This column appeared in the Philadelphia Inquirer on June 8, 2012.
In defiance of all political logic, the city’s long-awaited and much-feared Actual Value Initiative appears destined to clear City Council this month.
In the long run, this is unquestionably good news. A fair and equitable tax system is the foundation of good government, and new, accurate property assessments are the only way to get there.
Even so, I’m stunned that Council is willing to approve an unpopular and hastily assembled reform that is all but certain to create mass confusion and populist outrage, and could even cost a few members their jobs.
That’s no exaggeration. Just look to Pittsburgh, where mangled property assessments and a long-running court-ordered campaign to fix them have arguably been the dominant political issue for more than a decade. Indeed, reassessments are seen as so politically toxic in Allegheny County that Chief Executive Rich Fitzgerald – the county’s most senior elected official – vowed during his campaign that he would go to jail before mailing out new assessments, court order be damned.
Meanwhile, in Philadelphia, the Actual Value Initiative is almost the law of the land, without the political cover of a court order, and in spite of an array of unanswered questions about who will win in the citywide property reassessment, and who will lose.
“How is this thing alive? It’s a total mystery to me,” said State Sen. Michael Stack, one of many members of the city’s Harrisburg delegation who wants to kill AVI (for now, at least).
If AVI does indeed pass, it won’t be because Mayor Nutter has made a compelling public case for it. He hasn’t. Indeed, over and over, the administration has given Council every excuse it needs to walk away from AVI.
First, Nutter backtracked years ago on a promise to make the transition to the new assessment system revenue-neutral. Now he wants to extract $94 million in new funds as part of the transition, all of it earmarked for the financially desperate School District. That alone might have been reason enough for a “no” vote.
Then Council was told it would have to approve AVI without seeing the new assessments first. Just bad timing, the administration said. The figures wouldn’t be available until after the budget had to be passed.
Last month, Council got another surprise: It turns out AVI is likely to translate into a big break for commercial property owners, even as homeowners get socked. Actually, this shift in tax burden was easy to predict (The Inquirer called it in 2009) but somehow was left out of the discussion until awfully late in the game, when Councilman Bill Green raised the alarm.
Then the city waited until the last minute – for reasons so far unexplained – to try to get enabling legislation approved in Harrisburg, thus adding more uncertainty to the mix, and giving Council members yet another out.
Finally, just this week, the Nutter administration dropped the latest bomb. It turns out the likely post-AVI tax rate won’t be the 1.25 percent figure administration officials had been informally discussing with Council, but rather somewhere between 1.6 and 1.8 percent. That’s a huge last-minute shift, and it means property owners on the losing side of this reform will end up owing that much more than expected.
Given all this, Council members could easily say there is just too much confusion and uncertainty to responsibly approve AVI. And they’d probably even get a pass for ducking from the media and good-government types who have long called for assessment reform.
So why aren’t they bailing out?
Clearly, the Nutter administration’s backroom politicking has been far more effective than its public AVI diplomacy. The mayor has been careful to manage his relationships with the powers that really matter here: namely, GOP leaders in Harrisburg and City Council President Darrell L. Clarke (who wants to be a partner with the administration on this budget, his first as president). Nutter has benefited as well from having six new and relatively pliable freshman Council members to work with, as that group seems to be taking a lot of its cues from Clarke.
The School District’s funding crisis helps Nutter’s case as well. Plenty of Council members genuinely want to help ease the district’s pain, and Nutter has cast AVI as the best way to do that.
And there is at least one level on which approving AVI now makes political sense. If the transition must be made, best to do it when the next election is as far in the future as possible.
Finally, it just might be that Council and Nutter alike are willing to endure the inevitable political fallout because a majority of them are convinced that AVI is actually the right thing to do.
And that would be the most surprising development of all.