On March 5, 2015, during a budget presentation to Philadelphia City Council, Mayor Nutter proposed a 9.34 percent property tax increase to help out the Philadelphia School District.
City Council wasn’t so quick to jump on the bandwagon.
The warm, fuzzy thought would have been that council members didn’t want to continue to tax the people of this city; that they felt bad about constantly raising taxes.
The reality is that they weren’t going to engage in any public discussion regarding tax increases prior to the May Primary election when it could hurt several council members who were at risk of losing their seat such as Council-At-Large members David Oh, Dennis O’Brien, Blondell Reynolds Brown, William Greenlee, and W. Wilson Goode Jr.
There were hotly contested district seats at risk as well: the 2 District (Kenyatta Johnson v. Ori Feibush) and the 7 District (Maria Quinones Sanchez v. Manny Morales).
There was also council’s added benefit of continuing their petty and vindictive campaign against Michael Nutter that they initiated two years after he took office.
It was during this time that Mayor Nutter attempted to get rid of the DROP (Deferred Retirement Option Plan) program because it was going to increase pension costs by $258 million within 10 years.
The plan was introduced in 1999 by then-Mayor Ed Rendell. Between 1999 and 2010 the city has paid out nearly $673 million to 6,921 retirees.
If the program was not eliminated, it would eventually drain the pension fund and force taxpayers to pay $22 million dollars a year to fund the program.
The actual program, at least in the beginning, wasn’t a bad idea. What made it bad and a possible financial disaster for the city is that elected officials took advantage of it by using a loophole that they created and have caused the pension fund to practically become depleted to the point where it was only operating at 45% by 2010.
City Council was not happy. They liked the program and had profited from it by letting council members retire, collect a nice fat check and come back a day later.
So they pushed back and got the unions involved. Eventually, council decided to amend the program by reducing interest rates from four percent to two percent and delayed the qualification period by two years.
Voters were not impressed and, in one of the few times in voting history, they let it be known what will happen to council members who are enrolled in DROP: they will be dropped out of office.
It was at this point that council members decided that Nutter was anti-City Council and in the last five years they have made his job impossible to the point where he couldn’t even get a member to sponsor one of his bills in council chambers.
This latest round of tax increases was no different. Council members weren’t going to play ball with Nutter even at the expense of Philadelphia school children. There would be no discussions conducted about the 9.23% increase at all.
It was actually City Council President Darrell Clarke who decided that no discussions or decisions would be made regarding the proposal until after the May primary and that’s when he scheduled the hearings.
Clarke always needing to one-up Nutter came up with his own tax plan: a 4.5% property-tax increase, an increase in the Use and Occupancy tax on businesses and an increase in taxes for off-street parking (parking lots and garages) and on June 19 City Council approved the package to help out the district.
Philadelphia School District Superintendent William Hite had asked the city for $103 million and Nutter’s tax increase would have given them that. In fact, every cent of the increase would have gone to the school district.
Clarke’s plan will raise only $70 million, but the school district won’t see $70 million. They’ll only get $50 million. The remaining amount will be placed in City Council’s budget and basically used as leverage to get what they want which is more transparency; to see exactly where the money is going.
Whether or not the school district will see the rest of that money is anyone’s guess because City Council has a reputation of never being satisfied.
It’s also sort of like calling the kettle black. City Council wants more transparency regarding the district’s spending, but they themselves aren’t transparent to taxpayers in regards to their budget or spending.
City Council receives an $18 million dollar budget per year. Each council member gets an operating budget of over $1 million out of that money. Taxpayers know that council members also get city cars to use as well as cell phones and travel expenses, all at the city’s expense which is actually the taxpayer’s expense. Other than that, taxpayers do not know how that money is spent or where it’s spent.
They do know that regardless of the economic climate, the council’s budget is never cut.
All of this is just more of the city’s officials unwilling to cooperate with each other because when all else fails, they’ll just raise taxes.
For Philadelphia taxpayers, there really isn’t an upside to living in this city.
Every year, for a regular family that makes at least $50,000 (the median income is actually $37, 192), it becomes harder and harder to keep a roof over their heads, to take care of their families; to just survive. Forget about saving up any money because most people in this city can just barely afford living day-to-day.
If you earn more than $25,000 per year but less than $50,000 per year, 18% of your hard-earned money is taken out by taxes and now with these new increases expect that number to go up.
Since Mayor Nutter took office, taxes have increased four times (counting the newest tax increases that City Council voted on and the mayor signed): in 2009 a 2% sales increase, a 10% property tax increase in 2010 and another one in 2011 for 3.9%. Let’s also not forget about that pesky little cigarette tax which is hurting small business owners as they watch their customers venture out to the suburbs and Delaware to avoid paying it.
With Clarke’s tax increase bill signed, these same business owners who have lost revenue from the cigarette tax will now have to pay more due to the Use and Occupancy tax increase.
