Don’t rush new tax system

Members of Philadelphia City Council face a critical set of choices in the next few weeks around the property-tax overhaul known as the Actual Value Initiative. With fiscal crises at both the city and the school district, our representatives must find the money to keep the city and our schools running. With massive state cutbacks in education funding, in particular, the city has little choice but to turn inward, at least in the immediate term.

We in neighborhoods like Queen Village are willing to do our part. But we cannot support the mayor's current proposal, which is rife with too many "unknown unknowns" and represents exactly the sort of backward policy-making that makes Philadelphians cynical.

Few dispute that Philadelphia has a notoriously broken and unfair tax system. A cursory search of the Office of Property Assessment's (OPA) database demonstrates that comparable homes in the same block or neighborhood are often taxed at dramatically different rates.

The 15 civic associations that make up the Tax Fairness Coalition support AVI. It is required under state law and will be more equitable than the current system. If the OPA had finished the monumental task of reassessing every property in time to pass the fiscal year 2013 budget, we might not be having this debate.

Until the data analysis is finished, we cannot set an actual tax rate, nor can we estimate the costs of measures to protect vulnerable homeowners. Starting with revenue targets and backing us into a rate, the mayor's proposal leaves us guessing about our 2013 tax bills. When city officials dismissively say "you'll find out in October," it only increases the cynicism, especially on top of two years of "temporary" property-tax increases.

Putting the AVI cart before the data horse is an irresponsible way to make a major policy decision, particularly in light of the magnitude of tax increases that many residents will face. I've tried to get a sense of the impact in my neighborhood. Assuming a millage rate of 1.2-1.7 percent, taxes will likely go up for everyone on my block from 30 to 100 percent. Some of us will be able to absorb the increase. Others, particularly seniors whose retirement incomes were hit hard by the financial crisis, will be faced with painful decisions.

Without data we cannot accurately cost-out measures to protect vulnerable homeowners. How can we mitigate "gentrification" or set a homestead-exemption level, which is pegged to median home value, when we don't know the median? If we don't know how much value will be exempted, we can't know how much needs to be redistributed.

Worst of all, the sketchy data we have suggests that the property-tax burden may shift even further from commercial to residential. Philadelphia already captures a disproportionate amount of its property-tax revenue from residential property. We must figure out a way to shift the burden from residential to commercial, not the other way around. As many have suggested, we ought to consider shifting some of the tax burden from structures to land, which could help.

In short, let's do AVI right, not recklessly. Let's have the data we need to make informed policy decisions.

Let's protect vulnerable homeowners. Thousands of people have stayed in the city through thick and thin, and they shouldn't be forced from their homes. I worry most about people like my 82-year-old neighbor, who was born in his parents' house and, aside from his military service, has lived in Queen Village his whole life. He taught school for 35 years, is widowed and hasn't seen a cost-of-living-adjustment for his pension in 10 years. How will we protect people like him from losing their homes?

Let's find other sources of revenue. Have we done all we can to capture revenue from tax-delinquent property owners? Have we attempted to engage our robust nonprofit sector, our universities, hospitals, museums, foundations, all sitting on tax-exempt land, into entering into voluntary payment agreements (PILOTs)?