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July 13, 2014, 7:39 pm

Nutter’s tax plan stuck in Council

Council members continued to wrestle with the mechanics of Mayor Michael Nutter’s budget proposal this week — delaying approval for at least another week.

President Darrell Clarke said he expected a vote by June 21.

“At the appropriate time, which is the 21st at this particular juncture, we’ll have adopted a budget,” he told reporters.

He declined to respond to questions as to how budget discussions, now largely behind closed doors, were shaping up in terms of which of the 14 proposals now before Council might be poised for approval.

“I can’t respond to that question,” he said.

On Tuesday June 6, acting as a committee of the whole, council members approved an added exemption for gentrifying neighborhoods.

The bill, which was fast tracked to Council, would provide tax forgiveness – for ten years – for residents living in neighborhoods with skyrocketing property values. The bill would forgive any taxes above a 300 percent – or three times – the current value of their property, for homeowners that have lived in their homes for a decade or more.

So, for example, a home that is now assessed at $100,000 but would under the new assessments rise to $400,000, would only be taxed on a $300,000 value.

Members hope the tax break will shield longtime property owners in a manner similar to the tax abatement for new homes.

The majority of Tuesday’s activities centered around a hearing in which members continued their interrogation of administration officials.

Finance Director Rob Dubow answered questions for about two hours. Questioning will resume Thursday.

Though Council appeared to be making progress in moving a budget – members were obviously still concerned about the portion of revenue that would go to the school district.

The administration has proposed a $94 million increase in the district’s allocation. Council is not sold on that number. A proposal by Clarke would lower that allotment to about $85 million.

Clarke was among those who pressed Dubow, the finance director, as to how administration officials arrived at the $94 million allocation it earmarked for the school district.

“Where did you get the $94 million for the school district?” asked Clarke.

Dubow said the number was based on a projected nine percent increase in property values between 2004 and 2012, and that the administration simply “captured” that increase.

“We used the amount of tax dollars; we didn’t use an assessment base,” said Dubow. “We were looking at an increase in revenue.”

“What’s the difference between an increase in value and an increase in revenue?” asked Clarke.

It was an increase that would have happened even under the old assessment system, said Dubow, and had nothing to do with the planned move to AVI.

“We applied that growth and came up with the $94 million number,” he said.

Council seemed unconvinced, pressing Dubow as to the math behind the figure.

Councilman Bill Green persistently quizzed Dubow on the origin of the number, wondering at one point if it was a “happy coincidence.”

“No,” replied Dubow. “With a change in value under the old assessments you’re still seeing that increase.”

Dubow was also quizzed as to the median property value in the city, a crucial number in figuring out where to set a homestead exemption. Council is weighing options that range from $15,000 to $60,000. Dubow was unable to immediately provide the median value, but it was estimated near $80,000.

Plans for a homestead exemption have support in Council, but members expressed concern about the fact that the mayor unveiled the city’s application process last week, before Council had set the exemption. They worried that the timing and uncertainty would confuse residents.

Dubow said all homeowners should apply, and that the exemption will save taxpayers money regardless of the final exemption approved by Council.

“People are eligible regardless of the value of their home,” Dubow said.

 

To comment, contact staff writer Eric Mayes at 215-893-5742 or This email address is being protected from spambots. You need JavaScript enabled to view it. .