Council bill aims $120 million at schools - but red ink still flows

Posted: June 06, 2014

Philadelphia City Council took a big step Wednesday toward resolving a piece of the School District's budget woes, giving preliminary approval to a bill that would guarantee the district $120 million in sales tax revenue next year.

But that money would hardly cure the district's profound financial troubles.

In fact, the district likely is going to need tens of millions of dollars in city funding before the end of this month just to make ends meet.

Mayor Nutter plans to send a bill to Council on Thursday that would let the city borrow the needed funds and pay back the loan from future sales tax revenue.

Council President Darrell L. Clarke has introduced a bill that would give the district the money in exchange for closed school buildings the city then could sell.

If those options sound familiar, that's because they are nearly identical to the ones Nutter and Clarke offered last year, when they were debating how to solve the 2013 version of the school budget crisis.

In the end, they agreed to let the district attempt to sell $61 million worth of buildings - and if the district came up short, have the city make up the difference.

The district since has reached agreements to sell seven school buildings, but those sales will net only about $26 million after closing costs and debt are settled.

That includes the sale of the most valuable property, the former University City High School, for which Drexel University bid $25.1 million.

Councilwoman Jannie L. Blackwell, whose district includes the property, on Tuesday held up zoning legislation that is key to developing the site, accusing Drexel of not having communicated its plans to her and the community.

Even if Drexel goes through with the purchase this month, the district would be about $35 million short of funds for the fiscal year, which ends June 30, said Matt Stanski, the district's chief financial officer.

Clarke has been highly critical of the district's effort to sell buildings, a theme to which he returned Wednesday in a tense exchange with School Superintendent William R. Hite Jr.

"This whole school building sale has been one of the most frustrating processes that I've been involved with," Clarke said. "It just seems like, 'We'll get to it when we can.' "

Meanwhile, he said, constituents and advocates are pressuring Council to find money for the schools.

"I don't see a significant effort on behalf of the School District to raise the money for itself," Clarke said.

Hite, though, said the district's closing of seven sales this year was a "significant" achievement.

"It's not like we've been sitting around trying to delay the process," he said. "We've been trying to move these as quickly as possible."

The district recently launched a new effort to sell 20 more buildings. But Stanski said that if all 20 buildings sold at asking price, the district would net just $31.1 million.

The district had been counting on Council to approve the extension of the city's extra 1 percent sales tax as a major source to plug next year's $216 million budget hole.

Council moved a bill out of committee Wednesday that guarantees that funding, if approved by the entire Council, which is likely.

The district has asked the city for $75 million in addition to the sales tax revenue.

Nutter and Clarke hope money could come from a cigarette tax; both were in Harrisburg on Tuesday, lobbying state lawmakers for the necessary approval.

Previous efforts to get legislative OK for that tax have failed in the Republican-controlled General Assembly.


tgraham@phillynews.com215-854-2730

@troyjgraham

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