Having made it through a decade of recovery while a slew of state-level tax changes touched virtually every other tax levied by the City (the $10 Occupation Privilege Tax was hiked to $52 and is now known as the Local Services Tax, the earned income tax got a portion of the rate levied by the School District, the Business Privilege Tax and Mercantile Tax were phased out and replaced by the Payroll Preparation Tax, the Parking Tax was increased in 2004, set on a reduction schedule to 35%, then kept at 37.5% as a result of a 2009 pension law) the property tax—the biggest tax revenue generator for the City and budgeted at $128 million for 2014—could be raised in 2015 by half a mill.
The proposal should not come as a total surprise as the Act 47 team recommended the increase in its third recovery plan along with asking the Parking Authority to boost rates (done August 1) and for fees and charges to be reviewed more frequently. Call it the “millage rate that shrunk too far” as the reason for the millage hike is being placed on the reduction from 10.8 mills to 7.56 mills to comply with Act 71 requirements that follow a reassessment. There’s nothing that prevented the City from raising the millage rate in 2013 (it would have been limited to a 5% limit in a separate vote, but could have petitioned the courts for a higher increase) or 2014 (free of Act 71 guidelines) but it appears 2015 will be the year for an increase. The City’s total taxable value (total value less exempt property) is $20 billion based on the most recently available audited number for 2013.
The budget will go to the oversight board and then to City Council before the fiscal year starts on January 1st. Will there be a close examination of the numbers? As our June Brief pointed out, revisions pushed other tax projections up, but not the real estate tax and revenues essentially stayed at a total amount where they were earlier in 2014. There are still plenty of opportunities for savings and it would be reasonable to expect there would be growth in real estate tax collections from ongoing activity.
