Philly Mayor Jim Kenney seeks tax hikes, service cuts to offset pandemic’s $649M bill

City Hall in Philadelphia

City Hall in Philadelphia (Danya Henninger/Billy Penn)

Updated at 5:27 p.m.

With a looming budget hole in excess of a half billion dollars, Philadelphia Mayor Jim Kenney is seeking $370 million in spending cuts and a battery of “revenue enhancement” measures –– including a small property tax hike to help aid city’s schools.

Sources present for a City Council briefing Thursday told PlanPhilly the Mayor planned to revise a $5.2 billion budget introduced in March to compensate for a projected $649 million shortfall linked to the coronavirus shutdown.

The city’s property tax rate would rise from 1.3998% to 1.4551%. The 3.95% increase would amount to a $58 tax increase for a home assessed at $150,000. The additional property tax revenue would go to the School District, which is staring down a $1 billion deficit over the next five years due to the coronavirus pandemic.

An early payment discount for property taxes would also be eliminated, Kenney’s plans show.

Nonresidents would see their wage taxes rise slightly from 3.4481% to 3.5019% a $26 annual  increase for the average commuter earning $50,000 a year while city residents would continue to pay a 3.8712% rate. The wage tax had previously been on track to fall to 3.6997% for residents and 3.2953% by 2022.

Officials indicated they would also freeze planned reductions in the city’s wage and business taxes and raise the city’s parking tax from 22.5% to 27%. Some city permit fees would also rise.

The city expected the proposed tax increases and freezes would result in $50 million in additional revenue over the next fiscal year, which begins July 1.

Meanwhile, nonunion municipal workers with salaries above $35,000 could see 1% to 7% pay cut. The city’s libraries and rec centers would remain open but with reduced operating hours; and city pools would not open this summer. Kenney had previously said the city would freeze new hiring altogether, including seasonal hires, like lifeguards.

A planned expansion of street sweeping Philly is the only major city to lack a regular litter collection program will be cancelled.

The city would also reportedly use emergency federal housing funds to cover between $30 to $40 million cuts to the city’s various housing programs. Several opioid initiatives planned for this year a drug user survey and funding for several public bathrooms in the Kensington neighborhood, for example would be deferred.

For now, the mayor did not anticipate layoffs to police or fire departments, sources said. Prison funding would be reduced through anticipated savings from reductions in jail populations.

Some on City Council, which must vote to approve the budget, expressed skepticism about hinging budget plans on tax increases or freezes while some citizens were struggling with unemployment.

“The first response to that issue is sticking your hands into the taxpayers’ pockets,” Council President Darrell Clarke told the Inquirer. “Well guess what? The taxpayers don’t have much in their pockets.”

Sources said the budget preview also noted that all new school revenues under the revised budget would “not be enough to close the gap and provide a quality public education.”

A spokesperson for the city refused to immediately confirm details about the revised budget, which will be formally presented to City Council tomorrow ahead of negotiations and a vote to confirm.

This is a developing story.

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