Marc, you do not disagree that Alan himself has flagrantly disregarded the City Charter re audits and state law concerning PICA.

Don't you think it is important that the City Controller do the job he was elected to do?

Also, the Coalition for Essential Services has been HURT by Alan's refusal to issue a statement on the budget, 5 year plan and tax projections. Wouldn't it have been nice to know the projections were unreasonable BEFORE Mayor Nutter annouced cuts to those same essential services. Perhaps if Alan were doing his job your coalition would have had valuable information.

He didn't. So, to the extent you think that Mandel may advocate for causes you disagree with, remember, it is Butkovitz who has failed to do his job and, as a result, progressives and City Council are without important information for fiscal policy making. Instead, your coalition, as well as the rest of Philadelphians might as well be in the dark ages.

By the way, at least one group of progressives, ADA did endorse Brett Mandel.

1. Brett's point about the Controller making reccomendations about the soundness of tax projections to PICA is exactly that. A reccomendation of whether the projections actually add up, not a chance to relegislate tax policy from scratch. It was in fact specifically in the context of saying Nutter was far too rosy in his budget projections last year, that councilman Green was basically right, and that as Controller he would have actually voiced support for Green's questions on the soundness of the projections in that instance. Furthermore, he rounded out the example by citing how Street used to use overly dour projections to squeeze out cuts from projects he favored less only to later "find" a "surplus" exactly equal to Street pet project a few months later. Both of those are in essence examples of Brett promising to be a "striaght shooter" on the facts for groups like CES's take on the budget generally.

2. In terms of challenging the uniformity clause, realistically that would take a succesful challenge at the PA Supreme Court or a very, very unlikely dramatic action in the state legislature and both of those are changes of the state's political landscape of a scale that simply dwarfs whatever impact the City Controller, a non-lawyer, stating how he understands the standing interpretation of the uniformity clause to be. Your biggest challenge on the uniformity clause is the PA Supreme Court and judging by their actions on casinos, you've got a so much more work to do there that the Controller 100% accurately saying in effect "the current interpretation (which ideally he too would like to change) makes that illegal" is fairly considered the least of your worries. It makes more sense to worry about the City Solicitor going to bat for you, not the Controller so this gripe sounds arbitrary to me.

Pragmatically Butkovitz doesn't do his job as Controller but he pays you lots of meaningless lip service about wanting to change the uniformity clause. If thats your grand solution how far you gotten currently with Butkovitz in the Controller's seat?
I say you worry about getting the best Controller to do the Controller's job and you leave changing the PA Constitution to folks with law degrees. At least you will know the local service dollars you do have are fairly distributed and well spent.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Here's some testimony we presented at a hearing on Rep Youngblood's HB93. We were asked by Ms Youngblood to compare the various and legally permissible tools to ameliorate property taxes on low income citizens. Some of these measure may have to be optioned by the local jurisdiction by ordinance.

You can skip the LVT plug which is much of Section B ;)

Testimony for PA General Assembly House Bill 93, Rep. Youngblood
August 28, 2007
H. William Batt, Ph.D. Center for the Study of Economics
Joshua Vincent, Director, Henry George Foundation/USA
Philadelphia, PA

HB 93 was introduced on January 30, 2007 with provisions that would allow for the "refund or forgiveness of real property tax liability of certain low income, disabled, infirm or senior citizens." The measure would apply relief from tax burdens "attributable to real property tax rate increases, [and/or] increases in the assessed value of the low-income senior citizen's homestead (i.e., primary dwelling).” What relief measures exist (and may be employed in Pennsylvania) is the focus of this testimony.

A. Comparative National Use of Property Tax Relief Measures

Four property tax relief mechanisms have been instituted nationally for selected groups of homeowners. These relief measures apply variously to elderly and to low income households, and less often to disabled and veterans. Sometimes they are employed as a local option.

The Homestead exemption was adopted by legislative design in several states during the 1960s and 70s, and now exists in all states but Missouri and North Dakota in some form;

The Circuit Breaker is available in 34 states and provides reimbursement to localities by the states for revenue forgiven.

The Property Tax Freeze, has come out of property tax revolts in a few states largely due to public initiatives in the 1980s and 90s.

The Deferral option again arises from legislative design in 25 states and has the highest employment as a local option.

The 2002 NCSL (National Conference of State Legislatures) study, A Guide to Property Taxes: Property Tax Relief, reports that Pennsylvania authorizes some localities to opt for Homestead Exemption or Credit, Property Tax Deferral, the Circuit Breaker is available statewide.

