Today's vote on full-value property tax only 'start of the discussion'

Posted: July 17, 2008

The Philadelphia Tax Reform Commission threw a political hot potato into the air five years ago and, after burning hands all around the city, it lands today at the Board of Revision of Taxes.

The commission's idea was simple: The city's way of judging the values of properties is flawed and uneven. It should be made more uniform so homeowners don't pay too much or too little in taxes compared to their neighbors with similar properties.

The idea is also scary: A citywide property tax review tends to prompt panic from homeowners who worry that their bills are going up. They pass that fear on to their local politicians - the mayor and City Council.

The BRT, with seven members chosen by the Common Pleas Court Board of Judges, is set to vote today on whether to support the "Actual Value Initiative." If approved, it would be the first step in a complicated process that could lead to sweeping changes in how the city taxes real estate.

Here is how the city's current system works: The BRT assesses property based on only part of its worth, set at 32 percent. So a house with a market value of $100,000 would have an assessed value of $32,000. The assessed value multiplied by the city's property tax rate of 8.264 percent would produce an annual tax bill of $2,644.

In the Actual Value Initiative, several of the factors in that equation would be open for changes. The market value of homes citywide would be up for examination. Instead of assessing at 32 percent, the BRT could take the entire market value of a property into consideration. And City Council, which sets the property tax rate, could pass legislation to change it. The mayor would have to approve that legislation.

With all those variables in play and all the politics behind them, the BRT and Mayor Nutter have been trying to tamp down fear that today's vote will mean immediate changes.

BRT spokesman Kevin Feeley yesterday said the vote is the "start of the discussion." If the BRT supports the Actual Value Initiative, the next step is coming up with new citywide numbers for property taxes. Those numbers, which will be ready sometime between the fall and the end of the year, would be sent to Nutter and Council for review.

"It doesn't trigger tax notices," Feeley said of today's vote. "It doesn't trigger a deadline to start or anything like that. And it's not something the BRT is going to do unilaterally."

Nutter last week issued a joint statement with BRT chairwoman Charlesretta Meade, saying property owners should not fear receiving tax notices in August that incorporate a new way of calculating property values.

"We have a responsibility and I think a moral obligation to be able to give people an accurate, honest, fair and actual assessment notice that reflects the actual market value of their property," Nutter said yesterday, predicting the issue would move forward with the BRT. "I don't know who could be against that. Fair is fair."

City Council members have repeatedly urged the BRT to delay the issue, which was previously referred to as the "Full-Value Project."

Councilwoman Jannie Blackwell last month spoke during a weekly session, reminding supporters of the initiative that voters in May 2007 supported by a wide majority a non-binding referendum to not implement a full-value assessment system.

Brett Mandel, who leads the advocacy group Philadelphia Forward, says some politicians say they want to prepare the city for full-value assessment and then come up with the numbers. Mandel says that's backwards. The numbers should come first.

"The only way you can have that discussion about transition is with real numbers," he said. "Actual value correctly says some people are being taxed too much, some are being taxed too little. We're going to get it right."

City Controller Alan Butkovitz says his review of BRT practices suggests that the agency should work harder parcel by parcel to get the correct information.

"The BRT has not been reliably doing assessments. The remedy to fix that is to trust them to do it all at once?" Butkovitz joked. "I think the problem is one super-duper citywide assessment all at the same time and moving all these variables at the same time." *

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