Nutter team wasn’t ready on Philadelphia property tax plan

I got a complaint last week when I wrote about the city’s failure to adopt a proposed overhaul of the property tax system, and I said I’d heard one reason for the delay in assessments was that “the city’s lumbering civil service system couldn’t accommodate the prompt hiring of enough tax assessors.”

The city’s human resources director Albert D’Attilio and the three-member civil service commission took strong exception to that. So I met with them Tuesday and they walked me through their efforts over the past year to hire about 70 new assessors. They made a strong case that they, at least, weren’t lumbering.

More on their efforts in a moment.

First, why those hiring efforts were important.

It turns that that a key reason Mayor Nutter couldn’t convince City Council to adopt his property tax plan was that Council members didn’t have critical information those assessors were supposed to deliver.

Nutter wanted to move the city to a property tax system based on real market values, a step pretty much everybody agrees is needed.

City Council has to approve a budget and tax plan for the fiscal year before the end of June.

But because the city wouldn’t finish its reassessment of the half-million properties in Philadelphia until the fall, Nutter was asking Council to approve a plan before property owners knew what their new tax bills might be, before Council members knew what the impacts in their districts would be, and before anybody knew how the change might affect residential as opposed to businesses property taxes.

And it didn’t make it an easier sell that Nutter’s proposal wasn’t revenue neutral – it would result in collecting $94 million more in property taxes.

You could argue that cowardly Council members seized on the lack of information as an excuse to avoid doing the right thing. But as more analysis of the potential impact of the change emerged from Council, it became clear there were serious unanswered questions.

So what happened?

The administration had some lead time in tackling the assessment problem.

Nutter announced a moratorium on assessments in January, 2010 – more than two years ago – and said the city needed to fix its system. In May of that year, voters approved a referendum giving the city the authority to take over property assessments, and by the summer the city had hired a new chief assessment officer, Richie McKeithen.

Why couldn’t they get the new assessments done by this spring?

When I spoke to the personnel folks, they said McKeithen told them right away it would be hard to hire as many new assessors as they needed, because there just aren’t that many people around with those skills.

They said they found that to be true.

They hustled to advertise the required civil service test for the post of “real property evaluator,” administered the test and offered jobs to those qualified, and found they didn’t get nearly the number they were looking for.

So they adjusted the qualifications for the job, re-advertised and re-administered the test, with similarly disappointing results.

They did hire people, just not enough.

They’re now planning a third test, but the important battle has been lost. The administration didn’t get the values in time for Council to see them, so the change to full market value won’t happen till next year.

The administration has said the failure to change the tax system could cost the city up to $100 million in tax appeals, thought there’s legislation advancing in Harrisburg that could bail them out of that problem.

No way out?

So was this debacle inevitable? Were the city’ hopes simply sunk by the local labor market?

I asked the civil service folks if they could they have gotten more applicants by waiving the city residency requirement and bumping the salary another ten grand.

Both measures would require votes of the commission and could have been done, they said. The salary boost would have taken about three months.

But they said they doubted it would have made much difference.

What about going to private contractors for help? That would be up to the Office of Property Assessment, they said, but there would be union objections.

I talked to a couple of experienced folks in the private sector who work in property assessment. Both agreed there aren’t so many people out there with the needed skills who want to get into that business, but they weren’t prepared to say the city couldn’t have pulled this off.

So while I’ll acknowledge that the civil service commission and the city personnel may have done what they could, it’s hard to understand why, with a two-year running head start, the city administration couldn’t be better prepared than they were to present this stuff to City Council

Missed opportunity

It took city Finance Director Rob Dubow a while to return my call on this, but when he got on the phone, he told me the administration always planned to have the assessments finished for the coming fall, not for the spring budget season.

He said that schedule was presented to the state board overseeing the city’s finances last year, with City Councils’ concurrence.

That means the hiring problems didn’t really matter, and it means the administration thought they were going to sell the transition to market value assessments without having the property values established. In this, they were badly mistaken.

While I respect the talent and commitment of the mayor’s people, the truth is that the administration’s presentation of this stuff this spring has been pretty dismal, beginning with the initial briefing to reporters which came without a single piece of paper.

Information later provided to Council about the potential impact of the property tax plan on various neighborhoods came into question when Council members, particularly Bill Green, did their own analysis.

Dubow told me the administration’s information was never intended to be a predictor of what would happen under the new system.

When I asked whether in retrospect it was a bad idea to try and do the full market conversion without the new property values, he said the administration wasn’t dwelling on the past, and looked forward to getting the transition done next year.

One thing I’ve learned in decades of covering this stuff is that getting big things done in government isn’t easy. There are procedures that slow things down, all of them established to prevent known abuses. And politics makes things tricky, too.

But change is possible with planning and persistence.

In this case, the administration should have seen long ago that it would need those property values ready this spring and made sure they somehow got the job done.