No way to find out now about Philly property tax bill

Would you like to know how much you're going to pay in property taxes before City Council passes a budget that depends largely on what it expects to collect from each property owner?

Well, too bad. Not going to happen.

Philadelphia is in the midst of its Actual Value Initiative (AVI), part of an endeavor to fix a historically inequitable tax system based on decades of bad and incomplete assessments. Assessors have fanned across the city in an attempt to tag each property with its market - actual - value.

But the job won't be done until at least September, and the new City Council, which convenes its first regular meeting Thursday, must pass a budget and set a millage rate - the property tax rate - before the start of the fiscal year July 1.

"We're going to be asked to do a tax prior to knowing . . . what the value of all the land is. That has some practical problems with it," said Councilman Bill Green. "That essentially means we are putting in place a new tax without having a true public debate on the issue. Not that we can do anything about it."

AVI would figure to be a daunting challenge for any Council, but the 2012 version comes before a Council with six freshman members and a new leadership team.

The city is also coming off several lean years marked by cutting services and raising taxes in often-bruising budget fights.

The six new members - Democrats Cindy Bass, Bobby Henon, Kenyatta Johnson, and Mark Squilla, and Republicans Dennis O'Brien and David Oh - are likely to establish themselves and their legislative priorities in the early months.

Meanwhile, the Democratic leadership - particularly new President Darrell L. Clarke - will try to build coalitions of at least nine votes for its own package of revenue-generating ideas.

Clarke has a seven-point plan that includes previously floated ideas to sell advertising space on public property and to create development districts to sell off blighted property.

The leadership also plans to explore selling certain city assets.

"We have $80 million plus of surplus real estate that we should at least hang a shingle on and see what we get," said new Majority Leader Curtis Jones Jr. "We're missing valuable revenue opportunities that I think we need to look at now."

No idea seems to be off the table. New Majority Whip Blondell Reynolds Brown plans to introduce a bill Thursday that will allow bars to stay open until 3 a.m. - and dedicate the extra hour's worth of liquor tax collection to benefit the city's schools.

While the next five months should be all about the money, AVI promises to be the most divisive issue, since the reassessments will effect every neighborhood and councilmanic district differently.

Many people will see their taxes stay the same or drop, but residents in areas that have experienced huge gains in value - Graduate Hospital, Northern Liberties, parts of South Philadelphia - should expect large increases.

Squilla represents the First District, encompassing half of Center City and running along the river from South Philadelphia to Port Richmond. His area may be the hardest hit.

"Some people will say, 'That's fair, I knew I was paying less.' Some people will say, 'I can't afford to do this, you're going to make me move out of the city,'" Squilla said. "We're going to take a beating early on for this."

He said he would push for the kind of measures that could blunt the impact on people facing large increases, such as homestead exemptions for the elderly.

Council also seems poised to explore the capping and phasing-in of large tax hikes. Some of these measures will require permission from Harrisburg, never an easy request.

Two unknowns are how much money the city expects to collect and how Council will set the millage rate.

Several Council members said the most likely approach is to determine a revenue goal and then pass a formulaic millage rate where the actual number is an unknown. In the fall, when the assessments are completed, the millage rate could be plugged in to hit that revenue goal.

City Finance Director Rob Dubow would only say that the process of setting the millage is "an issue we need to work out with Council."

"What we want to make sure happens is that people have a tax bill that's accurate and understandable," he said. "By the time people have their bills, they'll understand what they're paying and why."

The tax bill goes out at the end of the year.

Council could wait until next year to institute AVI, once the assessments are complete and residents and businesses know how they will be impacted.

But there seems to be little momentum for that. Members were just elected in November, and now would be the most advantageous time to tackle such a hot-button issue, three years before the next primary election.

Green said he would prefer to delay a year but would wait to see the Nutter administration's proposal for handling AVI.

"It seems to me to be the logical thing to do, but the practical, political reality is, this is going to be somewhat jarring," he said. "The sooner the better in terms of getting it done."

Last year, Dubow and the administration acknowledged in its five-year plan that it expected to collect 20 percent more property tax revenue under AVI than in the previous year, due to increases in property values.

The city froze most assessments in January 2010, and has not done a full reassessment since the mid-1990s.

That means the two-year "temporary" 9.9 percent property tax that expires this year won't really be going away.

"Effectively what we're doing is collecting the same amount of revenue," Green said. "There's a logical argument to be made that that means we're leaving in place the temporary tax increase."

Clarke said that's part of the reason the leadership is seeking so many creative revenue solutions.

"I don't want us to be solely dependent on real-estate taxes," he said. "If there are ways that we can raise $30 to $50 million separate and aside, that obviously lessens the need to raise that money through reassessments."

When the School District asked Council last year to help close a $629 million budget gap, it passed yet another "temporary" property tax hike.

Property tax revenue is split between the city and the schools. The financial health of each remains to be explored in budget hearings, but the news from the district seems dire.

Last week, it announced that it had to cut its budget by $61 million by June, and on Wednesday, City Controller Alan Butkovitz questioned its ongoing financial viability.

"We haven't got any kind of direct indication yet," said Bill Greenlee, the new deputy majority whip. "But obviously when you read the paper and see where the schools are, that raises all kinds of alarms."