Delay in tax appeals hurting city and school budgets

It's looking like the city will not get its estimated $543 million in real estate tax revenue for this year, after all. The school district will also fall short on its estimated $679 million real estate tax projection.

The city's fiscal watchdog, the Pennsylvania Intergovernmental Cooperation Authority, will be releasing its quarterly financial report Wednesday that shows a drop in projected real estate tax revenues — $14.8 million for the city and $20 million for the School District.

The reason: The Board Revision of Taxes is still going through the 25,000 appeals from 2014. And, while a property owner is in the appeal pipeline, that owner gets to pay the old tax bill without any fees or penalties.

"More people appealed than usually would've because there was no risk to appealing," Rob Dubow, the city's finance director, said at Tuesday's PICA meeting. "People saw it as an interest-free loan and they could keep paying the old amount until their appeals were settled."

The Office of Property Assessment completed a citywide reassessment in 2013 as part of a massive overhaul of the city's broken property tax system. All of the city's 579,000 parcels were reassessed.

The BRT was tasked with reviewing appeals.

Last year, BRT executive director Carla Pagan told City Council that the board expected to be done with all residential appeals by Labor Day of 2014.

With about 2,000 appeals (residential and commercial) left, Dubow told PICA, the new completion timeline for 2014 tax bill appeals is this fall.

That didn't sit well with some PICA board members.

"It doesn't just impact the city's budget, it also impacts the school district's budget at a time when Council is scrambling to find dollars and the administration is trying to find dollars," said Suzanne Biemiller, a new PICA board member and the city's former first deputy chief of staff.

School district officials have been adjusting their budget numbers as they've seen real estate tax revenue continue to fall.

Those numbers are contributing to the estimated $85 million budget deficit Superintendent William Hite has predicted for the upcoming school year.

Matt Stanski, the district's chief financial officer, said the district would like to see BRT go through the appeals quicker.

"We're at the mercy of them going through these appeals," he said.

When asked about the time it was taking BRT to get the appeals decided and its effect on the city and school budget shortfalls, Pagan pointed to the legislation City Council had passed.

"Tax revenue (shortfalls) are not from a lag in the BRT process but because of legislation passed by City Council ... money is coming in at a lower rate," Pagan said.

Once the appeals are done, Dubow said he expects there to be a revenue "bump" for 2016.

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