not uncommon for a large broker to lose a few million dollars a month due to a small bug that causes erronious orders.

Systems -do- go from conception to production in a span of a month or so---with very little QA... and then deal with millions/billions.

On average, brokers tend to make 10x more than they expect to lose from bugs, so it doesn't bother them much (they have long meetings about changing their policies, but nothing gets done). It's kind of rare to see these things in the news...

Re: Try closer to 50%

[belmolis]

Here in British Columbia the homestead exemption is mentioned right on your property tax bill. It gives you the amount to pay if you are not eligible for the exemption, the amount to pay if you are, and the criteria for the exemption. It isn't a secret known only to tax professionals and those in the know.

Offer and Acceptance

[Anonymous Coward]

Consider the tax bill as an offer to purchase the home at that value. Accept the county's
offer to buy your home at that value. They seem to think it is worth that much. Sell it to them,
and delay paying the tax for 90 days. Dump the money into short term CD's and them pay the taxes.
You should end up with a nice chunk of change.

people problems

[SuperBanana]

if (home=single_family_dwelling AND new_appraisal >= current_appraisal *1.30) then

Except that a huge number of friends and coworker's houses came close to doubling in value since their last appraisal. Problems aren't as simple as you think they are, and your snap judgement on this shows you've never worked with a dataset that is naturally diverse, or of sufficient size. It is quite possible to have a county with a home that doubles in value even if other values don't go up or drop- for example, a major addition could be made.

You can't fix problems like these technically; you need to keep the data entry error from happening in the first place.

Ie, institute policies to help employees avoid mistakes, and if they get lazy/sloppy...policies to punish them for repeated failures.

Not Blaming the Database!

[brown-eyed slug]

calling it a "database entry error" implicates an innocent database doing it's job properly

No it doesn't. It suggests that there is an error in a database entry.

Did I miss something?

[Debiant]

I didn't read the article throughout, but what is RTFA?

Re:Did I miss something?

[soulctcher]

Read the F**king article.

A safer way to open bills

[Anonymous Coward]

As an aside, how would you like to be in the homeowner's shoes when he opens up his mail box and finds an $8M property tax bill? I'm sure there was a trip to the emergency room or the dry cleaners involved.

That's why I do most of my important reading, including opening bills, on the throne.

Re: Try closer to 50%

[the eric conspiracy]

But if you are STILL paying the same amount in taxes as if you just moved into a house that you have been living in for over 10+ years you are horribly managing your personal finances.

I wasn't born yesterday, and I resent people who seem to think I was based on incomplete information and assumption. You forgot to mention the fact that many states have low income limits or property value limits (at least low compared to my or my fathers situation) on homestead tax provisions. Because of these limitations neither my father or I qualify for homestead provisions.

Re: Try closer to 50%

[Anonymous Coward]

Condesending remarks from someone in the real estate industry, now that's funny.

Re: Try closer to 50%

[PhreakOfTime]

So, you do not meet the requirements because; a) you make too MUCH money, or b) your house is worth too MUCH money. You can resent me all you want, it still doesnt change the fact that you are letting yourself get screwed by the system. And since you dont even mention the state that these requirements are for, you can hardly chide me for incomplete information. If you do not appreciate when people make judgements on incomplete information, then do not give them incomplete information.

Do you know WHY those rules are there for qualifying for the exemption? Let me give you an example that may or may not relate to you...

The limits that you do not qualify for are there because if you are over those limits, like yourself and father, then you have enjoyed a larger than median appreciation on the value of your property. And again, if you can not figure out how to make that work in your favor, instead of against, then yes you do need a tax professional and yes you do look like you were born yesterday.

The fact is, no matter how much you resent it, a market in real estate is largely based on one party being more informed than the other, and thus being able to make a profit off of that knowledge. Right now, you are the less informed party of that economic dance. You can not complain about high excessive taxes on one hand, and not follow through with the other hand to reap the benefits of your situation that put you into noticing those higher 'taxes'.

