Phila. Council tweaks extra 1percent sales tax bill

Posted: May 24, 2014

What a difference eight little words make.

Last week, City Council was accused of introducing a bill that jeopardized the money raised from Philadelphia's extra 1 percent sales tax, a desperately needed source of revenue for the schools.

The legislation staked out Council President Darrell L. Clarke's position: The extra sales tax revenue, expected to be about $137 million next year, should be split evenly between the school district and the city's public employee pension system.

On Thursday, a nearly identical bill was introduced that contained eight new words that Clarke called a "safety net" for the funds the school district is counting on to help solve its latest budget crisis.

Because the state must give approval to extend the 1 percent increase in the sales tax, which is set to expire on July 1, the terms set by Council and the General Assembly must match up.

But the bill introduced on Clarke's behalf last week did not contain a fallback position if the state did not agree with his plan.

Clarke said he thought he could get Harrisburg to go along, but Mayor Nutter called the Council president's approach "risky and dangerous." The new bill still describes how Clarke would like to distribute the money but adds the words "or as otherwise required by the General Assembly."

"What we want to do is ensure that whatever ultimately comes out . . . as it relates to the sales tax we're in the position to enact here locally," Clarke said Thursday. "We wanted to have a safety net."

Mark McDonald, a spokesman for Mayor Nutter, said the new bill, if passed, provide "100 percent certainty" that the School District of Philadelphia would get $120 million from the sales tax next year. "This is an important step," he said. "Get this passed as soon as possible."

Last year, the state gave the city permission to extend the sales tax, devoting $120 million a year to the schools and giving the rest to the pension system, which is about $5 billion underfunded.

The Council bill introduced last week would give the schools $120 million in the first year, but in the fourth year, proceeds from the extra sales tax would be divided evenly.

Because that formula differs from what the state authorized last year, new approvals would be necessary.

Nutter said he supports splitting the revenue, but only if the state also approves a $2-a-pack cigarette tax in the city. School district officials and education advocates decried Clarke's plan last week, saying the district can't afford to have its share of the sales tax revenue sliced in the future.

The district needs $216 million in new money this year just to maintain its current, depleted state.

A second bill introduced on Clarke's behalf Thursday also resurrected the debate over selling off empty school buildings.

Last year, Clarke wanted the district to turn the buildings over to the city to be sold, in exchange for an infusion of at least $61 million. The district held on to its schools and managed to sell eight buildings that likely will net less than $30 million. Although the district recently announced a renewed and tweaked effort to sell 20 more buildings, beginning June 9, Clarke has remained critical of the efforts.

The bill introduced on Thursday would hand 27 buildings to the city in exchange for $35 million to the schools. The buildings would be sold to pay back the city, and anything over the $35 million would go to the district.


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