Philly lawmakers reject Nutter tax-collection proposals

Just about everyone agrees the city of Philadelphia does an inadequate job of collecting taxes. But a couple of measures Mayor Michael Nutter is seeking in Harrisburg to allow the city to get what it’s owed are going nowhere, due in part to opposition from the city’s own state lawmakers.

 

Part of Nutter’s plan to head off financial Armageddon is to collect at least $28 million in new tax revenue for the schools in the coming fiscal years.

To do that, the mayor wants the authority to attach the bank accounts and garnish wages of tax delinquents, a couple of powers that the state currently has and the city lacks.

If state lawmakers enact the right legislation, the city can go after working tax delinquents by garnishing up to 10 percent of their wages, provided they go to court and get a tax lien. Employers would collect the dough and could charge a 2 percent administrative fee.

If the city has a delinquent’s Social Security number, it could go after his or her bank accounts and get what’s owed. City Finance Director Rob Dubow told me that when the state of Wisconsin began using those tools in 2011, they were good for $25 million in new revenue.

But there’s a problem.

Though state Sen. Mike Stack, D-Philadelphia, championed these measures at a news conference this week, the Nutter administration presented the proposals to Philadelphia’s own legislators a few months back. State Rep. Cherelle Parker, D-Philadelphia, who chairs the city house delegation, told me she and her colleagues understood this was a priority for the mayor.

“But we in the delegation were emphatic about noting that we did not support the city having the authority to garnish wages and access the bank accounts of those who are delinquent in their taxes,” Parker said.

Why not?

Parker noted that times are hard, and unemployment, especially in Philadelphia’s minority communities, is high. She wouldn’t quite say it’s wrong to seize the income of tax delinquents, but she said it’s an expansion of the city’s power over its citizens.

“I’m not going to say that this is unfair, but, at this juncture, I think it is unnecessary for the city to have that authority until we see what works,” Parker said.

By “what works,” Parker was referring in part to another administration proposal she supports, which is progressing in Harrisburg. That would give the city the authority to place liens on properties outside Philadelphia owned by Philadelphia tax delinquents — in effect letting the city go after absentee property owners where they live.

Parker said she wants to see what that will yield before the city starts reaching into bank accounts and paychecks.

The Philadelphia delegation’s reluctance to back the mayor on tapping wages and bank accounts will be a serious obstacle, according to Erik Arneson, policy and communications director for the state Senate Republican leadership.

In cases where the delegation of a region isn’t united behind one of its legislative initiatives, it is “very unlikely, not necessarily impossible, but extremely difficult to get such a legislative package passed,” Arneson said.

Time is running out

Arneson’s warning is not news to anyone who knows Harrisburg. I asked Dubow how the administration could get its collection authority under such circumstances, and he stayed calm, as he always does. He said he’s used to problems.

“We’ve had big legislative challenges before,” Dubow said, “and we’ve kind of managed to succeed in getting some things we need, and we’re hoping we’ll be able to do that this time too.”

When I asked Parker what she and the delegation thought of Nutter’s proposed cigarette and liquor taxes, which also require legislation in Harrisburg, she was noncommittal.

She did say the delegation is committed to working collaboratively to get the funding the schools need.

She and the other players in this drama have about a month to figure out how do that.