Debate over property taxes seems likely to dominate City Council’s fall session, which opened Thursday with two new proposals that center on taxes – one would increase the penalties for some delinquent taxpayers, and the second would alter the city’s tax abatement policy.
Both proposals were made as Council gears up for a major property tax reform initiative called the Actual Value Initiative, which would shift the basis of the property tax from a fractional value to full market value.
Under the first proposal, introduced by Council President Darrell Clarke, penalties for delinquent property taxpayers who owe more than $20,000 in back taxes would double.
“We believe that the more you owe, the higher the penalties should be,” Clarke said, noting that the city is allowed to increase penalties under the state constitution.
“We cannot continue to have conversations about increasing real estate taxes when on paper we have hundreds of thousands of dollars in uncollected taxes,” he said. “So we’re going to be very aggressive on that matter.”
The second proposal, introduced by Councilman W. Wilson Goode, would change the way the city’s tax abatement policy works, replacing the current policy, which completely exempts certain properties for 10 years, to one based on a graduated scale.
Under Goode’s proposal, the abatement would go from 100 percent in its first year and then decline in 20 percent increments until it hit zero over a term of five years rather than 10.
“Most of the direct beneficiaries of 10-year residential abatements are private developers, investors and higher-income residents,” Goode said. “In other words, it’s generally a tax break for the few, the new, and the well-to-do.”
The city’s 10-year tax abatement program started in 1997, and was expanded in 2000 and again in 2003. It now includes new construction and improvements to residential and rental construction.
In other news, Council also overturned a mayoral veto that would have prevented Finnegan’s Wake in Northern Liberties from adding a balcony.
Mark Squilla, the councilman who represents the area, said the vote was largely to reinforce councilmanic prerogative.
“As a district council person, you usually feel that your dealings within the community and your business within the district are sort of in a way up to the councilperson and not the mayor,” he said.
In explaining his veto, Nutter said Council should not ignore the “opposition of the community resident association that represents the neighborhood most affected by the proposal.”