Philadelphia moves bills through council committee, but budget still in flux

Philadelphia City Council has voted out a series of bills, but has not come up with a final budget deal. As it has been all spring, the sticking point is a property tax overhaul known as the Actual Value Initiative (AVI).

It was close to 9 p.m.Thursday before the city council session that started at 10 a.m. finished. The delay? Finding enough votes to approve versions of three measures: AVI, a business use and occupancy tax increase, and Councilman Jim Kenney’s property tax abatement for longtime residents of gentrifying neighborhoods.  

Council President Darrell Clarke says, combined, the three would harness rising property values to produce $85 million more for the school district — short of the $94 million it requested.  

The increase to the use and occupancy tax would generate $45 million more. The changed version of AVI would bring in $40 million more from the property tax. 

Kenney says the proposed tax abatement would go to people in gentrifying neighborhoods who have owned their homes at least 10 years. The abatement would ensure those homeowners don’t see their tax bills more than triple during the next 10 years. After that, they would have to pay taxes based on full market values of their homes.

Clarke says the $40 million for the schools from AVI has strings attached.

“The purpose of that is to get a number of measures and commitments from the school district given the significant concerns about the continuing tax increases to support the school district.  At the end of the day members felt we needed the amount of accountability that made us feed comfortable about putting an additional infusion of cash into the school district,” said Clarke.

Council is also planning a $30,000 homestead exemption. That would mean the homeowners would not be taxed on the first $30,000 of value. 

With Philadelphia in the middle of a citywide re-assessment, council and the Nutter administration are estimating how much properties are worth and what the tax rate would have to be to generate this much revenue. The final numbers likely would not be known until the fall.

Councilman Mark Squilla’s bill that keeps the current property tax system in place for another year also passed committee, in case final negotiations on AVI fall through.