Like thousands of other cities across the nation, Philadelphia is also raising property taxes on its residents.
The reason? Growing pension costs and healthcare costs for the government employees and local retirees. Philadelphia residents should expect to see a 9.9 percent property tax increase for the 2011 year. The city has not raised property taxes to this extent since the early '90s. Other local cities that surround Philadelphia, however, are faring no better. Upper Moreland, a neighboring town, will see a 13 percent rise in taxes this year.
Property taxes are extremely important for local revenue, but every year the taxes seem to go up. Recently, residents saw a one percent increase in the sales tax, from 7 percent to 8 percent. Part of the reason is due to the recent recession and the rising costs of retirement. State legislators are hearing from constituents that they must cut down on rising pension costs to tame the property tax rate.
The local School District is also attempting to claim a larger share of the property tax pie this year. It raises about $600 million a year from property taxes and is asking the city to increase its share by another 5 percent (from 55 percent to 60).
Some union reps claim that city officials should have anticipated bad times by funding pensions better when the economy was healthy. It doesn't help that the state of Pennsylvania has cut down on the amount of aid they give to local governments, including the city of Philadelphia. Every year, the state reduces aid.
Currently, pension costs and healthcare costs make up about one fifth of Philadelphia's and Upper Moreland's yearly operating budget. In fact, Philadelphia's pension fund is only 45 percent funded, and it should be around 80 percent funded, according to actuary tables.
The city's current budget for the 2010-2011 year is set at $3.8 billion. Along with a 9.9 percent property tax increase, there is also a new commercial trash-removal fee set at $150. Philadelphia's Finance Director, Rob Dubow, claims that there is "no extra money lying around."
On a positive note, residents should not see any assessment increases, since they were frozen in 2010 and should remain so until 2012. The moratorium does not include recently constructed properties, improved homes and subdivided and consolidated properties. As always, however, Philadelphians may appeal their property taxes by contacting ValueAppeal, who will fight to reduce the bill.