Philadelphia Metropolis


Quack, Quack

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This nis not a duck.jpgIt looks like a tax hike.  It walks and talks like a tax hike.  It has been seen associating with other tax hikes.  But, it is not a tax hike.  It is a mechanism for "capturing" the rise in real estate values.

In other words, it is a tax hike.

It will be coming our way on or around October 1 of this year, when hundreds of thousands of Philadelphians will get a letter from the city telling them the new value on their homes. 

There will be a lot of sticker shock come that day.  Everyone knows that many Philadelphia properties are under assessed.  Under the Nutter administration's Actual Value Initiative (AVI) that will change. The October assessment should reflect the true value of your home - i.e. what it for on the open market. According to city Finance Director Rob Dubow, that letter will also include what your new tax rate will be - even though the official tax bill won't be mailed out until December.

The mayor originally intended AVI to be revenue neutral.  In other words, it would bring in as much property tax revenue next year as it did this year, about $1 billion.

That's changed.  The mayor wants to help out the Philadelphia School District, which is struggling with a deficit, so the mileage on our taxes will be, um, adjusted to bring in an additional $90 million.  Oh, and remember those "temporary" real estate tax increases passed two years ago?  They are becoming permanent.

On top of the actual tax increases, hundreds of thousands of homeowners whose homes have risen in value in recent years will get socked with higher taxes - your bill could double or triple if the rise in values in your neighborhood has been particularly steep.

At a briefing Wednesday where he explained the ins and outs of AVI, Dubow bridled at the suggestion that the administration wasn't being transparent about the real estate tax situation.

"Values have gone up and we are capturing that value," he said.told. "I don't know how it's a fast one if we're telling you what we are doing."

Well, yes and no.

The administration is being transparent about being sneaky. They are letting us in on the trick they are playing - because they don't have a choice. Reporters looking at how much the real estate tax brought in last year and looking at the total for next year eventually would notice it was $90 million higher. And ask why.

The problem here is that there is a case to be made - a legitimate case - for giving the school district more money. It is reeling from hundreds of millions of cuts made last year. It faces a potential deficit in the coming year that could lead to more layoffs and cuts in programs. You could argue that the city has an obligation to help out. (Sixty percent of the money collected under the real estate tax goes to the schools, 40 percent to the city.)

So, why not be honest and make that argument? Why try to disguise it? So the mayor can live up to his statement that the budget he presents today to City Council contains no tax increases? The facts in the case make that assertion a lie, plain and simple.

It is an exercise in deception.

You can it a kumquat. You can call it linguine. You can call it anything you want. Come October, when we get those bills, it will sure feel like a tax increase. And it will hurt.

-- Tom Ferrick

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