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Discussion in 'Philadelphia Real Estate' started by ArcticSplash, Mar 7, 2012.
City: New assessment system to bring in another $90M
Great, time to drop the "Temp" tax hikes from the past couple of years!
Instead we all know they will stay in place and the dopes in city hall will blown that 90 million faster then you can blink your eye! Any idea where at 90 mil will go?
KYW this morning said it is all going to the school district.
Yep, the PSD CRO made that announcement on Tueday. The anticipated budget gap is $248 million for FY2012-2013 OR it could be $148 million (projected gap minus amount from additional RE taxes of $94 million) - $400 million (new expenses from vouchers or charters and I imagine if they're not successful forcing the union giveback they've been hinting at doing)
This is a good article explaining why Corbett is claiming he has increased education funding and education advocates say he decreased it. Spoiler: they're both right but only one of them is trying to destroy urban public education. Pa. state school aid confused by competing math | Herald Times Reporter | htrnews.com
My house will be going up for sale shortly. I've had it with this city and the unfair burden placed on homeowners.
Where are all the "reassessment is revenue neutral" people now?
They're in here:
The split will be 40% - 60%, 40% for the city, 60% for the school district, just as it is for the property taxes we pay now. The extra funds for the school district will not cover their deficit made worse by cuts in state funding redistributed to PSU.
I'm not all that surprised that its not revenue neutral. Basically the political calculation goes "People are going to go ballistic anyway when everyone in the city's assesment changes so working in a revenue increase is not going to change the amount of screaming one way or the other."
What more surprises me is that this process has been in play for 3 years and City Council still seems to have no plan for how they are going to ease in new assesments for older owners where actual home values have raised dramatically since 20+ years ago. Think back 20 years ago and where neighborhoods on the rise around the edges of Center City have changed. New owners have had ssesments based in practice on their sale price but 20 years ago perceptions of Northern Liberites, Fishtown, University City, SWCC, etc were dramatically different. Owners who have been cruising on the same assessment since back then are going to be in for a controversial surprise. And the Controller's and City Council's main answer seems to pull a Chicken Little and offer no solution to that rude awekening. This'll be fun.
Councilman Bill Green seems to rubbing his hands together at the chance to ride that as hard as he can when the new bills go out.
I'm not sure if his pre-postitioning is any less calculating than the Nutter administrations decision not to make it not be revenue neutral.
Yeah you'll just be generating more revenue to the City. It's called the Real Estate Transfer Tax.
Everyone who bought into Fishtown before 1990 is up in arms. I'm in Kensington but close enough to Fishtown that my area will be hit with it too. Probably hard.
Did you read the article? The School District spends $14,000 per pupil, which is about the state average, and over 200,000 students works out to a budget of $2.8 billion. It only reimburses charters for $10,000 per student in charters, so I don't see how that is 'costing' the district any money, by the way. Meanwhile this new level of tax will generate a total of $673 million for the schools, which won't come anywhere close to funding the schools adequately, despite your protestations. Clearly the SDP is unsustainable and needs to be radically restructured. That can has been kicked down the road for far too long.
Now I know why cities that own utilities, particularly power generation, isn't such a bad thing.
In San Antonio they get ya through your light bill. The summer months is when City Public Service gets mountains of cash thrown at it by sweaty residents. Goes back to the City of San Antonio and fills up its coffers every year. San Antonio's government doesn't use property tax to pay its bills because the school districts (they have 12) collect all that tax, which goes back to the state, then gets farmed back out in the Robin Hood plan to keep rich districts from soaking up all the money for public education.
Too much time has elapsed since the last reassessment for the city's overall tax take to remain what it was in 2004. The base is larger now, so the total collections should be higher. If this process took 100 years should we be paying the same average tax as was paid in 1913? With how long the process has taken it would be insane to expect the average tax bill to remain where it was.
I'm kinda scared.
