Nutter to propose property tax relief in budget

Posted: March 15, 2013

Mayor Nutter intends to propose a $15,000 tax exemption for homeowners and $30 million more in other property tax relief in his budget address to Philadelphia City Council on Thursday, according to numerous sources familiar with the administration's plans.

The resulting tax rate then would have to be 1.32 percent to collect the same amount of property tax revenue in the next fiscal year as this year - $1.2 billion.

That tax rate translates into $1,320 per $100,000 of assessed value. The homestead exemption would let homeowners deduct $15,000 from the value of their primary residences before applying the tax rate.

The $30 million would be directed toward longtime homeowners living in areas with fast-growing property values, as well as owners of small commercial properties facing higher property and Use and Occupancy taxes.

The rates and relief measures are part of Nutter's property tax reform effort, the Actual Value Initiative (AVI), which figures to be the focal point of this year's budget season.

Overall, Nutter plans to propose a $3.75 billion budget, a $99 million increase from last year, sources said. Only about $18 million of that figure would be for new spending. The rest would go toward increases in wages, pension payments, and other areas.

The budget assumes a 3 percent increase in tax revenues and more than $13 million in savings through efficiencies.

The budget also includes nearly $14 million in new labor costs for l workers represented by AFSCME District Councils 33 and 47, as well as firefighters and medics represented by Fire Fighters Local 22.

Those costs are related to contract offers to D.C. 33 and D.C. 47, as well as a future offer to Local 22. All three unions have been working without contracts since 2009.

Given relations with the unions - their members are expected to raucously protest Nutter during his speech - the assumption of labor deals could be optimistic.

The 6,800 blue-collar workers in D.C. 33 who would be covered by the contract soundly rejected Nutter's last offer. The mayor has asked the state Supreme Court to hear his argument for imposing terms on the union.

The administration and firefighters also are entering into negotiations on a new contract without ever resolving the last four-year deal.

The administration is seeking to overturn the latest arbitration award to firefighters, which would have settled the previous dispute.

The new budget does not include money to pay that award, which the administration says would cost more than $200 million over five years. Firefighters have described that number as an exaggeration.

Administration officials said last summer they would have to lay off workers and make severe cuts to pay the firefighters - and apparently they are maintaining that position in the new budget.

The new budget does anticipate healthy fund balances - $128 million for the current fiscal year and $80 million for the next, according to sources. That could provide flexibility with contracts.

Mark McDonald, a spokesman for Nutter, would not comment on the particulars of the budget.

The administration previously said the property tax rate under AVI would have to be 1.25 percent without any relief measures. When breaks are given to certain groups of property owners, the overall rate must rise to pay for those breaks.

Several Council members have argued for the lowest rate possible - Bill Green has proposed eliminating the homestead exemption, for example, to keep the rate about 1.25 percent.

Under AVI, large commercial properties, which have been overtaxed for years, are getting enormous reductions. Their burden would be borne by homeowners instead.

Other factions in Council are arguing for the highest possible exemption - the members passed a bill last year setting the homestead at $30,000 - to push some of the burden back to commercial, industrial, and other properties.


Contact Troy Graham at 215-854-2730 or tgraham@phillynews.com or follow on Twitter @troyjgraham.

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