As applied in Pennsylvania, the local option homestead exemption may be no larger than one-half of the median assessed value of homestead property. In a city which employs the two-rate land value tax, the exemption is on the improvement value only.

B. How sound are each of these measures from the standpoint of textbook tax principles?

The commonly cited principles of sound tax theory: Neutrality, Efficiency, Equity, Administrability, Simplicity, and Stability. The only tax that has no downside effects and comports perfectly with these principles is a tax that is "inelastic" or has fixed supply. That means commodities like land sites, air, water, and other natural resources.
One should also consider land use configurations and environmental impacts, and this is particularly important with respect to the real property tax.

Recall also that the property tax is really two taxes with various different dynamics -- a tax on land values and a tax on improvements. The former has no harmful effects and actually fosters constructive behavior. The tax on improvements has many detrimental impacts.

Keep in mind: buildings depreciate in value, just like cars, computers or refrigerators. Only land appreciates in value. So the rise in market value of real estate (beyond inflation) is due to the increase in land values.

Taxing land values stabilizes real estate prices (i.e., insulates them from bubbles), even as it encourages the efficient use of locations by maintaining commensurate carrying costs.

Why is a tax on land value good? It is neutral with respect to its influence upon behavioral choices, efficient insofar as there is no “excess burden” (a fancy word for productivity loss and economic drag). It’s equitably progressive insofar only individuals or households that own land pay any tax at all, and because middle class homeowners for the most part own only modest parcels under their houses or farms where land is cheap. Administrable because it’s transparent, not likely subject to challenge, and can't be take it to an off-shore tax haven. Simple to understand, by all members of the community, and stable, so that it doesn't impact on budget designs very much.

C. Commonly used Tax Relief measures can violate these principles in varying degrees.

The productivity of a community's total enterprise is reflected in its land values by what is called “economic rent. “

Giving property tax relief will result in more economic rent flowing through some sites more than others, raising their market prices. This affects tax neutrality and tax efficiency.

Real property taxes are not on people; they are on locations (though people pay them).

Giving property tax relief to some locations and not to others distorts land use choices. This happens either by altering either choices or times of use. Ideally all sites should be taxed at the same rate and none should be exempted.

Property tax relief measures are instituted at the State level, yet assessments and tax rates vary greatly by locality. This creates inequities by regions of the state.

D. How administrable are property tax relief measures?

The neutrality, efficiency and fairness of the relief depend on accurate assessment of property parcels and upon maintaining the integrity of the formulas employed. The factors of the formulas typically get out of date quickly and then distort the programs of relief. Property tax relief formulas frequently need to be adjusted and updated, and this makes them subject to political influence.

E. Comparing the four relief measures, which one is best?

Homestead and Circuit Breaker instruments quickly become out of date and distorted.

Assessment freezes and tax rate freezes both corrupt the tax regime.

All three foregoing measures all cost the government in revenue forgone.

All three foregoing measures often rely on homeowner initiative to be eligible.

All three foregoing measures are difficult to understand and enforce.

The Deferral provision has the following advantages:

It does not alter the market value of the parcel, as the tax will ultimately be paid.

It does not affect the use of sites, because the titleholder has no incentive to alter use.

It is self-selecting for households desirous of employing the option, reflective of real income circumstances rather than arbitrary factors such as age.

Local governments are not deprived of revenue, even if it may be delayed.

It is fair to other homeowners in the community.

The program is simple to understand.

The Deferral program assures what it is primarily intended for: security for elderly or low income households as long as they wish to reside at that site. Therefore, we urge enactment of robust property tax deferral measures to correct any root problems with increased use of real property taxation.

Center for the Study of Economics/Henry George Foundation/USA
413 South 10th Street
Philadelphia, PA 19102-3404
www.urbantools.org
T: 215-923-7800
Joshua Vincent, Executive Director Joshua@urbantools.org
H. William Batt, Ph.D., Member, Board of Directors, hwbatt@gmail.com

Joshua Vincent
www.urbantools.org
www.ourcommonwealth.org
Phree Philly

Interesting post, Sean, but one thing -- who were you replying to? Not me, because you didn't even attempt to answer my main point. Here it is, one more time: Brett is a politician like the rest of them. He has an agenda, and he will get information out that promotes that agenda. Otherwise, he won't.

Now I understand that transparency itself is supposed to be a major part of Brett's agenda. But when transparency has conflicted with expediency on his real key agenda point, i.e., wiping out business taxes, expediency has always won. For ten years Brett has fought the gross receipts tax based on how it allegedly chases businesses out of the City. For ten years, he knew that much of the tax falls on out of City businesses, i.e., those who can't leave BECAUSE THEY'RE ALREADY GONE. He barely mentioned that inconvenient fact. He certainly never did anything to discover and expose to the public the extent of foreign liability for the gross receipts tax.

