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The Almighty Buck United States

$8M Revenue Shortfall Blamed on Bad DB Entry 220

Posted by CowboyNeal
from the data-integrity dept.
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."
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$8M Revenue Shortfall Blamed on Bad DB Entry

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  • The homeowner (Score:5, Insightful)

    by WebHostingGuy (825421) * on Saturday February 11, 2006 @10:46AM (#14694153) Homepage Journal
    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 (Score:3, Interesting)

      by bheer (633842)
      Good point. Example: $3 Million Comcast Cable Bill [flickr.com].

    • Re:The homeowner (Score:2, Interesting)

      by 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.

    • by msobkow (48369) on Saturday February 11, 2006 @11:36AM (#14694324) Homepage Journal

      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?

    • 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
      • 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 co

  • by Murphy's Paradox (585454) on Saturday February 11, 2006 @10:46AM (#14694154)
    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.
    • by MrWa (144753) on Saturday February 11, 2006 @11:11AM (#14694256) Homepage
      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...
      • 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' t

    • by Vellmont (569020) on Saturday February 11, 2006 @11:11AM (#14694258)
      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.
    • 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.
    • by 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
      • 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

        • 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 reduc
    • 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 n
  • Simple programming? (Score:5, Interesting)

    by Anonymous Coward on Saturday February 11, 2006 @10:49AM (#14694164)
    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.
  • Tax Rate? (Score:3, Interesting)

    by bmoon (721018) on Saturday February 11, 2006 @10:52AM (#14694180)
    That's quite some tax rate... where does an $8M home translate into $8M of revenue for the county?
    • Re:Tax Rate? (Score:3, Informative)

      You need to read the article. The house was mis-valued at $400 million, and the tax on that was calculated at $8 million.
  • 400 not 800 (Score:5, Informative)

    by slinted (374) on Saturday February 11, 2006 @10:52AM (#14694181)
    "$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."
  • by ral8158 (947954) on Saturday February 11, 2006 @10:53AM (#14694183)
    I mean, that's not a huge error, now is it?
  • by shoemakc (448730) on Saturday February 11, 2006 @10:55AM (#14694192) Homepage
    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
  • by technoextreme (885694) on Saturday February 11, 2006 @10:59AM (#14694212)
    Sell the house at $400 million dollars. Pay the taxes and then run away never to be seen again.
  • They didn't notice (Score:5, Insightful)

    by mac123 (25118) on Saturday February 11, 2006 @11:05AM (#14694233)
    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.
    • 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.
    • by yelvington (8169)
      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, f
      • by JeffSh (71237)
        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. Townshi
      • 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
        • Re:Mod Parent Down (Score:3, Informative)

          by aaronl (43811)
          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
    • by puetzc (131221)
      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 d
  • by Dan East (318230) on Saturday February 11, 2006 @11:05AM (#14694235) Homepage Journal
    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
    • by nanojath (265940)
      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.
    • 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 co

  • by linebackn (131821) on Saturday February 11, 2006 @11:12AM (#14694261)
    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.
  • by the eric conspiracy (20178) on Saturday February 11, 2006 @11:33AM (#14694315)
    I wish my tax rate were that low. I'm paying more like 3%.

  • by ChaoticCoyote (195677) on Saturday February 11, 2006 @11:34AM (#14694320) Homepage

    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.

  • Not surprised... (Score:3, Insightful)

    by alyawn (694153) on Saturday February 11, 2006 @11:36AM (#14694325)
    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?
    • 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
  • by Proudrooster (580120) on Saturday February 11, 2006 @11:43AM (#14694355) Homepage
    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!
    • 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

      • 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."
    • 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 turne
    • 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 maj

    • 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.
  • Data entry problem (Score:4, Interesting)

    by linebackn (131821) on Saturday February 11, 2006 @11:48AM (#14694369)
    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!
  • 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 screwe
  • by Antony-Kyre (807195) on Saturday February 11, 2006 @11:58AM (#14694409)
    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?
    • 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.
      • 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).
      • 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.
        • 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.
    • 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 w
      • 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
      • I should have probably said, "I would think a $400 million increase in local assessment values would raise a few eyebrows."
  • Tragic system design (Score:3, Interesting)

    by dbdweeb (598548) on Saturday February 11, 2006 @12:14PM (#14694477)

    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?

  • property tax system (Score:3, Informative)

    by dfghjk (711126) on Saturday February 11, 2006 @12:22PM (#14694525)
    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.
    • by jombee (111566)
      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 goe
    • 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 [wikipedia.org] 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 v
    • 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 servi
  • The county treasurer's name is Murphy. Jim Murphy. You can look it up.
  • Both Ends (Score:3, Interesting)

    by Karma Farmer (595141) on Saturday February 11, 2006 @01:02PM (#14694748)
    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.
  • 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.
  • Validation... (Score:2, Interesting)

    by hotarugari (525375)
    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.
  • 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
  • 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.
     

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