Wage Tax Hike a No-Go?

It looks like City Council’s suggestion that the city consider raising the wage tax to manage a $1.4 billion five year budget hole might be dead.

Several weeks ago, Council asked Finance Director Rob Dubow to confirm whether the city’s tax receipts had fallen by more than 2 percent. Because the city receives state gaming dollars for wage tax reduction, the casino law sets conditions for the city to raise the wage tax. One condition is that tax collections must drop by more than 2 percent.

But Dubow this morning sent a letter to City Council, reporting that tax revenues had dropped by 1.94 percent from fiscal year 2008 to fiscal year 2009.

Council wanted to look at the wage tax as a way to close the budget gap instead of the property tax hike proposed by Mayor Nutter. Nutter has also proposed a temporary increases to the sales tax.

Councilman Bill Green said he wasn’t concerned by the news from Dubow because Council is now actively pursuing a different plan – to extend Nutter’s proposed three-year increase of the sales tax to five. “At this point a majority of council people believe we have an alternative,” he said.

Councilman Jim Kenney, who had opposed raising the wage tax, said he was relieved. “It’s good news that tax revenues have not declined by more than two percent. It’s a close call in going down a road that we don’t want to go,” he said.