So, did Brett not know, not care, just conceal unhelpful information, wait around for Stan Shapiro to ask him about it? Reasonable people want to know. Whatever the answer, it doesn't say much for the dogged, smart, bulldog image of your candidate.

Your points on my alleged lack of concern on the property tax are deep red herrings. I am totally in favor of real estate tax protections for those who need help, and socking corporate tax evaders. However, Brett, who was in a position to do something about progressive tax policy while at the Tax Reform Commission, never made protecting the poor an item on his agenda. Nor has he done so since (except maybe when pressed, and then half-heartedly.)

Brett certainly never mentioned the need to help working class people while on the circuit promoting business tax abolition. Except by virtue of the old trickle down theory, of course. You know, if we help big biz, they will hire zillions of poor people at living wages, etc. etc, and the world will be saved. If asked about the poor he would say he's not opposed to tax credits or exemptions to protect them, but the need for such protection is really not that great. For instance, he would say, old homeowners can get reverse mortgages to pay their taxes. Problem solved. I'm not kidding, he said it in public testimony at Council. I was there.

Although I'm actually not running for anything, I'll tell you my position on the wage tax too. I actually wrote the bill, sponsored by Councilman David Cohen, that carved out wage tax credits for low-income taxpayers. I worked for years at One Philadelphia to keep them in force. With zero help from Brett Mandel at Philadelphia Forward.

But why did I mention Brett? Who cares what Brett thinks? He's only running for Controller.

is only slightly below yours, Dan.

I took Lou to be tweaking middle class liberals like us (and sometimes like him, although he won't admit it) who often would think a symbolic gesture on Darfur is more important than all sorts of concrete things politicians do that make a difference in the lives of people

He can correct me if I'm wrong, but I assumed Lou was being ironic in writing those words you've highlighted. That's why my own response, which pointed the limits of Butkovitz' power on the issue and tweaked all those who say Mandel's views don't really matter because he is not the decider on taxes, was also ironic.

If Lou were to say that divesting from companies in Darfur is more important than ward leaders getting jobs from the Registrar of Wills, then you would have something. (And, just in case there is any question, now I'm being ironic again.)

Just one question, though.

At the ADA meeting Brett said that he would have the resources to audit every year by eliminating the Community Affairs Department and hiring auditors in those positions.

Since those positions are paid for by the schools, won't Brett be continuing the practice of having the schools pay for positions in the Controllers offices, a practice that evidently has been going on from time immemorial, or at least since the days of Saidel, whichever came first.

And, if not, where are the resources going to come for audits every year of every department?

I have to admit, I was only half looking. I'm very unfocused today.

but the letter of the law is quite specific about the frequency of general audits and he's simply not keeping up - period.

In terms of the special audits, the way he prioritizes them is entirely political and arbitrary, feeding for example his personal pissing match with Paul Vallas. Not to say that there were/are not serious problems with how the School District handles money pre-, post- and during Vallas's tenure. There are and were. But Butkovitz plainly brags about "driving Vallas out of town" and its awful suspicious that his wrath at Vallas seemed to correspond in time with Vallas poking around at Butkovitz's patronage jobs in the School District while many of same problems Vallas had in terms of a vague open ended budget that doesn't quite add up seem to equally plague the plans of our current schools CEO, Dr. Ackerman.

As another example of a good audit that found good information but then was conveyed to the press in non-productive political manner see my post about Butkovitz's audit of the ambulance system above.

Boy you really are doing a full-court press for Butkovitz here, Marc, but (not to toot my own horn) but I feel like a lot of these Butkovitz talking points are failing to connect, as I did earlier.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Marc, there are 55 City Departments. If Butkovitz were doing his job per the Charter and per Mandel's plan, he would have 165 Departmental audits for the 3 years he's been in office, not the 41 he claims.

That is a pretty significant gap.

Some agencies, the Courts, the Housing Authority, the Redevelopment Authority, PGW, Inspector General, PIDC and the Procurement Department, he's never audited (to name a few). Some others he has audited once, the Police Department, Federal Expenditures, Streets, Human Services, Recreation and the District Attorney's Office.

And, how does he determine what agencies he audits, versus the agencies he audits once, versus the agencies he never audits (and those that the City has to hire an outside auditor to audit).

You don't have to like the facts.