Phila. unions to City Council: Stop cutting taxes

Following their disruptive protest at City Council on Thursday, the city's unions are pressuring Council to stop reducing wage and business taxes and to improve tax collection to help pay for new contracts.

With backing from their national leaders, who have painted a target on Mayor Nutter as an antilabor Democrat akin to union bête noire Gov. Scott Walker of Wisconsin, local unions have been distributing a flier to Council members that "urges Philadelphia policymakers to improve the city's revenue system."

The AFSCME flier says the city should back off plans to continue cutting wage and business taxes. But Council members, even those pushing for new contracts for the non-uniformed unions, District Councils 33 and 47, seem unlikely to reverse planned tax reductions.

The unions have been without a new contract for nearly four years, prompting hundreds of members to storm Council on Thursday, blowing whistles, shouting, and stomping so loudly that Nutter was unable to deliver his annual budget address.

At a meeting Friday with the Inquirer Editorial Board, Council President Darrell L. Clarke, who has said he hopes to mediate agreements to end the contract standoff, said he supported continued wage-tax reductions to "grow the city."

The business community has long pushed for lower taxes, saying it will make the city more competitive. A recent Wall Street Journal article listed Philadelphia as one of the country's most highly taxed large cities.

Councilman Bobby Henon, a staunch labor supporter who works for Local 98 of the electricians union, said he wants "fair contracts" for D.C. 33 and D.C. 47. But he said he also believes wage-tax reductions should resume as planned in fiscal 2014.

That year, the tax is scheduled to fall from 3.928 percent to 3.924 percent for residents - a tiny reduction equal to four cents on a $1,000 paycheck. By 2018, the rate is slated to decline to 3.7568 percent.

"I support the slow decrease in the wage tax," Henon said. "It sends a good message to businesses that want to come here and stay here."

City Controller Alan Butkovitz, a mayoral aspirant, said he believed the city could reach labor agreements without freezing planned tax reductions.

But Butkovitz questioned whether lowering taxes was wise when the schools are struggling financially: "It's surreal to reschedule for July the business tax cuts when there's no plan in place to get the schools through the school year."

AFSCME estimates that maintaining current tax rates would boost city revenues by $50 million yearly, but Finance Director Rob Dubow said such a savings would only come in the future.

The union figure obscures the fact that the bulk of the reductions over five years will occur in 2017 and 2018, Dubow said.

In 2014, foregone revenues would amount to only $4 million.

Dubow also said that the Nutter administration wanted to grant raises under new labor agreements, but needs concessions from the unions, including putting new employees into a less-expensive pension plan.

"Our pension fund is less than 50 percent funded," Dubow said. "We have to do something about that."

Pat Eiding, president of the Philadelphia Council of the AFL-CIO, said Thursday that he believed people would support higher taxes as long as collection rates improved so that the system felt fair.

Increasingly, national and local union officials seem to be singing the same tune about Nutter. In January, hundreds of union employees protested a Washington meeting of the U.S. Conference of Mayors, of which Nutter is president.

Union members are especially angry that Nutter in January said talks with D.C. 33 had reached an impasse and asked the state Supreme Court for permission to impose the city's last offer.

By going to the court, "Mayor Nutter has fallen in line with such antiworker elected officials as Scott Walker, who stripped public employees of collective bargaining in Wisconsin, and Rick Snyder, who rammed 'right-to-work-for-less' through a lame-duck session of the Michigan legislature," AFSCME president Lee Saunders said in a statement Friday.

Nutter spokesman Mark McDonald countered: "The mayor has met with Mr. Saunders in the past and he knows the mayor better than the grand rhetorical flourishes he uses in the comment. The situation here is nothing like the Midwest.

"Mayor Nutter believes in the collective bargaining process, but for the last four years, with no end in sight, there's been no real bargaining, because union leaders refuse to negotiate on the critical reform issues."

McDonald also said the city's final offer included two pay increases and $25 million for the union health fund in addition to the pension changes and the ability to use furloughs.

Nutter has argued that furloughs are a better option than layoffs, allowed under current law.