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Support For Mayor Nutter’s Property Tax Plan Waning

(Council President Darrell Clarke, second from right, huddles with colleagues as budget negotiations continued Thursday morning.) (credit: KYW's Mike Dunn)

(Council President Darrell Clarke, second from right, huddles with colleagues as budget negotiations continued Thursday morning.) (credit: KYW’s Mike Dunn)

Mike Dunn Mike Dunn
Mike Dunn is City Hall bureau chief for KYW Newsradio 1060. He covers...
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By Mike Dunn

PHILADELPHIA (CBS) — Support in City Council for the mayor’s proposed property tax overhaul appears to be crumbling, as lawmakers today try once again to hammer out a budget deal.

Council last week gave initial approval to a new property tax system dubbed AVI, and a separate measure to raise the so-called U&O (Use and Occupancy) tax that affects commercial property owners.  Under Council’s original plan, revenues from both bills would bring $85 million more for the school district. But with a final vote still pending, support among the lawmakers for both AVI and a U&O hike seems to be eroding.

To save his proposal, Mayor Nutter late Wednesday cut short his stay at the U-S Conference of Mayors session in Orlando, Florida.  His spokesman says the mayor is now back at City Hall, in private discussions with council members on the budget situation.

The waning support comes because the new assessments needed for AVI are not complete, and the Nutter Administration has lowered its predictions for the total aggregate value of all properties in the city under AVI.  Some on council are worried that if the lower estimate proves correct, the tax rate under AVI would jump.  It is that possibility that has led to growing support among Council members for a one-year delay in AVI.

First District Councilman Mark Squilla, who originally proposed the delay, says the idea is gaining support:

“We have a solid core of support for the delay. There are still some people on the fence, and undecided — they seem to be leaning toward delaying things a year.  But there is nothing set in stone at this point.”

When asked Thursday morning about approval of an AVI delay, Council President Darrell was mum:

“If you can wait a little longer, we’ll be making some statements — very concise statements — as to where we are.”

Councilman Jim Kenney says AVI is a tough vote right now since the raw data — the new assessments — are not yet complete:

“We’re being asked to make one of the momentous decisions in my career (here), and maybe in the city’s history, with no information — with a guess.”

Councilman Bill Green says the Nutter Administration’s lowered estimates of aggregate property value have left many of his colleagues worried:

“I think it has put a lot of people who were potentially would be in favor of AVI on the fence.”

The Nutter Administration contends that any delay in AVI would be inappropriate given the problems with the accuracy of the current property assessments.  Officials say using the older values would likely lead to tens of thousands of appeals, and potentially cost the government tens of millions in revenues.  A memo from Finance Director Rob Dubow to council members, obtained by KYW Newsradio, estimates that those appeals could cost the city “well over $100 million.”

But Squilla says that same risk exists even if the newer values of AVI are used:

“No matter what we do at this point, there’s always the chance of appeals.  Even if we go to AVI, there could be hundreds of thousands of appeals that could also lower that (revenue) number.”

Under Squilla’s proposal, the current assessments would be used and the tax rate would be set to bring in the same amount as the current fiscal year.  That would make permanent two years of temporary property tax increases that were due to expire this year.

Also needing approval are the separate appropriations bills. Council will meet today both at the committee level and in its regular weekly meeting. Its final scheduled meeting is next Thursday, though an additional session on June 28th could be added.

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