Nutter: Property-tax hike first, then assessment reform

Property values may be inaccurate and inconsistent throughout the city, but Mayor Nutter nevertheless yesterday pushed forward his effort to gain support for his two-year increase in property taxes.

"We can't stop what we're doing, the entire government operation, [to] fix the system," he said at a City Hall news conference.

Numbers released last week offer little to no assurance that Philadelphia's decades-old system for assessing real estate is fair and equitable. The data show some homes are deeply undervalued, others overvalued.

"Obviously, we need to try to fix the system as quickly as possible," the mayor said.

But Nutter said that was a problem for another day - one perhaps not far away. Furthermore, he said, that issue is unrelated to the city's immediate financial crisis.

At the moment, Nutter continued, "the stark choices are . . . we either have dramatically less service, or ask everyone to tighten their belt a little bit for the sake of the great city of Philadelphia."

Nutter would not directly address the fairness of raising property taxes on broadly flawed assessments.

Rather, he continued to make a case for the temporary property-tax increase, a cornerstone of his strategy for closing a five-year $1.38 billion budget gap. The increases - 19 percent in 2010 and 14.5 percent over the current rate in 2011 - are expected to generate $271 million.

Not raising the tax would mean significant service cuts and layoffs, such as the elimination of 480 police jobs and the closing of a health center, Nutter said.

It's the argument he has been making since introducing his budget in mid-March.

To date, though, the mayor's proposal to raise property taxes has gained little traction on City Council, and the leadership has indicated that he lacks the nine votes needed for passage.

Nutter tried again yesterday, assuring that many low-income seniors would be fully or partially shielded from the increase through at least three city and state programs. "We just need to make sure more people who are eligible sign up," he said.

Council is pursuing an alternative plan: Increase the sales tax from 7 percent to 8 percent for five years rather than the three years that Nutter has proposed. Council also wants to borrow $200 million through a bond issue or a bank loan.

Nutter made his comments after announcing a city hotline to report tax fraud, such as failure to file returns or report income.

The hotline will start operating Monday. Nutter asked anyone aware of tax fraud by individuals or homeowners to call 215-686-3852, or e-mail TaxFraud@phila.gov to file an anonymous report.

"If you owe the City of Philadelphia taxes," Nutter said, "you will pay, one way or another."