A 4% property tax increase proposed by Philadelphia Mayor Jim Kenney in his revised budget released last month is no longer needed, Kenney wrote in a letter sent Thursday to City Council.
Kenney wrote that the city school district will receive "higher than anticipated funding" in the $25 billion budget approved this week by the Pennsylvania General Assembly.
Kenney proposed raising $49 million in additional property taxes as part of a budget that tries to fill a $650 million revenue shortage due to the coronavirus pandemic. Tax increases on parking and non-resident wages remain on the table, along with 400 city employee layoffs and significant cuts in spending for programs and services.
The General Assembly's budget passed this week only funds some of state government through Nov. 30, but it included an entire year's worth of education spending for local school districts.
"This funding would eliminate the District’s FY21 deficit and obviates the need for an increase in the Real Estate tax rate at this time," Kenney wrote Council. "The School District still faces a substantial deficit during their Five-Year Plan which will require all of us, working with our partners in the General Assembly, to address in the future."
Council is currently holding hearings about Kenney's proposed budget, and showed initial reluctance to raising any taxes amid fallout from the pandemic.
"This is a difficult time for everyone. The ability to stick our hands in the taxpayers' pocket is not the same this time," Council President Darrell Clarke said last week.
Breaking news and the stories that matter to your neighborhood.
Council budget hearings continue into June. The governing body is expected to approve a budget by June 30 for the 2020-2021 fiscal year that starts July 1.
Notable cuts to programs include the shuttering of all city pools this summer, no expansion of Kenney's signature pre-K program, the cancellation of a street sweeping program and a halt to virtually all upgrades of city buildings.
Before the virus, Kenney had been enjoying the fruits of a robust economy. The city’s various revenue streams increased each year and the mayor maxed spending right along with it.
In his first four years, Kenney increased city spending by $1 billion, or 25%. A big chunk of that money went to cover bargained raises for the city’s workforce, and skyrocketing pension and healthcare costs.
His administration set aside $34 million last year for its first deposit into a Rainy Day Fund. In addition, it kept $55 million reserved for any federal funding cuts. Both of those reserves were expected to grow further this coming fiscal year. Instead those funds will now be reduced.
Despite economists predicting a recession this year or next, city officials had a positive outlook for the city’s future. The city’s initial 2021 budget proposal, released in March, predicted the wage tax and the Business Income and Recipients (BIRT) tax to both grow by 4.5%. The sales tax was also predicted to expand by 3.1%.
With that extra money in mind, Kenney planned new projects big and small such as street sweeping, establishing a new opioid response unit, and the redesign of the Municipal Services Building concourse.
Now some of those projects will be scaled back or put on hold.