Philly City Council backs two tax plans

City Council gave preliminary approval Thursday night to two bills that would allow the city to collect $85 million more for schools by moving to a new property tax system and by raising the use-and-occupancy tax on businesses.

Those bills were part of a budget compromise that members haggled over for most of the day. Council President Darrell L. Clarke cautioned that the action did not signal that a deal was done.

"We haven't agreed on anything until we vote the bills on final passage," he said. "The message is, we continue the debate."

By an 11-6 vote, Council gave preliminary approval to Mayor Nutter's property tax reform effort, the Actual Value Initiative (AVI), with Mark Squilla, Jannie L. Blackwell, Bobby Henon, Kenyatta Johnson, Dennis O'Brien, and Brian O'Neill voting against it.

But it also gave preliminary approval to a quite different competing bill, sponsored by Squilla, that would delay implementation of AVI for another year.

Squilla's bill, passed with only four "no" votes, from W. Wilson Goode Jr., Blondell Reynolds Brown, Marian B. Tasco, and Maria Quiñones Sánchez.

All three measures were voted out of committee and given a first reading, moving each closer to final votes, possibly next week.

Clarke cautioned that those votes did not necessarily reflect the support each measure would have when it comes up for final passage.

In fact, Squilla said he had only "four or five solid commitments" for his bill, but would lobby this week to try to persuade enough members — nine are needed — to pass the bill.

Nutter likely would veto the measure, Squilla noted, making his task harder — to reach the 12 votes necessary to be veto-proof.

Sánchez said she voted against the Squilla bill because its preliminary approval only "gives people false expectations about our ability to really hold off AVI."

Councilman Bill Green, however, said "It's hard to judge whether there were nine votes for either measure."

"I haven't decided where I'm going to vote finally on any issue," he said.

Finance Director Rob Dubow said the administration was pleased that the AVI bill and the use-and-occupancy bill were given preliminary approval.

"Our primary goals are to get AVI implemented and to get additional funding for the School District," he said. "So we're grateful that these bills will allow us to do that."

The AVI bill would raise $40 million extra for the schools, but the money would be doled out in accountability grants — meaning the district would have to meet conditions set by Council.

The use-and-occupancy bill would raise $45 million for the schools.

Council also amended the AVI bill to set a homestead exemption of $30,000, which means homeowners could deduct that amount from the value of their property before applying the tax rate.

Council also gave a first reading Thursday night to a bill that would cap market value increases for longtime homeowners in gentrified neighborhoods that have seen huge jumps in housing prices.

Green produced a chart Thursday that showed the possible millage rates, or tax rates, under various scenarios.

According to his chart, the tax rate with a $30,000 homestead exemption and the gentrification bill would be 1.81 percent.

That would translate to $1,810 per $100,000 of real market value of a property.

The millage rate, however, also depends on the total value of all the property in the city. That number is still unknown, as a citywide reassessment is ongoing.

The administration this week said $80 billion was a reasonable assumption. But some Council members expect the number to be higher, which would push down the millage rate.

Clarke on Thursday described AVI as "the most challenging budget proposal" he had seen in his career.

"This is a very troubling process," he said. "Unlike any I've ever had to deal with in the 12 years that I've been here."