I woke up this morning to grumblings on Facebook about Philadelphia’s budget deal: a “temporary” 9.9% increase in property taxes. The “temporary” (cause who really believes it will be temporary?) increase is an effort to plug a $150 million deficit in the city’s budget. The boost was approved by City Council and Mayor Nutter is expected to give it the go ahead.
As the bill is currently written, the property tax increase would be in place for two years (*cough*) and would raise about $88 million for the city each year. Exemptions would be available for low income and senior property taxpayers. Council voted 10-7 in favor of the hike, marking the first property tax increase that city residents have seen in 21 years.
And now the crying and gnashing of teeth begins.
But I’m actually relieved that we’re moving in this direction as opposed to other fees and taxes contemplated by the city. The wage tax cannot go up, and neither can the BPT. Those increases would, in my opinion, just from an appearance perspective, be devastating for the city.
And that trash fee for residents contemplated by Mayor Nutter? Likewise, a nightmare, but for different reasons:
- The cost to administer the trash fee would be out of control.
- Efforts to collect the fee from residents would likely fall flat; it’s not like the DOS is going to keep a checklist of whose trash to pick up and whose to leave. Again, see #1.
- Trash fees aren’t deductible for residents (real estate taxes, on the other hand, are).
- I hear from taxpayers all of the time that they aren’t so much frustrated with the amount of taxes as they are the sheer numbers of taxes. Adding another fee that residents have to pay is like the airlines charging for drinks and blankets: stupid and annoying.
So, I’m actually breathing a sigh of relief this morning. I think a property tax increase is one of the smartest, most palatable solutions to a very tough budget problem.
Do I want to pay more in taxes? No. Do I want the services of fire and police? Absolutely. And I want my trash collected and my streets cleaned (even especially in winter). I want schools to stay open. I want to use the library and go to the park (Fairmount Park is one of the reasons we chose to stay in the city when we bought our house). And those things, my friends, costs money.
Is there waste? Sure there is. Anna Verna and her DROP bonuses have seen to that. But that’s not what’s on the table. It’s not a choice of DROP bonuses go or your property taxes increase. It’s more a choice of fewer public safety hires or your property taxes increase. Guess what I choose?
A handful of other taxes will help balance the budget. The commercial trash fee will double to $300 per year (unlike residential trash fees, commercial trash fees are deductible to businesses as a business expense). Chewing (“chaw” as we say in the South), pipe tobacco and cigars will see an increase in tax at the retailer level.
The combination of some cuts ($17 million) and some increases will actually lift the city back into the black – even without a soda tax. Mayor Nutter isn’t giving up on the idea of a soda/sugared drinks tax, though. He has not been able to win the votes that he needs for the tax, even amid discussions about lowering the tax. I guess the door knockers and fliers that these folks left all over Philadelphia last week worked. Next week, however, the Mayor will try again.
Wow — I just googled DROP bonuses. You guys sound like you’re as bad as Rhode Island, with one-party government, politicians in bed with each other (here, it’s with public-employee unions), and all slopping at the public trough.
I hate to sound like a TP-er, but I would vote no on a property-tax increase, simply on “stop feeding the beast” grounds. As Charles Peters (founder of the Washington Monthly) likes to point out, bureaucrats will always make budget cuts that make people scream, when they’ve got a shortfall. They’ll fire crossing guards, close libraries, and shut down fire stations, because they know such cuts will get the public to give them more money. They never cut the Assistant School Superintent For Detention, the Mayor’s Special Liaison to Aruba, or… things like DROP bonuses. Until they do, I vote no on all tax hikes that show up on the ballot.
Urbie, unfortunately, the DROP bonus stuff isn’t going to change. It’s entitlement politics and we love it here in Philly (apparently). But realistically, we have closed our libraries, etc., and Council still didn’t budge on the DROP. I’d rather keep the City open for business (and hopefully kick some of Council out in the future) rather than let the City suffer with insufficient services to prove a point.
TaxGirl:
This same scenario of real estate tax rate increases in order to sufficiently fund local services is being played out all over the nation this year. In most cases the residential real estate assessments have declined as a result of steep declines brought on by foreclosures and resulting bank-owned property sales. Unfortunately, when real estate assessments declined most property owners expected to pay a lot less in real estate taxes. The reality is that assessed values that reflect state-defined values (fair marker value, fair value, true cash value, etc.) multiplied by locally-adopted real estate tax rates equal the amount you’ll pay in taxes. But the end result of why we pay real estate taxes is to fund local services that residential and non-residential property owners consider to be essential (education, public safety, and other services). Taxpayers owe it to themselves and their communities to let local taxing authorities know what they deem to be essential services and where effective budget cuts can be made.
Um, Kelly, refusing a property-tax hike would not be “let[ting] the City suffer with insufficient services to prove a point.” It would be letting the City suffer with insufficient services to let taxpayers keep some of their own money, with which to make ends meet. Especially taxpayers who — like me, in a recession — have been out of work for much of the past couple of years. Do the cities and towns think OUR revenue doesn’t fall along with theirs?
Just to digress, I grew up in one of the wealthiest towns in Massachusetts — no school budget override was ever rejected, because supporters would pack Town Meeting with parents. But we had a “progressive” high-school English department, so it was out with the classics, in with Vonnegut, Salinger, and a string of forgettable novelists.
My old boss grew up in one of the poorest towns in Massachusetts — manufacturing industries long-since absquatulated to points south and east in search of cheap labor. So the schools had no money for new books — and stuck to the old ones: Shakespeare, Dickens, Hemingway, et al. Who is more well-read: me or my old boss? Providing quality services (especially when it comes to schools) is not all about the money.
State and local governments are going to have to cut some services — if that hurts, oh well….