You're also talking about a city with a 25% percent poverty rate and all that poverty is not densely concentrated in a few areas that can be "walled-off" from the tax assessor. You're talking low-income seniors who are scattered throughout just about every single neighborhood except perhaps Chestnut Hill.
The ones who are completely surrounded by gentrification or are in pockets of jacked-up assessments left over from years of corruption in the BRT are liable to feel some pain. Since the City is doing all of this in aggregate and has to get the new assessments mailed out in October, chances are not good that the City is going to positively identify everyone who is likely to not be able to pay the new rates.
If you don't think this is all timed to generate maximum drama, you're kidding yourself.
The 10% property tax hike was city portion only, so when it is rolled into the new assessments and back to the 40/60 split, it will mean more of it will go to the School District.
They do have a plan. They are asking Harrisburg to pass enabling legislation where they can do assessments based on a smoothing curve. In essence, the value you pay taxes against will be the average of your last 5 years of assessments. Of course, Nutter is already putting out the press hawks that if Harrisburg doesn't give them the enabling legislation, it will be Harrisburg that kills the property reassessments.
I paid $150k in property taxes this year, or I will once I mail that last check this week. It's gone up dramatically (cumulatively 13% or so) the past two years. Now it looks like it'll be going up another $13k next year. Ouch. Who's to say it's going to happen in 2013, though? This process has been so drawn out that I have little confidence it'll go into place in 2013.
I was talking to my bankers about this, and my attitude is that if property values are increasing taxes should go up. In theory the increasing QOL and/or inflation justifies higher property valuations, which themselves justify higher taxes. The alternative, which is a Camden-like plunge in QOL and therefore property values, is much, much worse.
Because if charter enrollment increases, the district still has to kick in the $10K per students but the level of funding the PSD receives overall doesn't rise anywhere near enough to cover it, necessitating additional cuts to the district system. When a ton of the Catholic schools were going to close, the district said it anticipated large increase in charter enrollment in September 2013 but wouldn't know the exact numbers (and therefore, the amount times $10,000 it would have to fork over) until October, well into the FY2012-2013. Meaning, there were going to have to be disruptive mid-year budget cuts to schools. That's part of the reason why they're chasing the Gates Great Schools Compact money - otherwise it looks too obviously like a snake eating its tail.
Because you only said it after you got called out on it.
Actually it isn't insane at all. When the last reassessment happened has no bearing on the process. It is about revenue gathered. What you're discussing is exactly what the problem is with Nutter's approach. His goal is to reassess to get more revenue. All the other reformers want the reassessment to actually make the system fair.
The fixed system should be about fixing the system.
Under your premise, if the city is collecting $2 billion from a 1913 assessment and they reassess 100 years alter, they should be collecting $2 trillion dollars now because property value has increased 1000 times since then. You see how silly your example is?
City Hall has two options. They either have to wrap the tax increases into a new assessment system or keep the old system and raise taxes. The reason is because Nutter built his 5 year budget based on keeping the temporary property tax increases. City Hall would have to do significant levels of cutting as well as tell the School District they are getting no extra money, if something isn't done.
Nutter painted himself into a corner.
You are still mixing two different issues. The reassessment that needs to take place is to fix a system where NONE of the assessments are remotely accurate or fair. The current system is completely broken.
If it was a normal assessment to catch increases and inflation from year to year, just about no one would be up in arms with that. The thing is, that isn't the case. This is about fixing something that has been inaccurate for DECADES.
Well, to be fair, the school districts and the unions can't advocate for the retirement plans and then claim that the payments for retirements plans don't count towards the cost of education. The retirement costs are part of labor costs. So yes, Pennsylvania IS spending more on education, it just happens to be a significant portion of the funding has to go to increases in retirement benefits.
So, to really summarize what is taking place, money going towards the K-12 education system is increasing, but less is going to real time education because more has to go to legacy costs of the system's labor force.
Labor contracts have real impacts.
