Spectacular victory for Philly schools – pretty depressing

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    In a stunning, come-from-behind legislative win in Harrisburg, Mayor Michael Nutter and backers of the beleaguered Philadelphia school system managed to get a key vote last night authorizing a cigarette tax in the city to fund the schools.

    Without it, there was the prospect of 1300 layoffs and schools not opening on time in September.

    But honestly, this is awful. The alternative, I admit, was worse than awful. It was catastrophic. But consider where we are in funding schools for Philadelphia kids:

    The city now has the right to levy the fifth straight tax increase on its citizens for schools in recent years, and that leaves us $40 million or so short of being able to open schools this fall with an educational product pretty much everybody believes is unacceptable.

    To respond to the schools funding crises of recent years, Philadelphia has imposed three property tax increases, made permanent an extra one percent sales tax within the city, (leaving us with a sales tax that’s 33% higher than neighboring suburban counties), and now imposed a $2-pack cigarette tax on those who buy their smokes in town.

    There’s been precious little discussion of the impact on retail development of the tax differential between the city and suburbs resulting from this. The sales tax is now six percent in the Pennsylvania suburbs, eight percent in Philadelphia. That differential was instituted on a temporary basis five years ago, but it will now become permanent to fund schools and city pension costs.

    I don’t think that will make a lot of people move out of the city, but over time, I have to believe developers and retail chains thinking of where to locate a new Best Buy or other retail store will consider the differential sales tax their customers will pay. And while I’m not a smoker, I wonder if a $2 a-pack levy on cigarettes will affect decisions of smaller retailers to locate in the city.

    Back in the mid-90’s, city leaders began lowering city wage and business taxes that had accumulated to suffocating levels, a little at a time over decades. Those modest cuts which were suspended when the recession hit resumed this year, but I fear their positive impact will be overwhelmed by the rash of school tax hikes.

    The recent tax increases were enacted in good faith by people faced with terrible choices. And I can’t say I have any news ideas for fixing this.

    It’s the state’s constitutional responsibility to provide “a thorough and efficient system of public education,” but the politics of Harrisburg offer little prospect of change in state funding. There are people locally who have big ideas for reform, many of them in conflict with one another. I hope their efforts and those of a smart and committed superintendent make a difference.

    One of the hardest things to take about what just happened in Harrisburg was watching Philadelphia beg and bargain for the authority to tax itself, then see the state officials who agreed somehow feel they’ve done something for urban education.

    So while I understand the relief many feel with the vote in Harrisburg, I won’t be shooting off any backyard fireworks to celebrate. This is awful.

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