By Steve Tawa and Oren Liebermann

PHILADELPHIA (CBS) — The clock is now ticking for Philadelphia City Council to begin grappling with what could be the biggest challenge in the budget season, the proposed “actual-value” system for property taxes.

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Following the mayor’s budget speech this morning (see related story), Councilman Curtis Jones says he and his colleagues will have to work together for what he calls some “grownup decisions.”

“What needs to be noted is that some people have paid too much for decades and some, unfortunately, have paid too little,” he tells KYW Newsradio.

Councilman Wilson Goode Jr. says City Council and the public need to be realistic:

“Actual value has to happen,” he said today. “Not only is it state law, but it makes things fair.”

Councilman Bill Green says he would have preferred to see the Nutter administration bring Council a revenue-neutral process rather than a hidden tax hike — “to collect the same dollars we did last year, and then call any other increase in revenue what it is.”

The Nutter administration is seeking an additional $90 million in property taxes, all of which would go to the school district. Green says there’s no reason the city can’t do AVI — the city’s Actual Value Initiative — by keeping revenue estimates the same for the city and school district.

“The problem with this is that it’s one last grab under the old system,” Green tells KYW Newsradio.

But the mayor insists there is a distinct difference between an increase in property taxes and a property tax increase. He says the Actual Value Initiative makes people pay the correct amount of taxes on their property.

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“You may in fact pay more in taxes, but we are not raising them,” Mayor Nutter said after this budget address.

Dennis O’Brien, who is in his first term as a city councilman but was first elected to the Pennsylvania House in 1976, says, “Nothing is off the table and everything is on the table. These are brand-new proposals. Re-engineering the school district is going to be a continuing conversation.”

Veteran councilmember Jim Kenney feel like they are between a rock and a hard place in considering how they will go about changing the way properties are reassessed.

“Certainly no one wants to pay more in taxes,” he said today. “The irony is that we’ll be reducing the tax rate.”

The millage, or tax rate per thousand dollars of property valuation, will have to be set by the start of the new fiscal year this coming July, but the citywide reassessment will not be completed until the fall. That leaves Councilman Mark Squilla uneasy. And that’s why, he says, there will be safeguards put in place.

“We can put provisions into the tax lien to protect people,” he says. The mayor’s finance director had previously acknowledged that the new assessments would be phased in over three years to protect homeowners from huge hikes all at once.

In addition, the city will be seeking permission from the state legislature to create a $15,000 homestead exemption, which would drop a property’s assessed value for tax purposes. Low-income seniors could also apply to prevent their tax bills from rising.

And while the mayor’s budget address covered taxes, it also focused on the growing need for public safety. The mayor committed to hiring 400 new police officers over the next year and a half, aiming for a police force of 6,500 officers.

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“I made a promise to the people of Philadelphia that ours would be a safer city and that’s a promise I intend to keep. And today we make a further investment in that process,” said the mayor in his address.