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August 30, 2014, 10:19 pm

Coalition aims to defeat Nutter’s tax plan

A coalition of state legislators, two city council members and several community activists have launched their own tax revolt, urging Mayor Michael Nutter to halt his administration’s plans to move ahead with its Actual Value Initiative.

“We need to reform our property tax system, but we need to do it right,” said Sen. Larry Farnese, calling Nutter’s plan a “back door tax increase.” He added, “We don’t want this.”

Under the administration’s plan, the city would change the basis of real estate taxes from its traditional method using a fraction of the property value, to one based on the market value. Just how the change would affect most property owners is unclear – administration officials admit taxes for many would go up, but contend that for others, it would go down.

A group of 11 people – members of the state House and Senate, city council and two community groups – gathered at Farnese’s South Philadelphia office Friday morning to brief reporters on their united stand against the move to AVI.

“It’s time to wake up,” said Councilman Bill Green, who has been very vocal in his opposition to the mayor’s plan. “Or, you’re going to wake up in October with a tax bill that is an outrage.”

Green and Councilman Mark Squilla have led a charge in City Council against AVI.

Opposition hinges on two main factors.

First, council is expected to pass a budget by June 1, but administration officials have told members that full reassessment numbers will not be available until July at the earliest. That concerns council members who worry that they are being asked to approve a budget based on incomplete numbers.

“We don’t have all the information,” Squilla said this week.

In order to set the tax rate, Squilla and Green argued, council needs to know the aggregate value of all of Philadelphia’s real estate. Assessors are wrapping up their valuation of the city’s residential properties, but have not started reassessing commercial or industrial properties yet.

“We need to be able to have all the values in place before we tell the people what their taxes are going to be,” he said. “There is no way to know what millage we need to come up with.”

Nutter’s spokesman, Mark McDonald, said the change is already underway, and that when the new numbers have been generated the city will be obliged to go ahead.

“We are in the process of implementing AVI, which is for the first time in generations going to provide fair and accurate property assessments to all property holders,” he said. “Those numbers will be available later this year, and it would not be right to not use them.”

The lack of numbers from the administration is not the only reason opponents object.

Green also cautioned that the move to AVI involves a shift that places more of the financial burden on residential property owners. On Monday he introduced a bill that would increase the city’s use and occupancy tax, a move he said would equalize the tax burden on residential and business property owners.

Green is also among those who object to AVI on the grounds that it’s not revenue neutral.

The shift to the new system would generate an additional $94 million, earmarked for the school district. That concerned many of the people gathered at Farnese’s office, who agreed the move was a tax increase by another name. State rules generally force any municipality making a similar shift to collect the same total revenue before and after the change, something officials said is needed to maintain confidence in the system.

Nutter’s plan does not do that, they said.

“[Nutter] is already cooking the books,” said state Rep. Brendan Boyle. “And the people of Philadelphia have had enough.”

Noting that property taxes have gone up each year for the last three years, he added, “We cannot have a third property tax increase.”

Green has proposed an amendment to Nutter’s plan to keep it revenue neutral.

State Rep. Mike O’Brien said he was introducing legislation in Harrisburg that would force the city to freeze its wage tax, rather than reduce it as planned, and give the difference – roughly $86.3 million – to the school district.

They also contend that school district officials were wrong who cautioned that without the additional $94 million provided in Nutter’s budget, schools would not open the fall.

“Contrary to what the school district will tell you, the schools must open in September,” Green said.

Green urged residents to oppose Nutter’s plan by calling the mayor’s office and their council person or state legislator.

“Let your representatives know you want to wait a year,” he said.


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