Philly schools lose more money to tax breaks than any district in the country, a new report says

Philadelphia schools lost $112 million in a single year — the most of any school system in the United States — because of the city’s tax abatement and other tax breaks, a new analysis has found.

Good Jobs First, a nonprofit that tracks economic development subsidies, completed the study, which found that public school systems nationwide lost $2.37 billion in 2019 to tax subsidies.

Philadelphia’s $112 million lost dwarfs all other districts for which data were available. It includes about $86 million in costs from real estate tax abatements and $17 million in costs from Keystone Opportunity Zones, areas designated to stimulate economic growth and employment.

Real estate tax abatements and other mechanisms are designed to incentivize businesses but often end up hurting families, particularly those in low-income communities and communities of color, according to the analysis of about 2,500 school systems in 27 states.

“The reality is: There is a price [for tax incentives] and our students are paying it,” Christine Wen, planning and fiscal policy coordinator for Good Jobs First and author of the study, said Tuesday.

A city spokesperson said it was important to weigh the economic benefits of tax incentives.

“Discussions about the value of the abatement are important, but a study is incomplete if it does not include the key point that a substantial portion of the construction that receives an abatement would not happen without the abatement and, as a result, would produce far less revenue,” Mike Dunn, the spokesperson, said in a statement. Dunn pointed to a 2018 city study that found Philadelphia’s abatement program spurred development and generated jobs.

The national study’s authors argue that, generally, abatements are a net loss.

According to the data analyzed, “it is evident that the poor pay more,” the report said. “That is, school districts with the highest rates of poverty (measured by metrics such as the share of students who qualify for free or discounted school lunches) are likely to suffer the highest losses.”

City Councilmember Helen Gym, who joined a Tuesday Good Jobs First panel discussing the report, noted than $112 million would go a long way to building new schools or abating lead and asbestos in Philadelphia’s old buildings, many of which have environmental problems.

Gym has long been critical of the city’s tax abatement program, which she said “concentrates new development in already strong neighborhoods.” She called the notion that tax incentives are the city’s only tool to attract businesses and keep families in Philadelphia “mythology.”

“If you care about Black Lives Matter, if you care about race, if you care about racial justice, you’ve got to care about the impact of corporate tax subsidies on public school systems,” Gym said.

The report recommended changes including capping or fully shielding local taxes set aside for schools from tax abatements, and giving school boards control over tax abatement decisions.

Monica Lewis, a spokesperson for the Philadelphia School District, which has a long-term structural deficit, said the school system is “cognizant that we need to account for the more than $100 million a year which is redirected from the district to cover the economic development decisions of the City.”