In my last column, I made a lot of new enemies by not only endorsing Mayor Kenney’s request for a 6 percent increase in the real estate tax, but raising him — to 7 percent.
What am I, crazy?
More like angry and frustrated, and my agreement to raise taxes was conditional. It will fix the school budget for five years, giving us time to come up with financial solutions for the future.
It is not certain that City Council will give Kenney the increase he wants. Some members already are bucking like broncos.
“The spending plan is lean,” Kenney said in his budget address March 1. “We have combed through every part of government looking for new efficiencies.”
I’ll bet Kenney’s comb is missing a few teeth. To help him, here are seven ideas for finding funding.
1) Stop spending, now!
If Kenney’s budget passes, the city’s general fund spending will have increased 17 percent since he took office two years ago. During the same time, state spending increased only 3.3 percent. Money unspent on the city can be directed to schools.
2) Reduce the city workforce by 1 percent.
The city workforce was 31,833 at the end of 2017. The city payroll was $1.67 billion, the average salary $52,000. Eliminate 1 percent of the workforce, meaning 318 people. Approximate saving on salaries: $16.5 million. More when you factor in benefits. Although I don’t like seeing anyone lose a job, downsizing is as American as apple pie. The loss of 1 percent will not impact the city’s legendary efficiency.
3) Eliminate the real estate tax abatement.
It was designed to spur housing construction in Philadelphia, and it succeeded — wildly. But when new buildings go up, they generate no tax revenue. I asked the city for numbers, I was told it didn’t have numbers now, but it will in April. Phase the program out.
4) Collect revenue from deadbeats.
Councilman Allan Domb says $394 million is owed by 67,000 delinquent properties — 16,000 owner-occupied and 51,000 commercial, industrial, multifamily, and investor-owned. He estimates about one-quarter of that debt, about $98.5 million, could be collected. Why only one-quarter? Because some of the debt is decades old and some is owed by people who really can’t afford to pay.
The city’s Owner Occupied Payment Agreement allows poor families to pay $25 a month or less. I’m OK with not throwing the destitute out of their homes, but I’m also OK with the city writing legislation to take the home after the current owners die, sort of like a reverse mortgage.
Finally, Domb says that the city’s collection rate is about 93 percent, and that if we could nudge it up 3 points to 96 percent, it would result in an extra $40 million a year.
5) Make PPA pay up.
The Philadelphia Parking Authority shortchanges the schools out of money it promised. Take the PPA to court, or maybe send in the PPD for a hostile takeover.
6) Change the sharing formula.
The current real estate tax rate of 1.3998 percent of assessed valuation is split between the School District (0.7681) and the city (0.6317). Give it all to the schools and let the city cut more costs.
7) Bust the pension payments.
Pensions are a huge part of the city’s financial problem, says documentarian and former finance guy Sam Katz — and he’s not alone. When $500 million is spent to amortize the $5.7 billion city workers’ pension, he says, it’s hard for the city to dig out of that hole.
The city can make the burden smaller by infusing cash into the pension fund and reducing annual payments.
Sell the Water Department, the Philadelphia Gas Works, and Philadelphia International Airport, and use the proceeds to reduce the pension nut. That “would free up a boatload of money,” says Katz, a former candidate for mayor and governor. Also, change pensions from defined benefit to defined contribution for all new employees.
Money is there, if Kenney is serious about finding it.