Property taxes are supposed to be indexed to inflation via reassessments. When reassessments are frozen, the effective property tax rate goes DOWN (if property values are increasing). When that is fixed via reasssessments, that isn't really a tax increase. The question is whether you look at property taxes as a percentage of value or as an actual bill that comes out of your pocket. Generally taxes are expressed pro-rata, as in an 8% sales tax. Under your specious logic, increased sales in Philly with a constant tax rate of 8% represents a tax increase. Similarly, when you got a previous raise at work, you made more money and even though the city's wage tax rate dropped to 3.928% you still paid more money in taxes. Most people would call that a tax decrease, but your faulty logic would only recognize the larger tax bill (due to the high wage base) and call it a tax increase.
Right, but he's been telling people concerned about classroom funding to STFU because he technically increased education funding overall. There's a reason previous governors didn't smush the two together.
Not labor contracts, state laws made and changed by politicians that are heavily lobbied by the public sector unions: Pension Crisis
(The PSEA claim that they never lobbied for the Act 9 increase is laughable.)
Why is this not the news story then?
You sound skeptical that a smoothing curve (or something similar) would be necessary for new assesments to go through politically, instead of Council kicking the can down the road indefinitely. If you happen to be one of the unlucky individuals getting a new tax bill thats suddenly 200% or 300% higher, the fact that they also snuck in a 9% across the board increase is not what you are going to be upset about.
I don't know how many more ways I can say it. The reassessment taking place isn't for capturing inflation. It is to fix a system broken for decades. You are the one that worked up the silly 1913 analogy.
Maybe the problem was separating it out then. It means that before, no one was appreciating the true cost of operating the K-12 system and allowed previous governors and legislators to play games with the funding numbers.
So right now everyone is fighting over the semantics of a funding increase/decrease but completely ignoring the elephant in the room which is that it is getting more and more expensive to run the schools and at the same time classroom resources are decreasing. And what does that mean? No one is winning. So while both sides are swinging from the rough, the system continues to buckle.
Yes it was done via legislation, but it falls into the "labor contract" category since the state would likely lose a court case if they rolled it back without the union agreeing.
No, I am not skeptical. I meant to infer that Nutter is already planning to blame Harrisburg if he hits a rough patch or fails.
The thing is, Council can't kick the can indefinitely. There are court orders and lawsuits they are going to have to deal with. This is the end of the road and they want Harrisburg to save their hide.
Here is the article in question. (I chastised IOM for it. It was like they repackaged a Mayor Nutter talking point memo.)
City still needs state's help to fix property-tax system
Hmm, interesting. It looks like the post has been edited and fixed many of the complaints I had about the article. The original had quotes and parts that said City Hall couldn't fix the system without the enabling legislations. It was changed to say it would help make it easier.
No, there is nothing that a lot of Council would like better than to take the broken old assessments to court so they can wash their hands from the big jumps in assessed value. Thats been our idiot Controller's position from day one. For many members of Council saying the new assessments were forced on them by a court order is their most preferred way to play it politically.
These are people whose whole reality of liking to spend money is as disconnected as possible from the reality of having to collect it.
And I for one don't have a problem with easing in new fairer assesments, as long as we get there.
Why is this?
Well here is the problem. The smoothing legislation helps limit the anger from the people that have been, in essence, getting huge property tax breaks for 10 years (or more) at the expense of the people who will still have to overpay for the 5-10 year window. So, it isn't like it is a silver bullet. There are still going to be plenty of people who can be angry that they are continuing to be screwed and told to suck it up for the sake of the people in $400,000+ homes.
Even with that though, I can sympathize with the smoothing legislation if it was to fix a revenue neutral system. The fact it will also be used to roll in approximately 10-20% in tax increases makes it abhorrent.
There is already existing case law where benefits given to union municipal employees, even if not in the contract, can not be taken away without negotiation. I believe the Philly unions sued the City over them trying to remove DROP, as an example.