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Nutter budget gets bumpy Council reception

City Council members clashed with Mayor Nutter's staff in the year's first budget hearing yesterday, raising concerns about proposed tax increases and the need for legislators in Harrisburg to approve part of the financial plan.

City Council members clashed with Mayor Nutter's staff in the year's first budget hearing yesterday, raising concerns about proposed tax increases and the need for legislators in Harrisburg to approve part of the financial plan.

Nutter's plan to increase property taxes prompted some Council members - Curtis Jones Jr., Bill Greenlee and Bill Green - to ask why the city's wage tax was not considered for an increase.

Nutter, who has long advocated cutting wage and business taxes, wants Council to approve property-tax hikes for residents and businesses of 19 percent on July 1, reduced to 14.5 percent next July and then returned to their current levels in 2011.

Nutter is trying to close a $1.4 billion gap in the city's five-year financial plan while avoiding layoffs and service cuts.

Greenlee, stressing that he was not advocating for a wage-tax increase, worried that a property-tax increase would hit senior citizens and lower-income homeowners when they can least afford it.

"What all the analyses show is that the wage taxes and business taxes wind up costing us jobs," Finance Director Rob Dubow said. "And we think the worst thing we can do in this environment is cost ourselves jobs."

Nutter also wants approval for a temporary three-year increase in the sales tax by 1 cent on the dollar. That tax is now at 7 cents per dollar, with 6 cents going to the state and one cent to the city.

The state General Assembly must pass legislation to allow that increase. Nutter's staff told Council that they were speaking with legislators but could not say who would introduce such legislation or when it might be voted on.

"Although they have not endorsed it, they have not slammed the door on it as of yet," Clay Armbrister, Nutter's chief of staff, said about the legislators.

That uncertainty heightened tensions in the hearing.

Armbrister said that state approval of the sales-tax increase, and a proposal to slow payments into the city pension fund, would help the city to avoid a "contingency plan" that includes layoffs in the police and fire departments, less trash pickup and a permanent 6 percent property-tax hike.

Council President Anna Verna was perturbed that Nutter's staff could not provide details on how cuts would be implemented in the contingency plan.

Green, a frequent critic of Nutter's budget moves, complained that Council is being asked to approve both the budget and the contingency plan. He noted that the legislature often votes on such measures in early July, which would come after Council typically passes the city budget. So Council might not know which spending plan will be used when it votes.

"They're asking us to write them a blank check, where we have no input if the contingency occurs," Green said. *