City skeptical of recent data for Philadelphia property taxes
April 6, 2009
Dave Davies, Philadelphia Daily News
IF CITY COUNCIL members go along with Mayor Nutter's proposal for a two-year hike in city property taxes, they'll be increasing real estate taxes that already are among the highest in the region.
An analysis of effective property-tax rates shows that Philadelphians are paying higher property tax rates than home and business owners in 211 of the 240 townships and boroughs in Montgomery, Delaware, Bucks and Chester counties.
Many suburban communities are substantially cheaper than Philadelphia.
For example, the property-tax bill on a Lower Merion house worth $100,000 would be $1,340. A homeowner with a house of equal value in Philadelphia would pay $2,330. That's 74 percent more. The bill in Yardley, Bucks County, $1,726, would be 26 percent cheaper than in Philly.
The figures come from computations by Select Greater Philadelphia, a nonprofit organization that promotes economic development.
City officials are skeptical of the calculations, and many point out that suburban communities don't confront the range of social-service needs that the city has.
And many suburban communities don't provide or charge for some services, including trash collection. In Lower Merion, for example, a typical household will pay $262 a year for trash and recycling collection.
But even with that fee, Lower Merion's effective property tax rate comes in well below Philadelphia's.
Philadelphia's effective property-tax rate is also higher than that in every community in New Castle County, Del., the data show, but about average when compared with suburban communities in New Jersey, which has some of the highest property-tax rates in the country.
Mayor Nutter said recently that before he recommended a two-year increase in property and sales taxes, he thought long and hard about where to find the money needed to weather the current financial crisis.
"We did look at everything, and everything was on the table," Nutter said. In the end, he said, the imperative was to avoid raising wage and business taxes, which he argued would be "quite simply a tax on jobs."
City budget director Steve Agostini said he wasn't convinced that Philadelphians are necessarily paying higher property taxes than suburbanites.
He said city officials had done some property-tax comparisons of individual properties in the city and suburbs in recent weeks, and reached no clear conclusion about where the property-tax burdens are heaviest.
"We'll certainly look at this data," Agostini said of the tax-comparison tables provided by the Daily News. But he said the decision to raise property and sales taxes was based on the need to preserve services and not "go back to the well" of wage and business taxes.
In November, Nutter canceled planned reductions in wage and business taxes, and Agostini said with proposed temporary real estate and sales tax hikes, "the burden would be spread fairly evenly across the city."
Many Philadelphians are used to thinking of the wage tax as burdensome and property taxes as relatively moderate.
But the fact that Philadelphia's property taxes are relatively high is consistent with a pattern common in America: Older urban areas with struggling economies and more poverty tend to tax their citizens more heavily than newer, more affluent communities.
Indeed, many of the 28 suburban communities with effective property-tax rates higher than Philadelphia's are older, struggling communities in Delaware County like Darby, Upper Darby and Marcus Hook.
"They tend to be more urban, more blue-collar and have a larger minority population," said Greater Philadelphia Select Vice President Phil Hopkins, "and they tend to have lower property values per capita."
Cheltenham is the only municipality in Montgomery County with a higher tax rate than Philadelphia's - just 2 percent higher.
Civic activist Ed Schwartz, who led the city's Tax Reform Commission in 2003, said there was a perception then that Philadelphia's property taxes were relatively low.
But he said it's no great surprise that taxes of all kinds in Philadelphia are high.
"The city cannot afford to meet the needs that exist in the city. Twenty percent of the population lives in poverty," Schwartz said. "Without federal help, no matter what we do, we're in bad shape."
Schwartz also noted that suburban communities don't supply nearly the same level of services that Philadelphia does.
"Many of them have volunteer fire departments," Schwartz said. "Some don't collect trash, or charge a separate fee for it. They have far fewer police and spend far less on their court system."
Steve Wray, executive director of the Economy League of Greater Philadelphia, said there's more to the property-tax picture in the city than the rates.
"Property values are lower in the city, in general, so the absolute amount you pay is lower," Wray said. "You can get more house for that lower value. The $250,000 home in the city may be a $400,000 home in the suburbs."
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