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Thursday, April 30, 2009

City Questions Council Sales-Tax Plan

The administration today questioned another City Council budget proposal to deal with the $1.4 billion budget gap. This week Council suggested that the city extend the temporary sales tax hike proposed by Mayor Nutter from three to five years and borrow against the against the anticipated proceeds in the later years to help the city balance it’s budget in the early years.

Council’s plan suggested borrowing $200 million to cover expenses in the upcoming fiscal year. Members said this idea had more support than Mayor Nutter's proposed two-year temporary hike to the property tax.

Finance Director Rob Dubow this afternoon sent Council members a letter saying that borrowing to pay city operating expenses could raise red flags with financial rating agencies.

“It does provide some short term relief, but rating agencies have made it clear that if you start to borrow for operating costs, there are problems with your fiscal management,” Dubow said.

Dubow also provided Council with some research on the estimated cost to the city of their plan. He said that the interest costs of borrowing $200 million to cover expenses could cost $75 to $100 million. 

Nutter last month proposed raising the city's property tax temporarily, by 19 percent in July and then 14.5 percent in July 2010. He also proposed a temporary three-year increase in the sales tax by 1 cent on the dollar. That tax is 7 cents on the dollar, with 6 cents going to the state and 1 cent to the city.

Council's plan keeps the increase at one cent on the dollar.
Posted by Catherine Lucey @ 4:14 PM  Permalink | 1 comment
Comments   
  • 0 like this / 0 don't   •   Posted 1:19 AM, 05/01/2009
    Council knows what it needs to do, but it won't do what the big business interests who grease the wheels of the political structure don't want it to do. It should make the wage tax progressive by providing a perfectly legal exemption for low-wage working families, then roll back the rate to what it was a few years ago, and it should roll back the rate of the gross receipts tax to an earlier level. It could take the latter step, exempt all businesses making less than $500,000 and still raise $70 million a year. Together these steps could raise all the money needed to erase the budget gap. But the Chamber of Commerce won't allow Council to go there.
    — Stan Shapiro


1 comments
About The Philly Clout Team
PhillyClout
Chris Brennan, a native Philadelphian and graduate of Temple University, joined the Daily News in 1999. He has written about SEPTA, the Philadelphia School District, the legalization of casino gambling, state government, the mayor, the governor, City Council and political campaigns.
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David Gambacorta spent a small eternity writing about cops, drug dealers and serial killers. Now he’s writing about power and politics ­– which sometimes reminds him of the old crime beat. He joined the Daily News in 2005. And yes, he knows you’re not quite sure how to pronounce his last name. E-mail tips to gambacd@phillynews.com
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Catherine Lucey joined the Daily News in 2002 and has written about murderous drug gangs, political protesters and Harry Potter. After covering the 2007 mayoral election, she moved over to the City Hall bureau where she has been reporting on the Nutter administration.
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Jan Ransom, a native New Yorker, joined the Daily News in 2010 after graduating from Howard University. She has since written about the difficulty of filing police complaints, tax deadbeats and life after violent home invasions. She joined the Daily News City Hall Bureau in 2011 and has plunged headfirst into reporting on administration budget battles and City Council shenanigans.
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Catherine Lucey
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Chris Brennan
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Jan Ransom
Ransomj@phillynews.com
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