Can the City Afford Tax Cuts? - PhillyBlog

eldondre · #1 (**permalink**) 09-18-2005, 02:44 PM

Quote:

By Tom Ferrick Jr.

Inquirer Columnist
...John Street has two years and three months left on his term, but his lame duckness - exacerbated by The Bug probe - is a chronic condition that will only get worse with time. Add the fact that while Street is not facing reelection in 2007, all of City Council is. They don't want to head there having defeated - not once, not twice, but perhaps three or four times - tax-cut and ethics legislation.

Something's got to give. In fact, something's got to pass, though it may not be in the exact form the legislation is in now.

Street has another problem when it comes to his opposition to cutting business taxes. He's bedeviled because things are going so well in the city, with new houses and condos going up all over town, with the economy humming along, with home prices still rising.

Slowing the slide

In fact, the best piece of news came out just the other week: The rate of job loss in the city has slowed markedly this year - fewer than 1,000 jobs were lost in the first six months of 2005, according to the U.S. Bureau of Labor Statistics.

That's something to crow about, considering the rate we've lost jobs at in previous years - 5,000 or 10,000 or even 15,000 a clip.

A rising economy translates into rising tax collections. Rising tax collections undermine the mayor's argument that we can't afford to lower taxes for business, lest we imperil vital city services, such as libraries, rec centers, etc.

I always thought that was a crock because the amount of money spent on those services is peanuts compared to the overall city budget of $3 billion-plus.

I'm not the only one. The Pennsylvania Intergovernmental Cooperation Authority (PICA), the state board appointed to monitor the city's finances, came out with data recently that tell the true tale of city finances over the last five years.

To summarize: It found that while city revenues rose by 8 percent, city government spending went up by about 17 percent.

Where did all that money go? Not to most city departments. With the exception of the Department of Human Services and the prisons, the budgets of other city departments have risen little - if at all - since 2001.

Super soakers

Three big-ticket items soaked up the money: city contributions to its employee pension system (up 59 percent in five years), city payments for employee health and welfare coverage (up 46 percent), and the city's debt payments (up 28 percent).

These three items cost the city about $750 million a year. The budgets for the Free Library and the Recreation Department amount to $65 million a year.

Street took an ax to the libraries and rec department this year. But what has the mayor done to control pension and health costs? Not much.

He had a chance to seek changes in the benefit structure last year when he negotiated new contracts with most city employees. He punted.

Instead, he reduced the number of city employees, through attrition and some layoffs. PICA says the city payroll is down 1,600 jobs over the last five years.

Joe Vignola, who just stepped down as PICA director, said Street has "played Council members for fools" with his budget legerdemain.

The business tax cuts proposed by Councilman Michael Nutter will cost about $16 million over the next five years. During the same time, the city's budgets will probably total more than $18 billion.

And we can't afford to make further cuts in a business tax so high it scares away business?

So says the mayor. Allow me to repeat myself. That's a crock.

Contact Tom Ferrick at 215-854-2714 or tferrick@phillynews.com. Read his recent work at http://go.philly.com/ferrick.

brooke · #2 (**permalink**) 09-18-2005, 04:12 PM

Very interesting. Thanks for posting.

wilreynolds · #3 (**permalink**) 09-18-2005, 06:20 PM

Ditto. Good post El.

johnr · #4 (**permalink**) 09-18-2005, 07:18 PM

I wonder what would happen if they completely did away with the business tax? Is it possible that all the national retailers with stores just across the county line would think about opening locations where the customers live, like in Philadelphia? Gee, I wonder if the increase in sales tax would offset the loss of business tax? Maybe the additional income tax revenue from people working at those national retailers might bring in yet a little more money.

Philly is a great town, but the politicians have their heads so far up someone's rearend that they can see where they are going.

brooke · #5 (**permalink**) 09-18-2005, 07:25 PM

I'd imagine that the city would have jobs and thus people would earn more money and thus more wage tax.

It makes me understand why not a lot of us feel like we get much for all the taxes we pay. I know when I pay business privilege tax in addition to wage and state tax, I'm definitely going to be peeved this year.

Dave · #6 (**permalink**) 09-18-2005, 08:34 PM

Yeah, I know someone who pays all three and I've always thought that I'd be heading for the hills if I were in that situation... who knows.

As much as I'd like more retail in the city, I'm very cautious about the subject. It really wouldn't work very well unless we get some good leadership, which we currently don't appear to have any of. What I'm getting at is do we really want Wal-Mart getting approval to raze 4 square blocks of historic buildings somewhere for a disposable cardboard box and a gazillion square miles of parking? I wouldn't put it past the current administration to allow Fairmount Park to be filled up with strip malls, either.

I almost think that we need to worry about our leadership problem before we lower taxes or the flood of "national retailers" that follows the reform may end up destroying the city.

... just some food for thought.

eldondre · #7 (**permalink**) 09-18-2005, 08:53 PM

Quote:

Originally Posted by Dave

Yeah, I know someone who pays all three and I've always thought that I'd be heading for the hills if I were in that situation... who knows.

As much as I'd like more retail in the city, I'm very cautious about the subject. It really wouldn't work very well unless we get some good leadership, which we currently don't appear to have any of. What I'm getting at is do we really want Wal-Mart getting approval to raze 4 square blocks of historic buildings somewhere for a disposable cardboard box and a gazillion square miles of parking? I wouldn't put it past the current administration to allow Fairmount Park to be filled up with strip malls, either.

I almost think that we need to worry about our leadership problem before we lower taxes or the flood of "national retailers" that follows the reform may end up destroying the city.

... just some food for thought.

after this many years, I'm not gonna say hold off on lowering taxes b/c we can't handles prosperity. you take the chance when it comes along. btw, what wal-mart approval for razing historic bldg's are you talking about?

Dave · #8 (**permalink**) 09-18-2005, 09:35 PM

Quote:

Originally Posted by eldondre

after this many years, I'm not gonna say hold off on lowering taxes b/c we can't handles prosperity. you take the chance when it comes along.

I'm inclined to say the same. I'm still weary, though.

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btw, what wal-mart approval for razing historic bldg's are you talking about?

None in particular. It just seemed like an apt illustration for what I was talking about... well, there was that Wal-Mart proposal for Allegheny Ave in Port Richmond, but I don't think that involved razing historic buildings. The complaints were more about dropping a big, ugly traffic/trash magnet in the middle of a relatively quiet, walkable residential neighborhood. Thruth is, most national retailers operate in a certain way and, unless our pols have the balls to make them play by our rules, they could potentially make this city into something that I wouldn't want to live in, taxes or no taxes.

palvar · #9 (**permalink**) 09-18-2005, 10:01 PM

Dave-
I would expect Wal*Mart to move into to some of the brownfields in south philly like Ikea and Best Buy did. I find big box stores rather distasteful but atleast that land would be used for something then.

Dave · #10 (**permalink**) 09-18-2005, 10:47 PM

Wal*Mart already moved to the brownfields of South Philadelphia... and it has a great view of the river, if you care to walk a couple miles to the edge of the parking lot.

Why not look beyond big box stores and turn the brownfields into a park or something? Why must we always settle for crap because "it's better than what's there now"? Personally, I have little use for a Wal*Mart, or anything else, on the brownfields of south philly. I'd rather have something ped accessible in my neighborhood that I can walk to -- and I don't necessarily have a problem with it being a national chain, as long as it has the aforementioned characteristics.

The moment I feel like I'm being restricted, in the long term, to shopping at big boxes in strip malls built on former brownfields is the moment I'm moving somewhere else.