City Council has a revenue plan that uses a little borrowing to get us by

In an effort to reach a compromise with Mayor Michael Nutter, the Philadelphia City Council has proposed an alternative tax plan that would eliminate the need for a property tax hike. City Council leaders issued a statement today explaining how their plan could work.

“We understand that the double-digit property tax increase proposed by the Administration will have a devastating impact on many homeowners and we have developed fiscally responsible alternatives that are tailored to working families,” said Majority Leader Marian Tasco after today’s meeting.

The sales tax alternative extends the 1% sales tax increase from three years to five years and borrows against the FY13 and FY14 receipts to provide an additional $200 million in FY10 to address the current fiscal crisis.  In combination with the efficiency savings identified by Council, the alternative generates as much revenue as the Administration’s proposal.

One part the Mayor might like, is that City Council’s tax plan doesn’t call for raising the wage tax. Mayor Nutter has repeatedly said he opposes any increase in the city’s income tax.

Philadelphia currently faces a $ 1.4 billion budget gap over the next five years, and must pass a leaner budget by June 1.

The idea of a five–year “temporary” sales tax increase in Philadelphia seems like a fair proposal. I never really expect these “temporary” revenue enhancements to sunset anyways. But the idea of borrowing against sales transactions that haven’t even happened yet seems about a responsible as when I wrote a $12 check for a pizza in college knowing it would bounce. I had a great pizza and paid an additional $20 in penalties. Is it a wise idea to borrow against future revenues?