Eron Lloyd, Research Associate,
Henry George Foundation of America
Committee of the WholeTestimony on FY2010 Budget Wednesday, May 6
th
, 2009Good afternoon Madame Chair and members of Council. Within the city’s budget crisis is an enormous opportunity to lay a new foundation for sound and stable fiscalpolicy. The time frame and complexity of the situation prevents a comprehensiveredesign of Philadelphia’s tax structure in the weeks left before us, but there is a wayto make the most of the inevitable situation for the next fiscal year.Several things are certain at this point:
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One or several taxes will need to be raised to close the projected deficit,which may include a combination of the sales and property taxes;
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Even if you avoid a property tax increase in favor of an alternative, we willstill have a property tax to fund the schools and part of the city’s operations;
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The release of the BRT’s full value numbers will require additional time forfurther work, public review, and possible appeals;
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The property tax will thus depend on the current fractional assessment system for at least the next fiscal year, prolonging a system of inequity.We are optimistic about the improvements of the BRT’s actual value initiative, andhope to contribute to the effort to ensure the final numbers are as accurate anduniform as possible. However, Philadelphia will remain dependent on the current assessments for the near future, as rejecting their legitimacy outright would requirerepealing the entire property tax—an impossible scenario.With that said, we strongly urge Council and the Administration to considershifting the existing property tax to a revenue-neutral land value tax for the comingfiscal year. This action will have three significant advantages over retaining thestatus quo:1.Even under the current assessments, a large majority of residents will seesubstantial reductions on their property tax bill, which will help offset anyincreases in other taxes or fees.1
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