Nutter Confirms Budget Deal Without Property Tax Hike

"This budget agreement reflects the reality of the legislative process," Mayor Nutter said. (Kevin Cook/Staff file photo)

Mayor Nutter just confirmed that he has reached a revised budget deal with City Council that takes his controversial proposed property tax hike off the table.  He called that result of a compromise that leaves city residents as winners.

"This budget agreement reflects the reality of the legislative process. And I’ve seen if from both sides," said Nutter, emphasizing cooperation with Council's members. "We’re not talking about winners or losers."

At a City Hall press conference, flanked by ten Council members, Nutter said the city will deal with a $1.4 billion five-year financial hole through a a five-year temporary sales tax hike by 1 cent on the dollar. And to ease immediate financial pressures, they plan to defer payments into the city pension fund for two years, paying the fund back later.

The sales tax plan and pension deferrals require state approval.

The revised deal marks a political loss for Nutter, who had insisted that a temporary property tax hike coupled with a temporary sales tax increase was the responsible way to close the budget gap without substantially cutting services.

But with time running out before an end-of-May deadline to pass the budget, Nutter simply didn’t have the votes. Seven Council members publicly stated last week that they would not support a property tax hike.

Nutter’s property tax pitch was also weakened by the recent release of a new set of “actual value” assessments that would change most homeowners’ taxes and by an investigation by the Philadelphia Inquirer into the Board of Revision of Taxes, which sets city property taxes. The stories revealed longstanding mismanagement, political patronage and inaccurate assessments.