Philadelphia screwed up property tax assessments. Start over. | Editorial

After pausing property assessments for three years, the city last week rolled out its latest “new and improved” system that resulted in an average increase of a whopping 31%. While property values have clearly gone up, the new assessments are so fatally flawed the city needs to go back to the drawing board.

Inaccuracy and unfairness have long plagued the city’s property tax system. Since 2013, the city has adopted various reforms, each billed as a fix to a system riddled with uneven tax bills for homes with roughly equal valuations. Rather than instill confidence, the changes raise more concerns.

» READ MORE: Black and brown homeowners unfairly targeted by assessment increases

In the latest assessments, a local analytics professor found 30 single-family homes assessed at more than a half million dollars below their recent sale price, predominantly in Center City.

Meanwhile, an analysis by The Inquirer found property owners in poor and working-class neighborhoods in North and West Philadelphia, where home prices have risen more modestly than the city’s assessments, were hit with some of the biggest increases. Neighborhoods like Roxborough, Somerton, and Parkwood, middle-class communities where home prices have risen significantly since 2019, saw smaller increases in assessments. Beyond the troubling disparities between zip codes, even similar homes on the same block can often show incredible variation.

City officials defend the assessment as more accurate than its predecessors, and have touted new technology and a better approach. It is hard to gauge these assurances, as the city has yet to finalize assessment data. Property owners seeking to challenge their valuations will have to do so without knowing the city’s reasoning, without being notified, and with six months left to appeal.

It’s crucial that steps be taken to avoid huge increases in assessments in a given year. It is unconscionable to jack up property taxes by a third or more — especially for homeowners in some of the city’s poorest and most vulnerable neighborhoods. Many Philadelphians are still reeling from economic hardships brought on by the pandemic — even as inflation drives up the price of food and consumer goods — increasing the difficulty of making ends meet.

» READ MORE: Property tax values jump 31% after assessment delay

One simple solution is to increase the Homestead Exemption. While Mayor Jim Kenney has proposed setting it at $65,000, 10th District Councilmember Brian O’Neill has proposed an increase to $90,000, the state’s legal limit. A figure roughly in the middle — about $78,000 — would soften the blow of increased assessments for many homeowners, especially those whose homes are below median value. The city can also broaden access to the Longtime Owner Occupants Program, so that more households are eligible.

The Kenney administration has also proposed a small wage tax cut. While shifting the city’s main source of revenue from the wage tax to property taxes may be a good long-term goal, it would be wise to do so intentionally and incrementally, not through unexpected valuation increases on the city’s poorest homeowners. Philadelphia needs trustworthy assessments and airtight relief programs before embarking on an ambitious change to the municipal tax system.

In 2013, then-City Councilmember Kenney proposed reducing the tax rate to 1% to help offset a jump in property assessments: “We’re putting an amazingly undue burden on many, many people in this city who are frightened, who are scared, who are thinking about selling.”

By pausing the reassessments and mitigating the sticker shock of double-digit increases in tax bills, the city can defuse the same fear this time around, while taking steps to ensure the property tax system is fair and accurate for everyone.