Philadelphia City Council approves $3.6 billion budget, raising two taxes

Posted: June 29, 2012

CITY COUNCIL gave the final OK on Thursday to a $3.6 billion budget plan for the 2012-13 fiscal year that didn't include any major cuts, but would delay Mayor Nutter's property-tax overhaul for a year and raise $40 million for the cash-strapped school district.

That was substantially less than the $94 million Nutter wanted for the district, which he intended to raise while moving to a new property-tax system based on market values known as the Actual Value Initiative (AVI).

At a news conference Thursday Nutter said, "Of course, I would have preferred to have [AVI] go into effect this year."

But Council was concerned about approving the measure before assessments were complete.

"When we go to AVI, we will do it in a fair and equitable manner," Council President Darrell Clarke said, adding that Council will work with the Nutter administration and state lawmakers over the summer. "We didn't have what we needed to do this in the appropriate way. I think it's more important for us to get it right than to get it done expeditiously."

School help: Council voted 12-4 to provide the school district with $20 million through a 3.59 percent property-tax hike — the third such hike in three years — by maintaining the current tax system for another year. That means an extra $35.90 would be added to a tax bill of $1,000. The plan also makes permanent two property-tax hikes that had been billed as temporary. Council members Jannie Blackwell, Bill Green, Dennis O'Brien and Brian O'Neill voted against it. Councilwoman Maria Quinones-Sanchez was absent.

Council last week approved a 19 percent increase to a business tax known as the use-and-occupancy tax, which would raise another $20 million for the district, which is facing a $218 million deficit. Under the approved plan, the use-and-occupancy tax, which taxes the square footage of the business portion of a property, would jump to 5.5 percent of the assessed value of the space used by a business.

The money raised from the property-tax increase is contingent on the district meeting the majority of eight requirements that Council drafted in an accountability agreement crafted by Council members Blackwell, Sanchez and Blondell Reynolds Brown.

The agreement compels the district to provide Council with information that includes the number of employees in the district by occupation, its plans to help students who are behind in their studies and details on the restructuring of the district. It also asks for quarterly meetings with Council.

"The district made a very compelling case for funding, and our request was that we needed $94 million to maintain a bare-bone budget in our schools," said district spokesman Fernando Gallard. "It looks like at the least the district will get $40 million. We're still looking at what it will look like. There will be difficult decisions that will need to be made."

Budget boost: The administration said it got most of what it wanted in the budget from Council. The budget includes $4 million for 400 new police hires, $3 million for neighborhood libraries and $1 million for the Office of Supportive Housing.

After voting to increase taxes, Council increased its own budget by $500,000. Council spokeswoman Jane Roh said the money would be used for the Jobs Commission, which will examine the issue of unemployment and ways to improve the city's work force. Some of the money will also be used to beef up Council's technical staff to deal with AVI for fiscal year 2014. Roh said that Council would also use the additional resources toward Internet-technology upgrades.

Council also approved a capital budget that includes $15 million to invest in LOVE Park, $9 million to improve recreation centers, $5 million for neighborhood commercial corridors and $6.7 million to improve police and fire stations.

Little pain: Following years of major cuts, this budget was essentially painless. There are $2.2 million in departmental reductions, most are from contract changes at the Office of Information Technology and money the city saved because it didn't have to purchase salt for snow removal last winter. n

Contact Jan Ransom at 215-854-5218 or Ransomj@phillynews.com, or follow on Twitter @Jan_Ransom. Read her blog, PhillyClout.com.

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