Philadelphia City Council is willing to give back the 5 percent cost-of-living raise it received June 30, but only on members' own terms.

And putting their money back into the depleted city coffers, even amid a financial crisis, apparently doesn't appeal to them.

"The predominant thought in Council is they want to give it back, but they just want to find the way it would best help the city," Council President Anna C. Verna said through a spokesman after a nearly three-hour closed-door meeting with a majority of members.

In that meeting, Majority Leader Marian Tasco said, the nine of 17 members present were told by their staff that they had to accept the raises because they were required to by a 2003 law that set salaries. Under state law, Council cannot raise or lower members' pay during their terms, which do not end until January 2012.

The nine agreed they should give the raises back. But some, including Tasco, want to give the money to a charity of their choice because returning to the city's general fund the $85,000 in after-tax money from the 17 members' raises "tends to get lost in the sauce," Tasco said.

"We don't mind doing something, but we want to have some impact," Tasco said.

The base Council salary on June 30 went from $112,233 to $117,990 - among the highest city council salaries in the nation. Those in leadership positions earn more, with Verna making the most; her salary went from $140,864 to $148,090.

The automatic cost-of-living increase - mandated by a 2003 law passed by Council, which overrode a veto by former Mayor John F. Street - comes in the midst of labor negotiations in which the city's four unions are being asked to accept no raises for four years. Their contracts expired June 30.

The meeting in Verna's office appeared to push the boundaries of the state Sunshine Law, which prohibits a quorum of a legislative body from meeting in secret "for the purpose of deliberating agency business or taking official action."

Tasco said the meeting was about Council members' personal choices on what to do with their money. "The public doesn't have to know about this decision, because it's a personal decision that the Council members are making about their personal issues," Tasco said.

Melissa Melewsky, media counsel for the Pennsylvania Newspaper Association, said it was "not clear-cut" that the meeting violated the Sunshine Law; that would depend on whether the salary givebacks constituted "agency business." But given that Council was clearly acting in concert as a public body, she would argue that members should have their discussion in public.

At the meeting were Verna, Tasco, Darrell Clarke, Frank DiCicco, Bill Green, William Greenlee, Curtis Jones Jr., Donna Reed Miller, and Brian O'Neill.

Councilman Jim Kenney, who was not at the meeting, said he had already decided to give back his cost-of-living increase to the city, and to continue a 5 percent pay cut that he and seven other Council members had agreed to take beginning in January. Other Council members who took that 5 percent cut for the first six months of the year were Verna, Tasco, DiCicco, Wilson Goode Jr., Green, Jones, and Joan Krajewski.

Only Kenney and Green have committed to continue their 5 percent salary giveback - separate from the COLA giveback - through the fiscal year that began July 1. But Green, too, refused to give the money to the general fund and instead gave it to the Friends of the Free Library.

Council's preference to direct money to pet charities and not the city drew criticism from the two men vying for the post of controller, the city's elected fiscal watchdog.

"My wife and I are not paying taxes so that City Council people can give it to charities, regardless of how deserving those charities are," said Al Schmidt, the Republican candidate challenging incumbent Controller Alan Butkovitz.

"They seem to be remarkably tone deaf at the moment," Schmidt said, likening Council's resistance to salary cuts and giving up the controversial DROP pension benefit to the state legislature's ill-fated 2005 pay-raise scandal, which resulted in a historic routing of incumbents. "If the city were not out of money, and if taxpayers were not out of money, I think we could all be a little more cavalier about this."

Butkovitz said the best way to refuse the money was "sending it right back to where it came from."

"The principle is, we're in the same boat, and the leaders are trying to show consistency and solidarity with city employees," Butkovitz said.

Mayor Nutter and chief of staff Clay Armbrister gave back 10 percent of their salaries; the rest of Nutter's top staff gave back 5 percent; and everyone is required to take a week of unpaid furlough between January and June, and another week of unpaid furlough between July and June 2010.

Council has not required salary cuts or furloughs of any employees.

Nutter took a neutral stance on Council's decision. He said he had informed Council of his position - he is giving back his cost-of-living increase - but would not suggest what members should do.

"It's always a personal decision that independently elected officials have to make for themselves," Nutter said.

Several factors appear to be delaying Council's decision. One is the tax implications. Some Council members don't like the idea of paying taxes on the additional $5,758 they're giving back. Others wondered how it might affect their tax bracket.

Butkovitz said he was avoiding the tax issue by giving back his take-home from the 5.13 percent COLA increase minus the extra taxes he would have to pay for it. So of the gross increase of $5,932 that he's receiving, Butkovitz will repay $3,218 to the city.

Contact staff writer Jeff Shields at 215-854-4565 or jshields@phillynews.com.