City avoid$ 'Doomsday'

TALK ABOUT a photo finish.

The state Senate approved budget-relief legislation for the city yesterday, one day before Mayor Nutter was set to start a massive government shutdown by sending out 3,000 layoff notices.

House Bill 1828, which allows the city to temporarily increase the city sales tax by a penny on the dollar and to defer some payments into the pension fund, passed, 32-17, in the state Senate.

Gov. Rendell was expected to sign the bill into law today.

Without the state relief - worth $700 million over five years - Nutter was set to enact a devastating "Plan C" budget, which called for the lay off of workers, the closure of libraries and recreation centers, and the reduction of trash collection. Those cuts would have taken effect on Oct. 2.

Immediately after the bill passed, Nutter held a conference call with his managing director and other top officials to tell them to halt Plan C.

"Everyone should stop everything they were doing related to Plan C," Nutter said to cheers and applause. "That is over and done with."

An emotional Nutter thanked his staff. "I just want to tell all of you, you've done a tremendous job under very difficult circumstances and I'm very, very proud of you."

Police Commissioner Charles Ramsey, who had started meeting with officers who would be affected, said he was relieved to get the news.

"Most of our major categories of crime are down double digits. Once you get momentum, you don't want to lose that," he said.

Nutter reached a budget agreement with City Council on May 11. To manage a $1.4 billion deficit over five years, the plan relied on a five-year increase of the sales tax. The change would raise the tax from 7 cents on the dollar to 8 cents, with 6 cents going to the state and 2 cents to the city.

The plan also defers some payments into the pension fund over the next two years and stretches out payments into the fund over 30 years instead of 20.

Both the sales-tax boost and the pension changes required Harrisburg approval, and Nutter began a series of visits to the state Capitol to lobby for support. But the request was stalled by the state budget stalemate and an attempt by the Senate to tack statewide pension-reform amendments to the legislation, which kicked off massive union protests.

Most of the pension amendments were ultimately stripped from the bill.

The final version establishes a "special commission" to study Philadelphia's pension plan, including administration costs and the sufficiency of employee contributions.

Legislators have yet to pass the state budget.

Nutter yesterday thanked lawmakers for finally taking action on the city's budget legislation.

"We're trying our best to handle our business in Philadelphia, but every now and then we need help," he said. "There is a tremendous amount of joy in Philadelphia right now."

But the delay in getting state relief has had some consequences. The city already has made some cuts to account for the delay in the sales-tax revenue, which was expected to start bringing in $10 million a month in August. Layoffs and other reductions were announced last month to account for the loss of August and September sales-tax revenue.

Finance Director Rob Dubow said it wasn't yet clear if the city would get any sales-tax revenue for October. Implementing the increase is supposed to take four to six weeks.