Plan C averted, city gets its budget
Philadelphia City Hall and political coverage from the Philadelphia Inquirer City Hall bureau.
Plan C averted, city gets its budget
Patrick Kerkstra
After months of agonizing delays, state lawmakers granted final approval today to a temporary Philadelphia sales tax hike and a two-year reprieve on city pension payments, a pair of critically needed measures that plug the final $700 million hole in a multi-year deficit that once stood at $2.4 billion
The legislation, which was just approved by an 32 to 17 vote in the state Senate, will, at least for now, bring Philadelphia’s budget and five-year plan fully into balance, ending a political and fiscal drama that has consumed City Hall for over a year.
The bill — which Gov. Rendell is expected to sign shortly — eliminates the need for Mayor Nutter’s fallback budget, better known as Plan C.
That plan would have closed the $700 million five-year gap through cuts alone. As many as 3,000 city workers would have been laid off under Plan C, and basic services such as sanitation and police and fire protection sharply reduced.
If Harrisburg had not acted today, layoff notices for those 3,000 workers would have been delivered tomorrow. With the vote, their jobs are preserved, and the libraries, recreation centers, courts and facilities that they staff will remain open.
The legislation raises the sales tax in Philadelphia from seven percent to eight percent for a period of five years. The eight percent rate will be two points higher than the sales tax in every other Pennsylvania municipality except for Pittsburgh, where the rate is seven percent.
The other crucial pieces of the bill are pension related. One addresses the city’s immediate cash flow crunch, permitting it to defer payments for the next two years. Those deferrals have to be paid back, with interest, beginning in 2013.
Another key pension provision extends the amortization period from 20 years to 30 years, in effect spreading the city’s pension burden out over a longer period.
Unlike earlier version of the bill, the legislation passed today does not include any statewide pension reforms, nor does it cap or cut back on retirement benefits for current or future Philadelphia employees. Labor leaders had campaigned vigorously against those provisions, and succeeded in convincing the House to delete them from the bill.
Minutes after the vote, Nutter and Philadelphia legislators called senior city officials in Philadelphia. Addressing over 40 of his managers on a speakerphone, Nutter proclaimed: "Plan C is terminated." The managers in Philadelphia erupted in thunderous appaluse.
Moments later, Nutter appeared overcome with emotion as he thanked his staff.
Asked about it by reporters after he hung up, Nutter acknowledged that he was indeed choked up.
“When you think of the magnitude of a what could have happened tomorrow … the magnitude of it is astounding and I think quite honestly that’s why so many people seem to have difficultly grasping what Plan C was all about,” Nutter said.
He said the “greatest thing that has happened is there is a renewed relationship between Philadelphia and Harrisburg.”
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This is what politicians get paid for....to not do anything until very last minute. How about now paying any lawmaker until budgets are passed!— Justmy2cents- Schweeeeeeeet!— BKScholar
- The biggest joke of this is the "Doomsday Budget". Seriously doesn't anyone really think Nutter was going to go through with it. Every time a politician wants to raise taxes they saythey will lay off cops and firemen or pull off Nutter's phone calls today about trash pickup being cut. Nutter, Obama and every other politician who wants to raise taxes how about cutting spending you dopes.— ResponsibleAmerican
@ Justmy2cents....Then why don't you become a politican and change the game? Don't talk about it..be about it.
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- 8% is here to stay.....Can I here 10% so the city council can take longer vacations— martin710
- You folks in the city deserve your politicians. Enjoy the tax hike too.— teksys
- If you remember correctly, the sales tax hike that brought us up to 7% was supposed to be temporary, too! And City Council will still vote themselves a big fat raise!— Froggie
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- Great. So we defer pension payments for 2 years and stretch them out over a longer period of time to pay. So again we are just postponing paying legal obligations (pension money) so another mayor and city council have to deal with it.— phillyccgwm
- Just think this time next year Nutter will be raising the wage tax or business tax at the same time running a campaign asking businesses to come to Philly and pay more taxes than anywhere else in the tri-state area.— ResponsibleAmerican
- I would pay 10% if City Council would take a permanent vacation.— DocAwesome
- As usual, the main problem was not addressed. Without the necessary pension reform, this "plan" is akin to putting a band-aid on a bullet wound.— erformc1
- What's amazing is that after all CleanupPhilly's smug commentary the past few days about how the Senate wouldn't act and Plan C would have to be enacted, the Senate did act and Plan C won't have to be enacted...and he just comes back with more smug half-thought-out drivel. What math? Since when have you ever done any math?— anodyne
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