It’s the strangest thing.
A state agency nobody’s ever heard of quietly releases a one-page document last week, and tens of millions of dollars in property tax revenues for the city of Philadelphia are in jeopardy.
The State Tax Equalization Board, which reviews property tax data for every county in Pennsylvania once a year has suddenly concluded that property tax assessments in Philadelphia are way, way off.
And because of the way state law works, anybody who appeals their property tax bill later this year has the potential for a big reduction. You can read more about how it works here, or hear my explanation on Monday’s Newsworks Tonight program.
There are many weird things about this. One is that this obscure state board releases its calculation of the city’s effective property assessment rates in June (actually, it came in late July this year), too late for the city to adjust its tax assessment and rates to respond to it.
Another is that it’s widely believed that Philadelphia’s properties have been under-valued for tax purposes for years. But the State Tax Equalization Board somehow didn’t notice until this year, when it’s calculations showed a huge variance from the city’s numbers.
One theory you hear is that the state board, three political appointees of Governor Ed Rendell, were happy to accept fudged numbers from the city’s Board of Revision of Taxes for years, and now it’s different.
It’s different mostly because property tax assessments have been taken away from the BRT, a widely-criticized patronage haven. The city’s new Office of Property Assessment now has that function, and some believe they gave honest numbers to the state for the first time in years.
But what about the city’s budget? It assumes $487 million in real estate tax revenues this year. If everybody appeals and gets a cut the size of the state’s variance from the city’s numbers, $200 million of that revenue could be gone.
City officials aren’t saying much, except that the state finding is a concern and they’re considering their options.
I reached Uri Monson, executive director of the state board that oversees the city’s finances (different state board), and he wasn’t running around his office with his hair on fire.
He noted that people only get reduced property taxes if they appeal bills which go out later this month, and the appeal doesn’t guarantee a reduction. Once a taxpayer appeals, the appeal board can re-assess their property to a higher value if local markets justify it, so they can lose as well as gain. That should discourage some from appealing.
There seems to be more concern that commercial property owners can appeal and get a benefit from the state board’s finding, because their current assessments are less out of whack than residential properties.
“It’s something we need to watch,” Monson told me. “But we won’t even have our first inkling of the impact until we see the number of (property tax) appeals in October. Everything else is just speculation at this point.”