We are six years into Actual Value Initiative (AVI), the fix of a broken property tax system designed to make assessments and taxes fairer, more accurate, more predictable, and more consistent. But assessments have continued to increase, and while this could be seen as good because property values are rising, it’s not a very good thing for those homeowners who are seeing steadily rising tax bills.
The execution of AVI was such a heavy lift, it’s as if no one really has had the will or energy to assess how it is actually working and make necessary adjustments. But it’s time: The higher property assessments not only lead to confusion, but more to the point, to higher property tax bills for many.
But it doesn’t have to. AVI was based on the idea that properties would reflect their actual value; actual tax obligations would depend on a millage rate (the amount per $1,000 of value that tax is based on) that could be adjusted to avoid big spikes.
This being Philadelphia, no elected official has ever seriously suggested that the change in property tax system would assure revenue neutrality — meaning the total amount gained from property taxes would remain somewhat steady year to year. But the millage rate is a tool that gives the mayor and City Council control over the amount of property taxes people have to pay — and it should be used. If assessments rise, millage rates should go down. But there has barely been a whisper about adjusting the rates either this year or last.
Meanwhile, revenues from real estate taxes have been making the city budget very happy. In the last four years, the amount collected from real estate taxes (the portion that goes to the city, not the schools) has increased by 21 percent — a rise of more than $100 million in four years.
So has spending.
City Councilman Allan Domb, who seems to be among the lone voices talking about this, says he has brought it up in Council — to deaf ears.
He says that city spending has increased at the same rate as taxes.
The Mayor’s Office has explained that there is no talk about adjusting the tax rate because things cost more and the city needs to cover its bills.
Meanwhile, as we spend more and more, are we better off? That’s the million- (or, rather, billion-) dollar question. The growth and improvements in the city — gains in construction and population and decreases in crime — highlighted in recent reports are not gains that have come about from more spending. Meanwhile, problems that could benefit, such as poverty, have not budged. A big portion of the increased spending is in pensions, benefits, and debt service.