City Council passed a bill today that would raise $20 million by hiking the Use and Occupancy tax on businesses and moved a step closer to passing the third property tax increase in three years - all money destined for the nearly insolvent school district.
Council made technical amendments to its property tax plan, which would raise rates 3.6 percent to generate $20 million for schools.
Members would have to pass that bill next week to meet the city's June 30 budget deadline.
The actions end Mayor Nutter's drive this budget season to institute a property tax reform effort known as the Actual Value Initiative (AVI). Council's property tax legislation sets the tax rate, or millage, using the current property tax system.
Council's bill also says that the city will switch to AVI, a system that taxes properties based on their actual market value, in 2013. A citywide reassessment, key to instituting AVI, will be completed in September.
Nutter said the administration was exploring bills in Harrisburg that would allow the city to reopen its budget process this fall and reset the property tax rate once the reassessment was done. But Nutter called that option a "backup plan" in case of legal challenges to Council's action.
Nutter said in a news conference hours before the votes that he wouldn't speculate on whether he would sign a $40 million package, which falls far short of his initial goal of collecting $94 million more for the schools.
Nutter today predicted "real fallout" from failing to reach the $94 million goal, including "significant negative cuts that will affect classrooms."
Half the new money also comes with strings attached - the $20 million in property tax would be doled out only after the School Reform Commission met a series of demands from Council.
Today's meeting was supposed to be the final one before the summer recess. Members voted to add an extra meeting on June 28, at which they will take their final votes next week on several budget and spending bills.
The Use and Occupancy hike had faced stiff opposition from the business community and its passage was tenuous throughout the past two weeks. Support coalesced in the final hours, however, and passed by an 11-6 vote.
Council members Bill Green, James F. Kenney and Marian B. Tasco, all Democrats, and Republicans Dennis O'Brien, Brian O'Neill and David Oh, voted against the bill.
