AVI Tax Rate, Cigarette Tax Pass Council

Council passed a raft of budget bills Thursday, including one that sets the property tax rate under Mayor Nutter's Actual Value Initiative and one that would create a $2-a-pack cigarette tax for the benefit of the struggling school district.

The property tax bill, approved by an 11-5 vote with Councilwoman Marian Tasco absent, sets the tax rate at 1.34 percent of assessed value and allows for a $30,000 homestead exemption for homeowners. That means the owner of a home worth $100,000 would pay taxes on $70,000 and owe $938.

Voting against the bill were Democratic Council members Mark Squilla, Kenyatta Johnson and Bill Green and Republicans Brian J. O'Neill and David Oh. Squilla and Johnson's districts, which include growing neighborhoods bordering Center City, are facing some of the biggest property tax hikes under AVI.

Squilla's bill to allow people appealing their assessments to pay last year's taxes until their appeals are settled also passed. Johnson amended his bill to defer large tax increase for eligible low income homeowners. That legislation is expected to pass next week.

Council also amended a bill to provide so-called gentrification tax relief to longtime homeowners living in rapidly growing neighborhoods. The amendment would "means test" the relief, meaning only homeowners who need the help can take advantage of the program.

State approval for means-testing is required. A bill to give that approval, sponsored by state Rep. Michael H. O'Brien (D., Philadelphia), passed the state House this week and is awaiting action in the Senate.

The bill to create a cigarette tax, part of Mayor Nutter's plan to raise $95 million to fill the $304 million shortfall in the School District of Philadelphia's budget, also requires state approval. Winning that permission could be difficult in the Republican-controlled state legislature.

Council also passed a bill to cut the wage tax slightly over the next two years – the Nutter administration had pushed for a bill committing to five years worth of cuts.

Councilwoman Maria Quiñones Sánchez did not call for a vote Thursday on her bill, which would increase the use and occupancy tax to raise $30 million for the schools. If the bill gets enough support, Sánchez could call for a vote next week, at Council's last meeting before the scheduled summer recess.

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