I dont know you personally, so this is nothing against you. Those are the cold hard facts of money that the world we live in operate with. And I am telling you that you, and your father, are getting screwed by not taking the opportunities available to you. Its up to you to figure out what to do about that. Nobody is going to 'play nice' and hold your hand as they explain to you about money. Personally, Id rather feel resentment at my own ignorance, and deal with that, than have a lighter wallet, but thats just me.

Or, you can take the easy way out, and remain ignorant to the world of money and pay your 'high taxes'.

Re: Try closer to 50%

[Anonymous Coward]

For the comment you made, I suspect two things are true: 1) your property tax is quite low; 2) Recently, you walked into your bedroom with a sheep under his arm and said:

"Darling, this is the pig I have sex with when you have a headache."

Your cousin is lying in bed and replies:

"I think you'll find that's a sheep, you idiot."

You said:

"I think you'll find I wasn't talking to you."

Re: Try closer to 50%

[Anonymous Coward]

Stop! You're killing me, real estate industry oracle. Please tell me what late night TV real estate course do you recommend? Would you please advise me on your technique for upgrading to a double-wide? Heck, with all the money you save on taxes, you probably live in triple-wide. Luxury!

Been there, actually

[AllenChristopher]

One day when the phone rang, it was someone from the CIBC head office. (CIBC is a big bank here in Canada)

"We just phoned you up so you won't be worried," they said.
"Worried about what?"
"Well, we accidentally withdrew $250,000 from your checking account. We've just told the computer to put it back."

Nice. I looked at my online account balance, and indeed, I was nearly a quarter million in the red. Ouch. Would have been worse if I hadn't been staying in all weekend programming... at least I didn't find out myself at the mall. They fixed it quickly, but it was unnerving. I thought it was over.

At the end of the month, they suspended my account.

"Why have you suspended my account?"
"You owe us $17,000 in overdraft charges."

Ah, of course. Borrowing a quarter million for three days... that's serious interest. It took nearly two weeks to get this one straightened out because I was the one bringing it up.

I hardly need to say I cancelled my account the day after everything had been straightened out.

Only applies to your state

[Dark Coder]

Homestead is a mere pittance and not worth mentioning here when compared to the BIGGER issues. There is a triad of taxation with regard to the housing assessments.

1. Tax rate, fixed or variable
2. Annual reassessment
3. Sales Tax during saleless owner exchange.
4. Housing Exemption

Each and every state does all above differently. Take two extreme for examples...

California does no annual reassessment thereby locking in the taxation indefinitely for as long as you own the house. Also it is at a low fixed rate of 1%. Used to be a haven for retirement communities but foreign investors discovered its low tax rate thereby to jack up the Golden State housing value to astronomical proportion. This drives out not just the retirees but the lower-middle class (fireman, police, librarians, teachers, nurses) are driven out as well (the ones that this state needs so badly the most.) No one wants to upgrade their house, in fear, of mandatory reassessments, thusly the house improvement market is very weak compared to other states.

Texas (whew) on the other hand has a high 7% state-wide plus an upward of 1.4% county tax (plus a niggling of other assortments of easements and school district taxes). However has low housing value (a function of high taxation). BUT does annual reassessment thereby keeping the value of housing even lower. Very few foreign investors can be found in this market. Because taxes are in step with current market conditions, there is HUGE incentives to improve their houses without fear of HUGE tax increases.

So... yeah, to me, the middle average Joe, a 7% tax rate is better than 1%.... Too bad California can't fix this without sending the Hosing Market into a tailspin.

Be think, the tax rate should start going up NOW, but SLOWLY, just to discourage the foreign investors, as We, the People, need a place to live and own.

Re: Try closer to 50%

[AK Marc]

b) your house is worth too MUCH money.

Yeah, like in Dallas, you'd get an exemption for something like $50,000 of value. So your $200,000 home would be taxed at $150,000. Needless to say, a 25% discount would still mean that the taxes paid greatly exceed the purchase price of the home by the time the morgage is paid off.