Even if you’ve been following the property tax debate closely, you probably have a whole bunch of unanswered questions hanging out there. And for most Philadelphians, I’d guess the biggest one is this:
What’s going to happen to my tax bill?
Well today at PhillyClout, we’re actually going to try and answer that to the best of our ability.
But first a recap:
Mayor Nutter is proposing moving the city from the current property tax system, which relies on fractional assessments to a system where a straight rate will be placed on the market value of your home. This is known as the actual value initiative (AVI). Because Philly’s tax system has been wrong for a very long time, some residents are currently paying too much and others too little, although we don’t know who exactly because the city has not released the new assessments.
Since Nutter’s proposal, City Council has been debating whether to approve the plan and if there are groups that should get tax relief. Key among their concerns are longtime residents of gentrified neighborhoods, who could face huge tax increases that they can’t afford. They are also looking at doing a “homestead exemption” that would reduce the assessed value of all owner-occupied properties.
Complicating the AVI debate is that Nutter wants to raise $94 million in additional revenue for the schools when the city goes to AVI. He says this is capturing the increase in property values, while critics call it a backdoor tax hike. Council now says they plan to vote separately on AVI and schools funding.
Ok, still with us? If you are, you probably still want to know about your bill, right? Here goes…
We can’t definitely tell you what will happen because the city hasn’t released the new market value assessments or the new millage rate yet. But during testimony in City Council yesterday, Finance Director Rob Dubow said that a Council consultant had made a reasonable estimation that the total value of property in Philadelphia was $80 billion. He also said that if that number was correct your tax rate could range from 1.6 percent to 1.8 percent, depending on the size of the homestead exemption.
Let’s do some speculative math. Let’s say your house is likely worth $250,000, based on recent sales in your area. With a $30,000 homestead exemption and a 1.8 percent tax rate (one possible scenario), your bill for next year would be $3,960. If your home is likely worth $150,000, the bill would be $2,160. And if it’s worth $75,000 then it would be $810.
Again, these are still just projections at this point. Still, it's clear that depending on your current assessed value, your bill could go up or down. Some neighborhoods that have experienced rapid gentrification could see major upticks in their bills. Where do you think yours is likely to go, based on this scenario?