The budget impasse remains unresolved in City Council, despite a looming deadline as Council members now consider an alternative to Mayor Michael Nutter’s proposal to replace the city’s traditional property tax system with a new one based on market values — called the Actual Value Initiative.
The issue is complicated, because under the mayor’s proposal, the school district would get an additional $94 million, funds it desperately needs this year.
This week Councilman Bill Green put forth an alternative to Nutter’s proposal, suggesting that Council raise the use and occupancy tax to provide the revenue needed to fund Nutter’s spending plan, including the added money for the school district.
Green has repeatedly expressed concerns that the move to actual value will hurt residential property owners and benefit commercial and industrial property owners.
His new proposal, he said, will benefit both.
As an example, he cited a Center City commercial property valued at $127 million. Its real estate taxes under AVI would go from $3.8 million to $1.5 million, he said. That decrease would be offset by an increase in residential property taxes.
However, under his proposal, Green said, if the use and occupancy tax were increased 90 percent, as he’s proposed, the tax would be about $1 million.
“That property would still have a tax decrease … of $1.3 million,” he said, noting that the difference would not have to be made up by residential property owners.
“It is very important that we look at all the data and the impacts of this potential large shift from commercial and industrial to residential property owners and make all of our decisions that is important in that relationship because that will drive the estimated taxes people have to and whether or not they thing we’ve done a good job in protecting them this year from un-necessary tax increases.”
In addition, this week Councilman W. Wilson Goode Jr. urged Council to expand the homestead exemption proposed by the mayor, boosting it from $15,000 to $60,000, and to move ahead with AVI this year.
Doing so, Goode said, would eliminate property taxes for many residential owners since the median home value is under $120,000.
“A full reassessment may mean a lower tax bill for the majority of homeowners,” he said. “A fair assessment means lower tax bill for many, if not most. We should do what’s right.”
Not everyone is sure what the tax implications will be for residential property owners, so Council is also considering yet a third option - a proposal by Councilman Mark Squilla that would simply delay Nutter’s proposal one year.
Squilla introduced his bill just a few weeks after Nutter unveiled his budget. Squilla argues that would give Council time to review the administration’s data before making any decisions.
The administration has been pressing Council to move forward with AVI, despite the fact that it won’t have all the reassessment data until at least July.
The official deadline for Council to approve a budget is June 1.
With all the uncertainty it’s unclear even to Council members whether they can hit that target.
“I believe we can get this done on time,” Council President Darrell Clarke told reporters Thursday, adding, “ I must say, this is arguably the most difficult budget, particularly related to the revenue sources, that I have ever seen in my 12 years on Council.”
In other news, Council is expected to vote next week on a bill that would give people who get parking tickets several ways to appeal.
Council approved amendments to the bill this week that would give anyone who gets a ticket the right to appeal online or through the mail. The amendments ruled out telephone appeals except for the handicapped.