According to the latest poll by the Pew Charitable Trusts, nearly half of Philadelphians don’t know anything about the new city property tax system that was enacted by City Council this year. Of those who do know about it, nearly half don’t trust the system.
The Pew poll, which was released today, asked 1,605 Philadelphians about the Actual Value Initiative (AVI), a property tax overhaul that Mayor Nutter said was designed to bring equity to an often wildly inconsistent property tax system. Amazingly, after months of public debate, news coverage, appeals and exemptions, only 52 percent of poll respondents had ever heard or read anything about AVI.
Of those who were familiar with AVI, 44 percent said the change would make property taxes less fair. A perfunctory look at how AVI works indicates that the mistrust is warranted—especially for homeowners.
AVI, which the city says is revenue neutral—meaning it should bring in the same $1.2 billion in property taxes in 2014 as the city collected in 2013—shifts the property tax burden to homeowners and away from commercial property owners, according to a study by Pew.
In a report entitled, AVI: The Shift in the Tax Burden, Pew found that residential properties would represent 59.9 percent of the city’s total assessed taxable value in 2014, an increase of six percentage points—or about $72 million—from the previous year. The commercial sector, which includes shopping centers and Center City office buildings, would see its property tax burden drop by four percentage points, to 17.3 percent, yielding an overall tax reduction of about $55 million for commercial properties. Industrial properties would see a drop of $20 million, and apartments and hotels would experience a decline of $4 million.
The mayor’s spokesman Mark McDonald points out that some residential homeowners will pay the same or lower property taxes under AVI, and when those taxpayers are combined with those who will see increases of $400 or less they make up an estimated 70 percent of property owners.
Even so, many homeowners mistrust the city’s property tax system, and fairly or not, that mistrust was exacerbated by the debate over AVI.
“They don’t care about us, they’re about money,” said Raymond Barlow, a 67-year-old Northern Liberties homeowner, when I interviewed him earlier this year. “And it’s a shame that people down here have been down here 40-something years—some of them have been around here 50-something years. They live on fixed incomes now. And they’re forcing you out. You’re used to living down here. Where are you going to go? And I think it’s unfair.”
The irony? When the Pew poll was taken in late July and early August, after the city put an appeals process in place and offered $30,000 homestead exemptions for owner-occupied properties, 45 percent of homeowners still felt the way Barlow felt back in February. They believed the new tax system was unfair.
There are various explanations for that mistrust, including the inherent suspicion that people often harbor when it comes to anything new. But there is also the fact that, despite the city’s best efforts, some homeowners haven’t gotten the breaks they believed they should have.
The new property tax assessments that property owners received back in May were supposed to fix inequities in the system, but that didn’t always happen–a fact illustrated by the AxisPhilly AVI Map.
When homeowners like Raymond Barlow saw that their taxes could go up by more than 50 percent in gentrifying areas such as Northern Liberties, they complained loudly. Many took advantage of the appeals process that the city put in place.
McDonald, the mayoral spokesman, said that the estimated 10,000 to 15,000 homeowner appeals submitted to the Board of Revision of Taxes prior to the Oct. 7 deadline (the actual number will be released later this week) represented a remarkably low number for such a massive reform of a system with close to 600,000 properties.
But, as the Pew poll makes clear, many Philadelphians don’t know about AVI, a fact that may have kept the number of appeals low. Among those who do know about the changes, the mistrust remains, and as a Philadelphia homeowner, I’m keenly aware of some of the reasons why.
If you’ve watched the public school system endure mounting deficits even as your taxes are collected to fund the schools, it’s difficult to trust the system. If you’ve seen developers and new residents in gentrifying communities get 10-year property tax abatements while you continue to pay the normal rate, it’s difficult to trust the system. If you see that the owner of a commercial skyscraper like One Liberty Place will enjoy a $2.5 million property tax reduction under AVI, even as your own taxes increase, it’s hard to trust the system. If you’ve watched the city’s poverty increase to 28 percent even as business interests continue to get tax breaks, it’s hard to trust the system.
In short, history has taught us not to trust. And if the Pew poll shows anything about Philadelphians’ attitudes toward the implementation of AVI, it illustrates that we’ve learned that lesson well.
As much as the city has tried to ease the transition to AVI with appeals and exemptions, it’s clearly not enough. We need more.
When the city shows that it can evaluate our properties fairly, collect our taxes efficiently, spend our taxes wisely, and do so on a consistent basis, we’ll be happy to place our trust in the system again.
Until that day arrives, Philadelphians are right to remain skeptical.
* This version corrects the threshold at which approximately 70 percent of property owners will see lower, the same, or slightly increased property taxes under AVI.