City Councilman Brian O’Neill doesn’t need to rally public opinion in opposition to Mayor Michael Nutter’s proposed property tax increases.
Nor does O’Neill — a Republican from the Far Northeast and Council’s minority-party leader — have to convince his constituents that the Philadelphia Water Department’s planned rate hikes will hit them where it hurts most — in their wallets.
Yet, when push comes to shove over both controversial proposals in the coming weeks during Council’s deliberate and often-tedious budgetary process, it could only benefit O’Neill and other fiscal conservatives to have the potential for public outcry in their arsenal.
O’Neill laid the foundation for that support by reporting the latest news about both topics at two community meetings in the Northeast last week.
He spoke to the Somerton Civic Association on March 13, then the Fox Chase Homeowners Association and Town Watch on March 14. Folks at both events generally agreed that they don’t want to pay more into a municipal government that can’t seem to manage the money it already gets.
“What the mayor is proposing is not ‘revenue neutral,’” O’Neill told the Somerton group, quoting a term often used by advocates to describe the long-awaited “full value” or “actual value” property tax system.
Under the city’s current tax structure, owners do not pay taxes on the full market value of their properties. Rather, they are taxed on a fraction of the full or actual value. So, the tax rate doesn’t change from parcel to parcel, but the standardized rate is applied inconsistently. Some properties are assessed at one-quarter of their true market value, while others are assessed at three-quarters, O’Neill said.
The purpose of the full value initiative is to level the playing field, according to the councilman, who supports the idea.
In addition, he said, under the original intent of the proposal, the city is not supposed to reap a windfall of revenue from the change. Council is supposed to create a new, lower tax rate so that the revenue generated under the new system will equal that generated by the old system.
Yet, Nutter wants to set the new tax rate so that the city will collect close to 25 percent more from property owners as a whole, O’Neill told the Fox Chase group.
Property taxes generate about $1 billion a year, with the School District of Philadelphia getting about $600 million and municipal government about $400 million, he said. Those figures do not include two “temporary” tax increases sought by the mayor and passed by Council in previous years.
In 2010, there was a two-year, 9.9 percent hike, followed last year by a one-year, 3.9 percent hike. Both are scheduled to expire on June 30 at the end of the 2012 fiscal year.
But now, O’Neill said, Nutter wants essentially to keep both tax increases in place indefinitely to further fund the city’s ailing public school system. Also, the mayor wants to collect an additional $94 million for municipal coffers.
O’Neill said he and other Council members met privately with Nutter on March 14 to discuss the proposed property tax scheme.
O’Neill argues that the mayor is trying to obscure what would amount to a tax increase within the context of the change to the full-value system. The councilman thinks that any rate increases should be considered independently.
“I have always said I will never support [the full-value system] unless it’s revenue neutral,” O’Neill said in Somerton.
At both meetings, residents asked the councilman about the status of the 10-year property tax abatement on new residential construction. O’Neill reported that the program is likely to continue indefinitely, despite his opposition, because most Council members support it.
Similarly, residents at both meetings complained that the city should do a better job collecting delinquent real estate taxes before raising rates on those who stay up-to-date on their taxes.
At the Somerton meeting, Dan Lodise, chief of staff to state Rep. Brendan Boyle (D-170th dist.), reported that Boyle has introduced state legislation that could mandate that the full-value program be revenue neutral. If passed, the state law would supersede a reassessment ordinance passed by Council, Lodise said.
In an unrelated city-government money move, the Water Department recently announced plans to raise service rates by 6 percent each year for four consecutive years, O’Neill said. If compounded, that would amount to a total increase of more than 26 percent by year four.
In an economy when many are out of work and others aren’t getting cost-of-living raises, the proposed rate increases are out of line, O’Neill argued.
“Nobody is getting a six-percent raise anywhere and nobody is getting six percent on their money anywhere,” he said.
The Water Department’s justification is even more disturbing to the councilman. The department claims that people in Philadelphia — its customers — have responded so well to the department’s water conservation initiatives that the department is losing revenue. It needs to raise rates to compensate.
O’Neill argues that the department should have expected and planned for reduced income, considering its conservation programs. He thinks residents should fight the rate hikes.
“There’s work to be done here. (Water officials) have to feel the pressure about this,” O’Neill said. “Maybe you won’t get no increase, but maybe you’ll get a more manageable, reasonable increase.” ••
