Will PGW sale be AVI deja vu?

ALEJANDRO A. ALVAREZ / STAFF PHOTOGRAPHER In his budget address yesterday, Mayor Nutter touted the benefits of selling PGW for $1.86 billion, but a sale is less than assured. City Council appears to be in no rush.
ALEJANDRO A. ALVAREZ / STAFF PHOTOGRAPHER In his budget address yesterday, Mayor Nutter touted the benefits of selling PGW for $1.86 billion, but a sale is less than assured. City Council appears to be in no rush.
Posted: March 07, 2014

MAYOR NUTTER began his budget address to City Council yesterday by listing what he and the city's 17 lawmakers have accomplished over the years by "working together."

"Working together, we reformed Philadelphia's inaccurate and unfair property-tax system," he said of the Actual Value Initiative.

Although describing Nutter's turbulent relationship with Council during the AVI debate as "working together" is a stretch, he's correct that, in the end, it became law.

But if the mayor wants to accomplish his biggest Council priority for this year's budget season - selling Philadelphia Gas Works - he'll have to hope that they work together better than they did on AVI.

Council delayed that initiative for a year as members criticized the administration for keeping them in the dark on vital information - complaints similar to the ones that members are making now about how the city chose UIL Holdings Corp., of New Haven, Conn., to buy PGW for $1.86 billion.

Unlike AVI, Nutter may not be able to afford major delays. UIL can walk away from the deal if it isn't approved by July 15, and Council is unlikely to restart a major initiative next year, which will be consumed by the race to choose the next mayor.

"My hope would have been that, in the last eight months, they had worked with us to pick a bidder so that we could have been standing behind him when he announced it," Councilman Jim Kenney said. "They don't want to work that way. They want to keep it clandestine and not transparent."

Nutter has pledged to provide Council with everything it needs to evaluate the UIL deal, including information on the losing bids.

"In the coming months, I know that City Council will do its due diligence and carefully weigh all of the elements of a potential sale," Nutter said in his address. "I believe this is the right decision for us, for PGW customers and for PGW workers."

Council, meanwhile, is hiring consultants to vet the bids and explore alternatives to a sale.

In short, they are not in a rush.

"We simply are not close to making a decision, and the priorities [this budget season] should be municipal contracts, shoring up our pension system and public-school funding," Councilman W. Wilson Goode Jr. said. Selling PGW, he said, has "been presented as a big wad of money, not a steady flow of income, and anyone with common sense shouldn't be fooled by a big wad of money."

The other big-ticket item this spring will be funding the cash-strapped School District of Philadelphia, which has requested $75 million in new funding from the city - on top of a $120 million sales-tax measure that's tied up in a high-stakes staring contest between local and state lawmakers.

Nutter's budget proposal banks on the state General Assembly caving to the city in that skirmish and authorizing a city-only $2-per-pack tax on cigarettes that would generate $83 million in its first year.

Both measures are seen as political long shots in GOP-controlled Harrisburg, but Nutter said it's too soon to discuss backup plans.

"I will not on day one start talking about Plan B," Nutter said. "I'm from West Philly. I don't believe in insurmountable."

Even in the most optimistic version of Nutter's plan, the city would fall short of the district's request by about $40 million.

The city has increased its school funding by $155 million per year in recent budgets, while meaningful funding increases from the state have been absent. Most Council members agree with Nutter that it's time for Harrisburg to pick up the slack and at least authorize the city to impose more taxes on itself.

But some in Council may not be willing to wait for the General Assembly.

"I'm not sure that his proposal for school funding is viable, because it leaves everything at the steps of Harrisburg," said Councilwoman Maria Quinones-Sanchez, who recently introduced a bill to give the district a greater share of local property taxes.


On Twitter: @SeanWalshDN

Blog: ph.ly/PhillyClout

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