Property Tax Hike Coming To Philadelphia

After a full day of haggling and closed-door meetings, the Philadelphia City Council has struck a deal to raise property taxes to come up with money to help fund the city school district.

The plan to raise $52.5 million for the city's schools was voted out of committee around 8:30 p.m. Thursday. The proposal is slated to include $6 million from parking fee increases in the Center City and University City neighborhoods, with another $10 million coming from other city budget areas.

The money will go to keep school buses for students and to keep class sizes smaller by laying off fewer teachers. But their is clearly a gamble on the part of the council and Mayor Michael Nutter that the state wil kick in another $50 million at some point.

During the course of the day, two measures to bring more tax hikes to citizens failed to get enough votes to pass before a deal was finally reached late Thursday evening.

Closed-door meetings took place throughout the recess in limited numbers so as to avoid legally having to make them public.

Lobbyists opposed to a sugary drink tax were present, as were students advocating against cuts to the Philadelphia school district, which created an often noisy and busy environment at city hall.

Sources had told Fox 29 earlier Thursday that the soda tax and the property tax hike were both still alive as city council tries to raise money for the schools before the council went into a lengthy recess on Thursday. However, there were not enough votes for the so-called “soda tax” proposal, and it never came to fruition.

Mayor Michael Nutter's soda tax plan could have raised about $60 million for schools.

Instead, council decided to raise between $50 million and $60 million for the school district through a 3.85 percent hike in property taxes and hope Harrisburg will fund the difference for the $102 million school officials say is needed.

One failed plan had been a one-cent soda tax that would generate $30 million, a $10 million transfer from the city's cash reserves, $5 million from prisons, and another $6 million from a parking rate hike in University City and Center City.

Another plan proposed was basically the same except for the soda tax, which would be replaces with a 3.5 percent property tax increase.

The plans only offered somewhere between $51 million and $58 million, and there didn't appear to be a plan to fully fund the $102 million requested at the city government level.

The political wrangling had one city councilor saying that it was clear there wasn't an easy solution to the issue. Councilman Curtis Jones Jr. released a statement voicing his support for funding the schools.

"As I have stated, throughout the past few weeks, we will either pay now through investing in public education or pay later with more funds in criminal justice. More so, the conclusion of these hearings is as symbolic as a down payment on our children’s future," said Jones.

Nutter originally proposed a 2-cents-per-ounce tax on soda -- similar to a plan that was scrapped last year -- to generate $60 million for the schools this year and help prevent painful cuts. Opponents, however, call it an unnecessary tax that would cost hundreds of jobs in the beverage industry while encouraging people to leave the city to buy soda.

Dozens of opponents of the tax filled the council's ornate chambers with signs bearing slogans such as "Say No to the Beverage Tax" and T-shirts reading "Philly Jobs Not Taxes." One soda company executive testified that the tax proposal would cost 1,200 jobs because people would leave the area to buy soda.

"Any beverage tax will be devastating to our local business," said Fran McGorry, the head of Coca-Cola's operation in the Philadelphia area. "Our industry really just doesn't understand why we're being singled out." Critics of the tax point out that PepsiCo shut down a manufacturing line in Baltimore earlier this year and 77 jobs were cut shortly after a similar tax was implemented there.

Supporters of using the tax to support city schools chanted and sang in the hall outside the chambers. Inside, sign-waving supporters at one point garnered a warning from City Council President Anna Verna: "Wait a minute, we're not at a football game."

City budget officials testified that the tax was needed to help the school district plug holes in its budget and prevent deep cuts. Transferring money from other city departments, they said, would simply create problems in public safety and other budgets.

"I know that there are trade-offs," city finance director Rob Dubow said. "We think it's essential that we fund the district."

Councilman James Kenney questioned whether the school district was prioritizing correctly and suggested that money could be saved in areas such as an 18-day summer program slated to cost $23 million.

But another councilman, Curtis Jones, said the city can't afford to skimp on public education that helps determine what happens next in the lives of city residents. "We pay now or we pay later,"