Budget hearings are underway in Philadelphia to determine how much property taxes will increase next year. Mayor Jim Kenney originally proposed a 6 percent property tax rate hike but reduced it to an increase of 4.1 percent. The reason: property values rose dramatically with last year’s reassessment of commercial and multi-family properties so the lower tax rate would still bring in amount of revenue needed.

The Mayor says the property tax rate increase is needed to help erase a nearly $1 billion deficit in public school funding over the next five years. The city is taking control of the School District of Philadelphia from the state-run School Reform Commission in July. The Commission is being dissolved after running the public schools for more than 16 years.

The current property tax rate is $1.3998 per $100 of assessed value. If the 4.1 percent increase is approved, the rate would rise to $1.4572 per $100 of assessed value. This proposed increase will generate $966 million for schools over the next five years. Philadelphia also plans to contribute $20 million annually from its general fund to add $100 million for public education.

Taxpayers may also face an increase in the real estate transfer tax. If approved by the City Council , an increase of 8.5 percent in the transfer tax would provide schools with $66 million.