Philadelphia City Council begins the fight over property tax overhaul

The political maneuvering over a property tax overhaul began in earnest Thursday, with Councilman Bill Green proposing to kill the homestead exemption and the six freshmen members calling for hearings on tax delinquents.

The moves came a day after members got a look at some preliminary numbers from a citywide reassessment key to Mayor Nutter's Actual Value Initiative (AVI), although the Council proposals have been in the works for weeks, if not longer.

The Nutter administration plans to begin mailing the results of the reassessment to property owners at the end of next week. All owners should know what the city thinks their properties are worth by March 1.

AVI is supposed to tag each of the city's parcels with its actual market value. A tax rate would then be set to bring in the same amount of revenue, $1.2 billion, as last year.

The homestead exemption would let homeowners deduct $30,000 from the value of their primary residences before the tax rate is applied.

The exemption, however, drives up the overall tax rate. With the exemption, the tax rate would have to be 1.4 percent of a property's value to reach the $1.2 billion goal, Green said. Without the relief, the rate sinks to 1.25 percent, or $1,250 per $100,000 of value.

For people with homes above a certain value, paying the lower rate without an exemption would be cheaper. In Green's scenario, a $280,000 home would pay the same $3,500 with or without a deduction.

Other properties - commercial buildings, industrial sites, hotels, rentals, vacant land - are not eligible for the exemption, and those owners would benefit from a lower overall rate.

A majority of the city's homeowners would save under the exemption, but Green said that at the 1.25 rate, taxes would still go down or stay the same for those who would have benefited most under homestead.

"It doesn't make sense for everybody else to pay [the higher rate] for a very, very small benefit for a large number of people," he said, "as opposed to everybody paying the same fair rate based on what your home is worth."

Green's bill was cosponsored by James F. Kenney.

Wilson Goode Jr., a proponent of the exemption, said not considering what is best for the largest number of people would be wrong.

"At the end of the day, the majority of people will see a lower tax bill with a homestead exemption," he said. "That's not debatable."

Nutter administration officials told Council members this week that 180,000 properties had been approved for the exemption, but that an additional 140,000 were eligible. The deadline to apply is July 31.

According to administration figures, at a 1.25 percent rate with no homestead exemption, 40 percent of homes would see their tax go down or stay the same. A further 37.5 percent would see increases of $400 or less.

Eight percent of homes - 36,214 - would see tax hikes of more than $1,000, including 663 whose bills would rise by more than $5,000.

Meanwhile, Council's six first-term members - Cindy Bass, Bobby Henon, Kenyatta Johnson, Dennis O'Brien, David Oh, and Mark Squilla - called for hearings on virtually every aspect of how the city handles delinquent taxpayers.

They even launched a website to promote their ideas - www.taxpayerfairness.com. Henon was the driving force behind the idea, several freshmen said.

The city has a shoddy record at collecting delinquent taxes - the estimated amount owed varies from a quarter of a billion to a half-billion dollars.

AVI critics long have argued that the city should go after that money before implementing a system likely to cause drastic tax hikes in some neighborhoods.

Nutter this week unveiled his own plan to collect delinquent taxes.