Rebellion brews in Philly City Council against tax changes

City Council on Thursday showed the first signs of rebellion against Mayor Nutter's plan to reform the city's property tax system while picking up an extra $90 million in the process.

Councilman Mark Squilla, whose First District in South Philadelphia could face some of the steepest tax increases from the switch, introduced a bill to keep the current system and tax rates for one more year.

Squilla's bill and other grumblings from Council members emerged just days before Nutter administration officials are scheduled to testify before Council on their proposed budget.

A hearing has been set for Monday on the administration's five-year financial plan, and the Actual Value Initiative (AVI) figures to be a major topic of discussion.

AVI was meant to fix a tax system widely recognized as unfair and inequitable, based on decades of incomplete and inaccurate assessments.

Under actual value, properties would be reassessed at their market price for tax purposes. Those reassessments, however, won't be completed until fall, and Council must pass a budget by June 30.

Squilla said he has been fielding questions at community meetings about how actual value would affect individual homeowners.

"Our answers were terrible, and it was: 'We don't know,'" he said. "I believe it is irresponsible to go ahead with AVI at this time."

The administration has proposed that Council pass a formula that allows the city to collect $1.13 billion in property taxes to be split 40-60 between the city and the schools.

Once the reassessment has been completed, the millage rate - or tax rate - could be set to hit that revenue figure.

Some tax bills would go down and many would go up. Properties in booming and underassessed areas, like Northern Liberties and Graduate Hospital, could face dramatic increases.

Nutter said on Thursday that it would be "irresponsible" and "disrespectful" to property owners to not use the actual value numbers this year, given how broken the system is now.

"This is a tough one. I get it," Nutter said. "This issue has been around for a long time. We all need to just kind of bite the bullet and do what needs to be done to create a fair, equitable tax assessment system."

Nutter's plan means that a two-year 9.9 percent property tax hike passed in 2010 - billed at the time as temporary - would continue to be collected. It would also make permanent a nearly 4 percent tax increase last year, another hike sold as temporary.

The mayor also has proposed that an extra $90 million be collected for the schools compared to last year.

The administration argues that the city merely would be catching up to the rise in property values since a full reassessment was last done.

Councilman Brian O'Neill said he was worried about passing AVI and enshrining tax hikes before the reassessments are completed.

"This is one people will wake up to after it's over," he said. "I don't think you can sell fairness in an unfair way."

O'Neill said he might side with Squilla's idea of waiting a year.

"This is a very, very big undertaking," he said. "If you don't do it as close to perfect as you can, people have a right to turn on you."

Councilwoman Maria Quiñones Sánchez, who supports the mayor's plan, said "there is absolutely no way we are going to do AVI perfectly."

"The folks who know they have not been paying their fair share - the loud minority - will scream about it because it's time for them to pay up," she said. "The majority of folks know we need a fair system, not a perfect one."

Majority Leader Curtis Jones Jr. said Council was committed to AVI as a solution to the broken property tax system, but some members have reservations about packaging the extra $90 million as part of the deal.

"What you're hearing is a lot of members starting to talk about separating the two issues, and that's a valid argument," he said. "If you want to vote for a tax increase to support the school board then the public should know what we're doing."

Nutter described the extra money for a school district facing at a second straight budget shortfall as "an extra benefit" to fixing the property tax system.

"All in all, you either support public education or you don't," Nutter said.

Schoolchildren "wonder on a daily basis, what are the adults doing to make sure that they as students are getting a high-quality education?" Nutter said.

But Squilla said there were too many uncertainties for him to support AVI.

"My mother once told me never dive into water if you can't see bottom," he said. "I'm not willing to take that dip into the millage pool until we know how deep the assessments are."