Perhaps the most surprising debate around the city’s move to a property tax system based on the full value of a property rather than a fraction of its worth is whether or not City Council is actually debating it.
According to Council President Darrell Clarke, the fate of the move to AVI — short for Actual Value Initiative — is up in the air. According to Councilman Bill Green, it’s a done deal.
“Nine people have to vote for it,” Clarke said.
That will happen when Council votes on a city budget. It’s too early to say when that vote will take place, but Council must have a budget in place by July.
Green, in what was almost a throwaway line at last week’s City Council meeting, said AVI was in place – enacted last year and that the only thing up for debate was the tax rate. In conversation on Friday, he explained further.
“When Council passed a budget last year … they passed the formula that the mayor wanted to be in place last year,” he said. “So, without any action by Council, the Actual Value Initiative will be enacted on a revenue-neutral basis. There is no debate.”
When asked about Green’s statements, Clarke said he had a different take on the situation.
“I think he’s inaccurate,” Clarke said about Green’s remarks.
That did not mean that AVI wouldn’t move, Clarke said.
“We need to move it ahead,” he said. “Is there a chance [it would fail]? I can’t make people vote for something.”
What both men agreed on was that Council will have to approve a tax rate.
Green said the only thing needed was a tax rate so the tax bills could be sent out. Clarke agreed that the heart of the matter is the tax rate.
Recent numbers from the administration suggest that the tax rate will be around 1.44 percent. That number is subject to change as city officials continue a citywide assessment which changes the total value of taxable property that has been estimated to range from approximately $98 billion to $102 billion.
However, City Council finds itself in much the same situation as last year, when it delayed action on AVI. At that time, Council was frustrated with the administration’s lack of assessment data and declined to put reforms into place for the coming tax year.
The administration has promised that the shift to actual value will be revenue neutral – meaning that tax revenue will remain level this year. So, the tax rate will be calculated using the total value of real estate in the city and total revenue.
Clarke said Monday he still hasn’t seen final numbers.
“We don’t even have the numbers yet,” he said, adding that he wouldn’t discuss the rate until he had. “If we can’t get nine people to vote for a measure, as relates to rates, it doesn’t really matter.”
In any event, as Council moves toward AVI, the issue seems likely to stir up a great deal of change.
The issue was in the spotlight again this week as the state House Democratic Policy Committee held a hearing in Philadelphia to take testimony on a package of bills related to AVI that the city’s state delegation hopes will be voted on early this year. Approximately 20 members met Monday at the National Constitution Center for the hearing.
The package of four bills would offer a variety of measures that would ease the shift to AVI for many property owners.
Under one of the bills, the city would be authorized to place liens on all properties a delinquent taxpayer owns anywhere in Pennsylvania, if property taxes in Philadelphia are unpaid. The second bill would allow the city to set two property tax rates – one residential and one commercial. State law now mandates that rates be uniform. The third proposal would allow Philadelphia residents to pay their property taxes in installments. The fourth would amend the state code to allow the city to give tax exemptions based on age and income.
The package seems to have the support of Council leaders and the administration.
“You cannot emphasize enough the need to do this,” Clarke said, testifying Monday.
City Finance Director Rob Dubow voiced similar support for the proposals.
Council members are struggling to find ways to protect long-time homeowners – a group classified by state law as homeowners who have owned their homes for 10 years or more – from the possibility of skyrocketing property taxes.
“We must be sensitive to the fact that some residents will experience substantial - and even in some cases extraordinary - increases in their property taxes,” Clarke said in testimony. “We seek to protect long-term, owner occupants where homeowners are already struggling.”
Administration officials have been reluctant to discuss the exact impact of AVI except to say that for some taxes would go up and for others they would go down.
Dealing with many of the issues Council members expect often requires enabling legislation from the state level, something the package of bills was aimed at addressing.
State Rep. Cherelle L. Parker noted that city and state lawmakers had worked together on the package pointing out that the bills were crafted to leave local lawmakers some wiggle room.
Clarke said that was essential.
“To put the burden on you to come with detailed legislation for things we have to deal with here in the City of Philadelphia, quite frankly, is not fair,” he said, noting that during last year’s budget talks, “We changed our minds daily.”
Clarke assured state legislators that the city would keep the state in the loop.
“You giving us the authority on the local level…is very important to us,” he said. “When we do anything, we talk to you all.”