The $487 million that the city of Philadelphia plans to receive from real estate taxes could be in jeopardy with new information from the State Tax Equalization Board. The state’s property-tax watchdog evaluates each county’s assessment of real estate and found that Philadelphia has expensive discrepancies.
Millions of budget dollars are at risk, according to state real estate laws governing property value. The state real estate tax board, which assigns market values based on property sales, told the city that Philadelphia tax assessors have been inaccurately assessing properties.
Current market values in Philadelphia, the board wrote, were off the state mark by a long shot. The city bases its real estate taxes on a portion of 32 percent of a property’s value. The state agency said Philadelphia assessments were so distorted that the city was actually taxing against market values of only 18 percent.
With the wildly skewed property values, the state reported, Philadelphia property owners could head to court. With an assessment rate nearly cut in half, Philadelphia financial officials say it could be forced to trim as much as 40 percent from taxpayers’ bills. One city attorney said that represented “hundreds of millions of dollars” in expected revenue.
Philadelphia officials may appeal the ruling. The city could also change its assessment ratio to match the state’s 18 percent mark and raise property taxes later, but there’s a snag. According to the city’s own laws, no changes can be made to tax rates during a current fiscal year.
Source: Newsworks, “Phila. scrambles to preserve property tax revenue after state ruling,” Dave Davies, Aug. 1, 2011