The Good, The Bad & The Budget City Agreement Good News; Now It's Up To H'burg

WE BREATHED a sigh of relief when the fierce budget battle between Mayor Nutter and City Council ended on Monday with the announcement of an agreement on how to close the $1.4 billion budget gap.

That's not to say there aren't a few hiccups at the end of that breath.

But Nutter was right to scrap a hike in property taxes - as the flaws in the system have become more obvious, raising that tax became increasing untenable. Instead, as proposed by Council, he'll seek a five-year increase in the sales tax from 7 percent to 8 percent; the city will also defer a portion of the payments to the city's pension fund for two years to free up immediate cash. Both Council and the mayor deserve credit for coming to the table and making a deal.

Without this deal, the city would have had no choice but to lay off hundreds of police officers, decimate services, and shred the safety net for our most vulnerable citizens.

We are concerned, though, that the compromise relies on reducing the payment to the already troubled pension fund. The plan is to defer a portion of the payment for the first two years and then pay the money back later with revenue from the sales tax. But it's not clear if enabling legislation will require the payment to be made. Nutter might be tempted to take the extra cash and spend it on his policy priorities, especially since the recession has forced him to scale back his agenda.

The agreement, while imperfect, is good. Among its values: It's a good reminder to the mayor that 18 heads are better than one. We hope this represents a new era of smarter collaboration among the mayor and Council's 17 members.

But it doesn't mean the end of the budget saga.

Now, Nutter must go to Harrisburg to get approval to increase the sales tax and change the city's required contribution to the pension fund. That could be very difficult - and expensive.

Already, Gov. Rendell and the Republican-controlled state Senate are battling over taxes and the state budget. The GOP - or state legislators who aren't fans of the city -may oppose hiking the sales tax on ideological grounds. Even if that doesn't happen, we expect Harrisburg won't act without trying to extract a quid pro quo.

The wide and frustrating impasse between the mayor and Council has been narrowed. Good thing because they'll have to work fast and hard to build support for the plan in Harrisburg, or we'll all suffer. *