If Mayor Michael Nutter gets what he wants, the city’s tax rate will be 1.25 mills, said Councilman Brian O’Neill.
In the next few days, a week or so at the latest, city homeowners will be mailed what the city believes are their properties’ “actual values.” Homeowners can multiply that new assessment y 0.0125 to figure out what the 2014 tax on a property will be. At that rate, an owner whose property was assessed at $100,000 would pay $1,250 in taxes.
If that’s how things shake out, O’Neill said in a Feb. 8 phone interview, most people in his Northeast district wouldn’t see much of a change in their property taxes.
In a meeting with council members last week, O’Neill said, the mayor’s staffers said they’re targeting a 1.25 millage rate, if the city doesn’t give taxpayers any kind of exemptions or other relief. In last week’s briefing, O’Neill said, the values of individual properties weren’t discussed, but averages in neighborhoods were.
For almost everyone in the Northeast, it looked like homeowners would pay slightly more in taxes, he said. In Parkwood, for example, it looks like taxes would be basically the same, said O’Neill (R-10th dist.)
If an assessment goes down, he said, it means it previously was overvalued.
“Some people will get really big increases because they have been unbelievably underassessed,” he said.
O’Neill said council members will get further briefings this week.
The idea of reassessing all properties, officials have said, is to make taxes fairer. However, if the total value of properties in Philadelphia goes up, then, by law, the tax rate must come down. Reassessments are supposed to be “revenue neutral,” meaning the city will collect the same money after reassessment as it did before.
But the tax rate is really not a matter of debate, Councilman Bill Green said Feb. 8.
“The tax rate is formulaic,” he said. “We don’t have to set a rate. It’s automatic.”
The council agreed last year to assessing city properties at their actual value, Green said in a phone interview. The mayor said he doesn’t want any tax increases this year, the at-large Democrat said, and he wants the 1.25 mills rate to produce the revenue the city needs to operate.
Any council move that would push up the rate or push down the revenue is likely to be vetoed. Twelve votes would be needed to override a mayoral veto.
For example, giving owners who live in their homes $30,000 homestead exemptions would shave what some individuals would pay, O’Neill told the Northeast Times Jan. 2. Property owners would subtract that $30,000 from the new assessments they’ll soon receive and then apply a tax rate.
However, O’Neill and other council members have said the exemption would force up the tax rate because the city still needs revenue to pay its bills and its employees. Further, O’Neill said, some properties will have such low values that subtracting $30,000 from them will mean they’ll generate no taxes at all. In that case, he estimated more than 30,000 properties would produce no property tax revenues.
Giving a tax-increase abatement to owners whose properties have skyrocketed in value because of gentrification is another measure that would ease the pain for some people, but spread it around to everybody else.
TAXES NOT PAID
How the administration got to the 1.25 mills is complicated, Green said, and it involves estimating the amount of taxes that won’t be paid.
The mayor “wants a rate that gives him the same amount of money he collected last year,” Green said.
The city is owed $518 million in delinquent taxes, penalties and fees, Deputy Revenue Commissioner Frank Breslin said in a phone interview Tuesday. Despite a successful tax-amnesty program and aggressive collections, that figure has been rising. It was $498 million in 2008, he said.
The delinquency figure, Breslin said, represents what’s called the “active” receivables. Those include $248 million in real estate taxes that have been delinquent 10 years or fewer, and business and other taxes that have been delinquent six years or fewer.
Of the $248 million owed in real estate taxes, penalties and interest account for $28 million, Breslin said.
O’Neill said he can’t seem to have a conversation about real estate taxes in which delinquent taxes don’t come up.
“It just gnaws at people,” he said.
A NEW WEB SITE
Turning the red ink into black got fresh attention last week. Six freshman council members — four Democrats and two Republicans —– put up their own Web site to tell the public they want to hold council hearings on ways to harvest what’s owed.
“We are calling for hearings to see how much is really owed and what the city is doing to collect the back taxes,” Councilman Mark Squilla (D-1st dist.) stated in a Feb. 8 e-mail to the Northeast Times. “The city says it writes off bad debt, but we are not sure of the number. I would guess about $100 million. We are hoping that the hearings will provide us with total delinquent tax number for each property type, how much is written off and how the city is going to do a better job of collections or hire an outside agency to do the work.”
Democrats Squilla, Bobby Henon (6th dist.), Cindy Bass (8th dist.) and Kenyatta Johnson (2nd dist.) joined with at-large Republicans Dennis O’Brien and David Oh to sponsor the Web site, www.taxpayerfairness.com.
Squilla said he expects decisions on the hearings to be made this week.
Breslin said a certain segment of what is owed is hard to collect especially if bankruptcy is involved.
Also, there are homeowners in low-income hardship agreements, who he said keep paying but in such small amounts that their tax liabilities continue to rise.
Further, he said, the Revenue Department wants to upgrade its computer equipment so it can collect more money, and wants to encourage people to get current on business taxes by reducing some of the high delinquency penalties. ••