It's Our City is a project that uses TV, Radio and Web
to promote civic engagement in the Philadelphia region.Mayor Nutter Surprised and Concerned by Citizens Call for Wage Tax Hike
Tuesday, March 3rd, 2009 at 12:19 pm - by Matt Campbell. Filed under: Budget, Budget Workshop #1, Budget Workshop #2, Budget Workshop #3, Budget Workshop #4.
The City of Philadelphia gets a majority of its tax revenue from the wage tax
Click here to listen to the mp3 of Mayor Nutter on WHYY (how to save an mp3)
Philadelphia Mayor Michael Nutter speaking this morning on WHYY’s Radio Times said he was surprised by the widespread support in the citizen budget workshops for boosting the city’s wage tax. Citizens opted for the tax increase in hopes of preventing deep cuts to city programs they like. But today Nutter said he was concerned by that finding.
I am surprised and concerned that citizens would immediately go to the wage tax because of the deteriorating impact that many studies have shown that the wage tax has had of the City of Philadelphia. But for the moment, I think people are talking about the different taxes that they know. What I think is more important is they are even talking about the prospect of paying more. You then have to discern between and among which you would consider. We’re looking at everything. It has to be a combination that is done in a way that again enhances the long term prospects of the city. We have to be very, very careful that we don’t take a short term action that may in the near term generate more dollars but can have a long term disastrous impact on the overall economy.
The mayor was commenting on the findings from 4 citizen forums held by The Penn Project for Civic Engagement. You can read the results here.
Radio Times host Marty Moss-Coane also asked the mayor about another finding from the budget workshops. A majority of participants expressed anger that city council members use of city cars that includes drivers, and for their misuse of the DROP retirement program. Nutter said as a member of city council, he never used a city car, and when pressed by Moss-Coane whether council should follow his example on the use of the car he offered this.
I think it’s a decision that each individual member needs to make but I think in the current environment it might be a good decision. And some members have made that decision. Didn’t take one or turned their vehicle back in.
Although health and pension benefits won’t be renegotiated until mid-year, Nutter was asked about whether he’s seeking concessions from the city unions on these two volatile issues. Nutter said he won’t talk about contract negotiations in the media but reiterated his belief that we have to get savings from these two areas, that he said accounts for 24% of the city budget.
We have to be very, very, clear that these are significant issues that the city must reap the savings from making changes in our health care as well as our pension system. I am very, very focused on, I mean, there might not have been a budget workshop or PhillyStat session about this. There’s not a whole lot to talk about. But I want your listeners to at least know I am very focused in this particular area.
The mayor will present his budget proposal to city council on March 19.
Related link:
DN Editorial on City Council’s role in the budget process
March 3rd, 2009 at 1:55 pm
I agree with the mayor. I totally understand the good intentions behind supporting tax increases–it feels like a small, passive sacrifice in a crisis. But service cuts and tax increases are the same thing–paying more for less. The wage tax is very expensive because it isolates the Phila economy since the surrounding suburbs don’t charge it and thus win the competition for new jobs. But those jobs are expensive to individuals and the environment and are at the root of our conflicts in the Middle East since the majority of suburban workers commute by car. In effect suburban workers exchange the wage tax for gas and auto upkeep. If they did honest math, they might find it cheaper to live and be employed within the city with the wage tax and car-less commuting rather than their current situations. [I agree about dropping the car service for council members --people, did you not learn anything from Tom Daschle and the limo service? Take SEPTA.] There are other imbalances with property/sales taxes and local services, but the bottom line is that Phila lost its population to the surrounding suburbs and the wage tax helped pushed them out (schools sealed the deal). I also perceive that the wage tax grips the earnings of low-income workers more than high-income earners whose compensation is not classified as wages (does it work like that?).
So I think the public learned a lot from this exercise. But it revealed the real tasks are to tackle health and pension costs and those are big issues that need to be solved at the national level–with evidence and dialogue collected at the local level. What would it mean for the city next year if Obama succeeds with health reform this year? Since it’s an emergency, can the city negotiate a deal to get its workers on the federal government’s health plan while O dukes it out with health reform? And laying off city workers goes completely against the strategy to recover the economy.
I read this book about Sweden last year (found it by chance at Borders), The Swedish Secret: What the United States Can Learn from Sweden’s Story. I got to the parts about their health, pension, and vacation benefits while riding the train into the office and I have to say, not the best way to start an American workday. Unbelievable. Americans, we do like the misery. http://www.amazon.com/Swedish-Secret-United-States-Sweden%C2%92s/dp/0929636600/ref=pd_sim_b_2
March 3rd, 2009 at 2:30 pm
The Penn Project’s Report doesn’t exactly say that citizens “support a wage tax increase.” It actually says, “A few tax minor tax hikes were widely and swiftly supported. When it came
to the big-ticket taxes (sales, wage, real estate), increases were often approved – but often amid lingering doubts that the city really has done all
it can to collect what it’s already owed: delinquent taxes, bail fees, PILOTs, reducing abatements etc.” This is hardly a ringing endorsement for increased wage taxes. Also, the report includes in the support of “modest” tax increases the property tax, and part of that is accepting the actual value initiative, which Nutter postponed for one year, even though experts state that it’s ready to roll entirely. Only Rob Dubow thinks he wants to look at it some more for reasons of “due diligence” which makes me think he doesn’t really know what that means.
March 3rd, 2009 at 2:35 pm
The city is owed half a billion in overdue, delinquent property taxes, a problem that existed long before the current financial crisis. This property has value now, has never had more value on average than it does now, and is certainly almost always worth more than the liens against it. If that were not the case, no property could be sold in Philly. Ask any title agent. Let’s not squander this opportunity to fix what’s broken in Philly. That means some journalists are going to have to do the heavy lifting of finding out how to do that. Starting with property tax collection is a sure way to improve schools and keep cherished services through the financial melt-down.
March 3rd, 2009 at 2:47 pm
It shocks me that the press seems befuddled that you look at a pie chart that shows only 16% of city revenue coming from property taxes, but there are half a billion in uncollected overdue property taxes even after Philly property has never been more sought after, even during a down turn. We’re not Nevada, or Florida. The city can auction this property, and sell the huge amount of city assets it landbanks but does nothing with. This is going to put government held property in limbo back into the active property tax paying base. Where is recognition that this is how to get revenue, not just by raising taxes?
March 25th, 2009 at 9:11 am
I personally do not agree with the tax hikes. I will admit I don’t have the answers but I agree with the mayor in cutting spending of council members.
And one thing I noticed was they spend I think 70k just to broadcast their sessions. If they cut that 70k
down to zero and offered some broadcast networks
the chance to bid on the right to broadcast council
sessions. Of course in the event that no one wants
to broadcast council sessions. They could allow colleges students majoring in broadcast and telecommunications, to broadcast the session for free
April 7th, 2009 at 8:31 am
[...] suggesting the administration might take those perspectives into consideration — something it seems they surprisingly did do after those citizen [...]