Plan C averted, city gets its budget
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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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Karen1000 is absoultley right and there was a Plan C. There were people on the chopping block ready to get letters tommorrow. For those who think it's false are idiots.— PJJ- Comment removed.
- What is Cleanup Philly going to do now. The city budget is over with. It was fun reading your 20 posts per article in dealing with the budget but it's time to go crawl back under the hole you came from!— PJJ
- just make the residents of PHILA. pay for trash pick up just like the suburbs that would solve a big part of the problem— sammybuns
- Amazing. I don't blame Nutter since he wanted to raise property taxes. This going to have long term consequences that will outweigh the short term gains. Philadelphia will continue to lose people and lose jobs. Amazing— BLKMD
- I rent in the city and I already do much of my shopping in the burbs. This is just a way to crush Walnut Street retail and the boutiques in the surrounding neighborhoods while trying to payoff philly machine cronies and bloated bureaucracy with a few extra cents on everyone's corner store bill. In the long run balance must return, but today's politicians will be gone, I feel sorry for everyone who will be here. After supporting Nutter with money and time the first time around, I will be certain to make sure both he and Rendell never go further in politics.— mktstrfinancial
- "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." The part about "Does not include..REFORMS" says it all. So, a year from now, we will have the same crisis all over again, but a little worse. Just more of the same from our elected leaders.— dee99999
- THIS IS A DISASTER! CLEANUP PHILLY WILL HAVE NOTHING TO OCCUPY HIS/HER TIME, OH GODOHGODOHGOD— brendancalling
- Hey, Gov. Ed can now go back to doing Eagles Post Game Live in studio, and get more face time, like he did the other night, on left-wing MSNBC trashing Rick Santorum (who was, of course, replaced by the funder of the ACORN criminals, and tool of the Big Labor bosses, Bobby Casey).— rsh00
- What a joke! All they did was put us in more hock with needless additional interest payments on fat pensions. Tax hurt the business infrastructure that creates the jobs. More people will move out of Philly as soon as they can...me included and I love this town. I am so sick and disappointed with the Philly political machine with no hope on the horizon. Mr. Nutter could have and should have used this opportunity to clean out City Hall as he promised. Instead, he bailed out to the special interests, in this case the public employees unions. No good will come of this.— feudi
- All I want to know is who in the senate put the amendments in the bill that caused all this strife. Please put I out there so the persons or person can be voted out— katie_9918
- In case you didn't already realize this, the "temporary" tax hike isn't really temporary. The word "temporary" is a ploy to get everyone used to paying the additional 2%... then once the expiration rolls around, they're going to tell you that its to the city's advantage that they keep it at 8%.— RandomX856
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- So much for any chance of the state forcing reform on philly. The city taxpayers can not continue to afford the current pension plans the city gives workers. They need to be enrolled in 401k type plans and pay for their own retirement.— Taxpaying Voter
