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How Much Can Philly Expect to Collect in Unpaid Property Taxes?

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The short answer? Not a whole lot. A report by the Pew Trusts found that of the $515.4 million dollars (which includes late fees and penalties) owed to the City of Philadelphia, only $155 million are collectible. That's only roughly 30%.

The report found that in cities of similar size with lower delinquency rates, enforcement was pursued more quickly: delinquent taxpayers lost their homes, and lost them quickly. However, the Pew Report also notes that "...these cities have lower percentages of poor people, stronger real estate markets, and higher shares of homeowners who pay their taxes automatically through mortgages." In other words, the deck is already stacked against the city.

The sector of Philadelphia's government hit hardest by tax delinquency is the School District, which receives 32% of its funding from property taxes (most school districts receive less funding from property taxes, but Philly's school district has to contend with relatively low funding levels from the state). In other words, the fate of Philly's schools is inextricably tied to tax collection.

The Pew Report also emphasized that, since the majority of back taxes were extremely difficult to collect, it made more sense for the city to focus its efforts on reducing the current delinquency rate instead.

Other key findings include:
· A large portion of Philly's tax delinquents are not homeowners who reside in their homes, but rather investors and absentee landlords. Pushing these property owners hard, and pursuing foreclosure on their properties is both more likely to be lucrative and less likely to throw people out of their homes.
· Unless foreclosure is a legitimate threat, taxpayers are less likely to work toward paying back taxes. Philly's leniency (toward both homeowner-residents and investors) makes it harder to collect taxes.
· Almost 18% of Philly's properties are tax delinquent.
· The best thing the city can do, in terms of raising revenue, is not to collect back taxes, but rather, focus on reducing new delinquencies: the city has begun to send "stern notices" to delinquent tax payers more quickly, which has helped to reduce new delinquencies.
· Formalizing and publicizing an installment payment plan, which would allow taxpayers to pay in installments before they became tax delinquent, could also help reduce the amount of unpaid taxes.
· DELINQUENT PROPERTY TAX IN PHILADELPHIA: STARK CHALLENGES AND REALISTIC GOALS [Pew Trusts]