Watch your wallet: Nutter's new budget includes big new taxes
Philadelphia City Hall and political coverage from the Philadelphia Inquirer City Hall bureau.
Watch your wallet: Nutter's new budget includes big new taxes
Patrick Kerkstra
Proclaiming that the city cannot “just cut our way out of what is in essence a $150 million hole,” Mayor Nutter today proposed a budget that would instead close the gap with two major new tax programs: one levying a two-penny-per ounce charge on sugary drinks, and another that would charge property owners $300 per-year for trash collection.
If approved by City Council, the two new revenue sources would raise $146.6 million next year, and $185 million in future years, the Nutter administration said. And unlike the temporary penny-per-dollar sales tax hike approved last year, the new tax programs would be permanent, administration officials said.
The mayor’s $3.871 budget — which he will formally present to City Council tomorrow — proposes just $33 million in spending cuts, principally in the prison system. There will be no significant spending reductions in recreation, libraries or public safety, administration officials said.
“The budget is designed to avoid more service cuts,” said city finance director Rob Dubow, noting that the administration has already cut spending by over $200 million a year.
City departments were asked to prepare for cuts of up to 7.5 percent, but the administration determined that the service reductions such cuts would have required were too severe, Dubow said.
Raising existing taxes — like wage, real estate, or the business privilege tax — presents a host of political and legal obstacles. So the Nutter administration opted to “look for other revenue options that might also help us reach other long term goals,” Dubow said.
For instance, while the tax on sugared drinks would raise plenty of money for the cash-strapped city, administration health experts also hope it will help reduce childhood obesity in Philadelphia. That assumption is untested, however, as no other city has come close to taxing sugary drinks as heavily as Nutter proposes.
Billed by the administration the “Healthy Philadelphia Initiative,” up to $20 million a year of the proceeds generated from the sugary drinks tax will be dedicated to anti-obesity programs, said Health Commissioner Donald Schwarz.
Similarly, the garbage levy — which the Nutter administration is calling the “Keep Philly Clean” service fee — will provide enough revenue to fund $10 million worth of enhanced community cleanup programs, in addition to funding the entire sanitation budget.
Both proposed revenue measures are sure to encounter stiff opposition. Many property owners will no doubt voice disapproval of the garbage fee, which could complicate its passage in City Council. The beverage industry is already gearing up to fight the tax on sugary drinks. And low-income advocates are claiming that the two measures will hit the poor harder than the wealthy, though a lower $200 annual trash fee is available for low-income households.
But elected officials in Philadelphia have little appetite for a fresh round of budget cuts. As the economy collapsed in 2008, tax collections plummeted. That forced the city to pare $1.7 billion from its five-year spending plan through a combination fo spending cuts and delaying planned wage and business tax reductions.
City Council now may well prefer to accept new taxes over finding $150 million more to cut.
“Raising our core taxes is not an option that anyone wants to use. We don’t want to raise wage taxes or real estate taxes and our business taxes are already recognized as being too high. With that backdrop, where do we fill the deficit hole without reducing services?” asked Councilwoman Blondell Reynolds Brown.
Still, some observers were surprised that the administration chose to favor tax hikes so strongly over further cuts.
“I’m surprised at the ratio. I thought there would be more of a 50-50 allocation between new revenues and lower spending,” said City Controller Alan Butkovitz.
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"REEL in SPENDING, do not increase MORE taxes on the already overtaxed city." They've already cut as much as they can. Nothing else to do but increase taxes. Of course, according to right wingers, governments should be able to provide government services without taxes at all, so there is no point in arguing with idiots.
Instead of having your hand out and voting for someone who gives you the most UNEARNED money, Try getting a job..... I love standing in line at the supermarket and watching customer after customer pay with access cards. All the while having gold rings on their fingers and around their necks. Than I watch them get into their new luxury cars. Are these people really in need of public money to eat? So instead of spending money on food,they can spend it on jewelry and luxury cars? Great! Keep voting for the guy who gives you the most for free on the backs of everyone who actually works for a living....— Sperbigbob- Tom Howard is dead on. The city needs to collect the $500,000,000 it is owed in property taxes, or seize and sell those properties. Why do they think it's alright to tack additional taxes on the backs of those who ALREADY pay taxes, instead of collecting what they're owed!!! Better yet, why do we let them get away with it! Go to http://citymaps10.phila.gov/Map/default.aspx?&SA_PLANNING_2000Councilmanic=on and find out what district you're in. Then go to http://www.phila.gov/citycouncil/CouncilMembers.html and email your City Council member. Let them know this is BS, and you WILL vote them out if they pass this ridiculousness.— fatandlazy
- Has anyone considered a reduced (say 3 or 3.5%) sales tax within the city? That would entice shoppers to come in from places like Cherry Hill or KOP to spend their money. Am I missing a key point? Maybe I'm just crazy...— mantua633
- "eMMster Privatize the trash, the gas, water, cops and the firemen." Um, no offense, but the Water Dept. is revenue POSITIVE. That is, they take in more than they spend. The City then skims the remainder to pay Latrice Bryant's salary.— citylumberjack
Comment removed.- $300 to property owners - then private services should compete for collection. For those who can afford it, this will drive more people out of the city - for those who cannot afford it, it will cost even more to collect.— BMarie
- It will never end if you voter's keep putting the same people back in office. All they are doing is feeding their hungry payroll patronage heavy people. "ROOT" THEM ALL OUT OF OFFICE.— FJG JR
- My city council person is Marion Tasco. If she votes for the trash tax I will vote against her is the next election and work to make sure most people in my neighborhood do the same.— Kitty_Carlyle
- Subsequently, DC 33 and 47 will have to wait for the next Mayor for potential contract discussions. He tried to stop SEPTA workers from getting raises, which they eventually got, and will stiff the City workers.— MezikeB
- I guess this is what "Smart Growth" is all about. Move back to the city to enjoy better crime, better congestion, better parking, better filth, better political corruption, better illiteracy, and better taxes. Now I understand.— ritaf
- ....Billed by the administration the “Healthy Philadelphia Initiative,” up to $20 million a year of the proceeds generated from the sugary drinks tax will be dedicated to anti-obesity programs, said Health Commissioner Donald Schwarz..... So, you start a new tax and then take the money and start a new program. Isn't that why we have soooo many problems? New program after new program after new program.— NC Dennis
- I like the heading on this article "Watch Your Wallet", what wallet? After paying the city wage tax, property tax, school tax, and now TRASH/SODA TAX, ENOUGH IS ENOUGH....GO AFTER THE CITIZENS THAT PAY NO TAX.....THE FLIGHT FROM THIS CITY WILL BEGIN SOON!!!!— Dadair1
- Mmmm. wanna talk about saving dollars? Let's start with the Mayor decreasing his staff...a lot of the positions in his cabinet are redundant, and exceeds what the former Mayor had in his cabinet. Folks are out of jobs, businesses are failing, and yet another tax placed on the citizens of Philadelphia, can't wait for the new elections...— shawqi
Get rid of Latrice Bryant. $90,000 / $300 = 300 less households charged a trash tax.
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