Recently city politicians and school officials rejoiced over the fact that the cigarette tax netted them over $50 million, but if people were still buying their smokes in Philadelphia that number would be over $86 million. It just wasn’t the $2 tax that caused smokers to revolt it was the 2% sales increase plus the $2 tax.
These same politicians also admit that the number will continue to shrink and after five years the state may do away with the tax altogether.
Still, the city will find some way to keep the price up because that’s what they do; they’ll take every opportunity available to them to siphon as much as they can out of the hands of taxpayers.
Between the property tax hikes; the over-all high cost of living that council members are passing off to their working low and middle class taxpayers in order to make room for the rich; sales tax increases; and their refusal to collect what is owed to them by delinquent business owners as well as property owners, it gets much worse than that.
The city officials like to proudly boast of events in the city such as Jay-Z’s Made in America. This yearly concert venue rakes in over $5 million and not one cent goes to the city except through vendors, parking, hotel stays and the venue does pay the average cost of event-related services (police and sanitation).
All the revenue that city does get from this event is passed on to the taxpayers regardless of whether or not they attend the event.
Jay-Z made millions and the city made nothing.
They also like to give tax breaks in the millions of dollars to outrageously rich developers, but offer no such tax breaks to the very residents who keep this city afloat through paying of taxes.
In 2013 City Council approved $33 million in tax breaks to developers Brook Lenfest and Jeffrey Cohen to build a hotel at 15 and Chestnut Streets in Philadelphia. Another hotel, especially in that area, wasn’t a dire emergency. There are already 30 hotels located in the downtown corridor.
In June of 2015 they approved $55 million in tax breaks to the developers who are making over the Gallery Mall at Market East. This makeover is designed to attract the rich and/or the young professionals to spend their credit card balances there.
No word has been given if the city plans on giving these people a tax break just for shopping at what will be called the Fashion Outlets of Philadelphia at Market East.
Universities and colleges in Philly pay no taxes as well, but always seem to be able to increase tuition rates.
These institutions of higher learning also don’t have a problem buying run-down properties, throwing poor people out on their impoverished hindquarters so they can build new structures for their over-privileged student body and millionaire administrators.
If the mayor and members of council felt any disgrace about the burdens they put on the residents of Philly that moment should have come in 2014 when, despite the fact that SEPTA owed them $22 million, they agreed to erase that debt.
That money could have gone towards a lot of things like funding the pension plan for a year after the DROP program sucked it dry, but instead it went poofies into thin air.
It wasn’t enough for the agency that they are tax-exempt, but they were delinquent on taxes generated from rent they collected from commercial buildings.
The tax exempt status is given to them because they are non-profit, but the Supreme Court ruled in 2003 that they have to pay taxes on these properties because it’s generating income; it’s generating profit.
Despite that ruling, SEPTA never paid a dime of that money despite having an operating budget of over $1.327 billion.
On July 1, 2014 a new 30 year contract between SEPTA and the city went into effect. In that contract it was agreed to not only eliminate the $22 million, but also any future taxes that might be owed.
As if that wasn’t bad enough, besides the usual taxation such as state, federal and sales tax, in Philly you also have to pay cigarette and alcohol taxes; City of Philadelphia income tax (regardless if you work in or out of the city); City of Philadelphia school, property and transfer taxes (if you decide to sell your shack there will be a four percent realty transfer tax); a City of Philadelphia dog license for Fido ($16-$40); a $300 business license fee if you blog; residential parking fees per car per household a month; any parking tickets you may accrue (and you will); PECO (the electric company) tariffs (taxes) which includes: generation, transmission and distribution and state tax adjustment; a 5% amusement and sporting event tax; hotel tax; car rental tax; taxes on your monthly cable bill which includes: a Regulatory Recovery Fee, Universal Connectivity Charge, State and Local 911 Tax, Federal Excise Tax, State and Local Sales Tax, Gross Receipts Taxes, State and Local Utility Taxes, State Communications Services Tax, as well as Local Communications Services Tax.
The beautiful thing about Comcast is that they don’t pay taxes so you can. And who said chivalry is dead?
If you own a business you can enjoy being taxed: income and receipts tax, an outdoor advertising tax, a valet tax; a mechanical amusements tax (for vending machines); a net profits tax and a use and occupancy tax. Plus your use and occupancy tax is getting ready to be increased.
If you want to reserve a picnic table or spot in a city park you have to pay for a permit.
There’s also a tax on gas. An extra $0.70. Per gallon.
It just goes to show you that this city’s politicians will find a way to tax everything. They may even be meeting to figure out how they can tax the dude that sells you pot, going after the heroin and crack dealers as well as the guy at Broad and Lehigh who sells loosies.
Mayor Nutter’s time is coming to an end and it’s a very good possibility (barring an apocalypse) that former Councilman Jim Kenney will become mayor. Just don’t delude yourself into thinking that things will get any better in this city.