Friday, October 24, 2014
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IOM Editorial: Time for the city to start cutting

In today's It's Our Money editorial, we argue that after years of property-tax hikes, it's time for the city to make real cuts. (Here's a breakdown of how we calculated how much the city has raised taxes compared to how much it has cut.)

IOM Editorial: Time for the city to start cutting

In today's It's Our Money editorial, we argue that after years of property-tax hikes, it's time for the city to make real cuts. (Here's a breakdown of how we calculated how much the city has raised taxes compared to how much it has cut.)

We suggest that officials use this summer to start planning cuts for next year.

Check out the editorial, which appeared in the Daily News, below:

Within a matter of weeks, the estimated aggregate value of the city's properties dropped by $40 billion, which drove up the necessary millage rate to a point where early expectations of AVI — that many homeowners would see a drop in their taxes, and that enough mechanisms would be put in place to mitigate the steeper increases — got turned on its head. Although we hate the delay because of how long AVI has already taken, we almost see the wisdom in holding off.
This delay means that Council had to find a new way to find money for the school district, and this time, it reverted to form: To raise $40 million for the schools ($50 million less than the district was hoping for), Council hiked the property tax, for the third time in three years.
This, too, isn't surprising. The go-to move for Philadelphia since the 2008 recession began has been to deal with budget shortfalls by reaching deeper into taxpayers' pockets.
We did some ballpark calculations to see how much the city has dealt with its budget shortfalls through tax hikes, and how much with spending cuts. The city has raised about $370 million through a sales-tax hike and two "temporary" property-tax hikes (now permanent) in the three fiscal years since the recession. Meanwhile, the city has cut $175 million in spending — if you don't count the money the city "saved" by deferring pension payments, and you shouldn't, because that was no spending cut.

Within a matter of weeks, the estimated aggregate value of the city's properties dropped by $40 billion, which drove up the necessary millage rate to a point where early expectations of AVI — that many homeowners would see a drop in their taxes, and that enough mechanisms would be put in place to mitigate the steeper increases — got turned on its head. Although we hate the delay because of how long AVI has already taken, we almost see the wisdom in holding off.

This delay means that Council had to find a new way to find money for the school district, and this time, it reverted to form: To raise $40 million for the schools ($50 million less than the district was hoping for), Council hiked the property tax, for the third time in three years.

This, too, isn't surprising. The go-to move for Philadelphia since the 2008 recession began has been to deal with budget shortfalls by reaching deeper into taxpayers' pockets.

We did some ballpark calculations to see how much the city has dealt with its budget shortfalls through tax hikes, and how much with spending cuts. The city has raised about $370 million through a sales-tax hike and two "temporary" property-tax hikes (now permanent) in the three fiscal years since the recession. Meanwhile, the city has cut $175 million in spending — if you don't count the money the city "saved" by deferring pension payments, and you shouldn't, because that was no spending cut.

Continue reading the editorial.

It's Our Money
About this blog
Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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