The City of Philadelphia has sent out notices of property reassessment. They came after the city’s budget was passed and after City Council ended its session. For most people, the assessment will raise taxes, without a vote by Council and without any accountability for the increases. Perhaps the worst part is that it doesn’t have to be like it is.
The process is so convoluted that it is almost impossible to understand, and that may not be an accident.
Two parts set real estate taxes — the assessment of the house, and the tax rate set by Council and the Mayor. In every other county in Pennsylvania, a reassessment cannot be a backdoor tax increase. If the assessments go up, the tax rate must go down, but not in Philadelphia.
The tax rate, called the Mil rate, has not changed and is still 1.3998%. The city collects $1,400 for every $100,000 the unelected, unaccountable appraiser says your house is worth.
As the city has gentrified, used the 10-year real estate tax exemption for new construction, and built houses and condos worth significantly more, real estate taxes have skyrocketed. The assessors, looking at the value of the new condos and houses that receive the tax abatement, decided the properties next to the new construction were also worth much more than in previous years, and the property taxes shot up. Many longtime residents, people living on fixed incomes, or people whose income has not kept up with the rising property taxes, were being forced out of their homes. City Council developed programs to help, but most are based on formulas and income, and that makes it difficult for working people to qualify. The only tax relief program every homeowner qualifies for is the Homestead Exemption.
The program lowers the amount of the assessment on which taxes are paid. Because Pennsylvania’s Constitution requires all taxes to be “uniform,” the city cannot have higher tax rates for million-dollar homes and lower rates for $100,000 ones. The Homestead Exemption makes real estate taxes slightly more just for everyone who lives in their own home. Renters do not get the benefit or receive the $100,000 exemption.
A house worth $200,000 gets a 50% reduction in property taxes, paying only on $100,000. A $2 million home gets a 5% reduction, paying taxes on $1.9 million. The less a house is worth, the greater the value of the exemption.
Not everyone eligible receives the Homestead Exemption. The Pew Charitable Trust estimates that 30% of those who are eligible don’t receive it.
The city — both the Controller and the Mayor’s Office — have the technology to see who may be eligible for the exemption and is not receiving it. The savings are significant at $1,400.
The technology, however, doesn’t appear to be used to help people get the benefit of the program. The Controller’s report and news stories show it is only being used to remove the exemption from people who don’t qualify.
In December of 2024, City Controller Christy Brady released a special investigation of Philadelphia’s Homestead Exemption Program that found the City and the School District of Philadelphia are losing a combined $11.4 million annually because individuals are taking advantage of the program. “The investigation was conducted through a data mining process and cross-checking of property records.”
The report makes four recommendations, none of which suggest using the same “data mining process” to find homeowners who are eligible for the exemption, but not receiving it.
According to The Philadelphia Inquirer, Mayor Parker’s administration launched a review that same year to identify properties that might no longer meet the eligibility requirements. As a result, 13,355 homeowners were removed from the program. The city projects collecting $33.5 million in additional revenue.
“We want eligible homeowners to get the relief they deserve,” Revenue Commissioner Kathleen McColgan said in a statement. “These compliance projects help ensure that program participation is accurate, fair, and accessible to residents who truly qualify.”
The Mayor, Controller, and Revenue Commissioner should be lauded for eliminating fraud and abuse. But it does nothing to notify the homeowners who do qualify but are not receiving the exemption. There is no apparent reason the city cannot use data mining tools to help people, as well as catch people who abuse the programs. Yes, helping people use the exemption would lower the money the city collects, but the reason the city collects money is to help people live better lives. Giving people relief from ever-rising property taxes helps make the city more affordable, and isn’t that the catch phrase for all elected officials now?
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