Philly state legislators still not unified on city property tax reform

State Sen. Anthony Hardy Williams said Thursday that fellow members of the Philadelphia legislative delegation needed to speak with "one voice" to pass bills essential to enacting Mayor Nutter's property-tax changes, which also could provide desperately needed funding for schools.

"Those bills were moving through the legislature quite effectively, quite quietly, the governor was prepared to sign them, until Philadelphia decided to have its own food fight," Williams said. "Some members in our delegation decided that 'well, maybe it's not in our best interest right now to move forward on this.'?"

Although he said he did not want to "personalize" his comments by naming individual lawmakers, Williams said those opposed to Nutter's Actual Value Initiative (AVI) were merely trying to prevent tax increases for constituents who "have been getting a discount for generations."

He accused opponents of "fearmongering" and telling a "bold-faced lie" that AVI could raise taxes on low-income homeowners. AVI is forecast to benefit many property owners in low-income areas who have been overassessed for years relative to more affluent areas.

The city's budget, meanwhile, is again at the mercy of politics in Harrisburg. With just a month left to pass a budget, City Council President Darrell L. Clarke said the members were going to have to start voting on budget bills before the General Assembly takes action. He called that "a significant leap of faith."

"I have no idea what's going to happen in Harrisburg," Clarke said Thursday. "If [the bills] don't pass, we have a real problem."

Williams (D., Phila.) is the author of three bills related to AVI and the transfer to a system that would tax properties based on their true market value. One bill would give the city the authority to lower the millage rate — the city needs permission to do so because of a state provision meant to protect public school funding.

Lowering the property-tax rate is essential to implement AVI. The millage rate is now 9.4 percent; under AVI it would need to be somewhere between 1.25 and 1.70 percent, according to recent Council testimony.

Another Williams bill would give the city the authority to provide homestead exemptions to homeowners; the third would create a board to hear property-assessment appeals.

Despite the uncertainty of those bills, the Nutter administration is launching a campaign Friday to get homeowners to apply for a homestead exemption. The application, a brochure, and an explanatory letter from the mayor will be available Friday online at the city's home page, www.phila.gov.

The deadline for applying would be July 31. The city also plans to mail information on the exemption to every home by June 30.

If given the authority, Council would set the exemption level — right now members are considering $15,000, $40,000 and $60,000. With a $15,000 exemption, for example, the owner of a home assessed at $100,000 would pay taxes on only $85,000.

Under AVI, many homeowners — especially those in middle- and lower-income neighborhoods — are likely to see their taxes go down. But some, especially in areas that have undergone significant growth, like Graduate Hospital and Northern Liberties, could face large tax increases. Council is considering measures to protect lower-income residents of newly gentrified neighborhoods.

Nutter, who joined Williams in addressing AVI on Thursday, acknowledged the change would be hard, but said: "Every now and then in this business, you just have to step up and do the right thing."

"You take some risks," Nutter said. "If you want a safe existence, if you want to be truly loved and admired every day, this isn't the business for you. You should go work in a pet shop."

City Controller Alan Butkovitz — the only outspoken opponent Williams eventually cited — said he didn't think AVI should be implemented given all the uncertainty. He has long opposed the ongoing citywide reassessment because it "creates all these earthquakes."

"It can kill growth in the growth areas of the city," he said. "You can't kill the goose that laid the golden egg."

Complicating AVI is Nutter's plan to raise an additional $94 million in the changeover for the School District, which faces a deficit of more than $200 million next year.

State Sen. Larry Farnese, a Democrat representing Graduate Hospital and Northern Liberties as well as other neighborhoods in Center City and South Philadelphia vulnerable to big tax hikes under AVI, has been at the forefront of a group of lawmakers urging Nutter to find alternative ways to fund the schools, including a proposal to use casino revenue. Farnese is set to introduce an amendment to Williams' millage rate bill that would force AVI to be revenue-neutral — to collect the same amount in property taxes as last year.

If Council then wants to raise more money for the schools, members would have to take a separate vote.

Farnese reiterated Thursday that he supported AVI and said his amendment shouldn't effect its implementation.

"This process was sold to the people as being open, fair, and accurate," he said. "I believe this amendment brings that level of fairness."

The legislature returns to Harrisburg on Monday. Council has scheduled a hearing on a dozen budget bills for Tuesday.

In 2009, the city had to wait to finalize its budget until September, when the state finally passed bills allowing for a sales-tax increase and a change in pension payments. The city had to suspend payments to vendors in July and August to get through the summer.

Williams said he hoped there wasn't a similar impasse this year that confounds the city's budget.

"My hope is that by the time we get to Harrisburg next week," he said, "we'll have our collective act together."