Hail Isaiah Thompson! AxisPhilly Delivers the Assessment Explainer You Need

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I was getting ready to complain about the poor explanation quality in the items on the property reassessment news out of Philly today, when Isaiah Thompson went and wrote precisely the explainer people needed to see.

You can’t just throw a number like $96.5 billion out there, say it’s bigger than the city expected, and then not walk people through what that means. Isaiah gets this so he shows you how the Nutter administration came up with the suggested 1.3% millage rate:

To understand what the first number ($96.5 billion) means, and how it translates into the second number (a tax rate of 1.3% to 1.4%), let’s do some math.

Step One: Total value = $96.5 billion.

— This is the value of all taxable property in the city (nonprofits and certain other properties are exempt from paying real estate taxes).

Step Two: City’s budgeted property tax revenue = $1.05 billion

— The Nutter administration has suggested that the city should take in the same amount of money in fiscal 2014 under AVI as under the old system in fiscal 2013. That $1.05 billion represents roughly $480 million for the city and about $570 million that goes to the Philadelphia School District. Of course, City Council, which sets the budget, can choose to appropriate more or less money for the city next year.

Step Three: Assume a collection rate of 87.8%

— The city doesn’t expect to collect everything it bills; the administration uses this rate based on experience over recent years.

Step Four: Calculate how much to bill

— Take the $1.05 billion the city needs to generate and divide it by the 87.8% collection rate to get a total amount to be billed: $1.2 billion.

Step Five: Calculate the tax rate

— Divide the total amount billed ($1.2 billion) by the total taxable value ($96.5 billion). Result: 1.25%

This math gets more complicated if you include a popular proposal to give homeowner-occupied properties a $30,000 exemption, which would reduce their taxable value by that amount.

Read the whole thing.

This entry was posted in Budget, Land Use.

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