A pair of New Year’s Eve “pocket” vetoes by Mayor Jim Kenney left Philadelphia’s poorest taxpayers and residents with little to celebrate. The mayor declined to sign, thereby allowing to expire, two recently passed City Council bills to raise the annual property tax exemption for homeowners and to provide a wage tax rebate for lower-income individuals who live and/or work in Philly. Kenney’s Dec. 31 letter to Council President Darrell L. Clarke offered general support for these goals but expressed concerns about the timing as well as the fiscal, administrative, and other impacts of the two bills.
In a city where one in four residents, or about 400,000 people, are living in profound poverty, ironing out budgetary and bureaucratic kinks ought to matter far less than expediting assistance to people whose struggles are exacerbated by the high costs the city imposes on pretty much everyone who lives, works, or does business here. Despite what is widely described as a robust national and local economy, the percentage of Philly residents in deep poverty only declined from 25.7% in 2016 to 24.5% in 2018.
The wage tax measure Councilmember Allan Domb sponsored, and the homeowner exemption increase Councilmember Kenyatta Johnson introduced on Clarke’s behalf, went through the customary legislative process — unlike, say, the unilateral pocket veto deployed on the last day of a four-year mayoral term. The legislative process at least provided opportunities for interested parties to ask questions and get answers.
Kenney’s 2019 budget raised the homeowner exemption — the amount of property value that is untaxed — by $10,000 in the 2019 budget and another $5,000 in the 2020 spending plan. Clarke’s office said the vetoed bill would have increased it another $5,000, from $45,000 to $50,000. If the estimated 220,000 eligible homeowners all availed themselves of the exemption it would cost Philadelphia about $15 million annually. Domb, in a Dec. 31 letter to Kenney, said his wage tax bill would have provided an average $800 annual refund for about 60,000 households, or 150,000 residents. The yearly cost would be $25 million, he said.
That combined $40 million is hardly an inconsequential loss to the city treasury. The real estate development boom that for a decade has helped replenish the city’s coffers and brighten its reputation undoubtedly will be impacted in some fashion by the mayor’s signing into law a plan to reduce Philly’s controversial 10-year property tax abatement on new residential construction. Downsizing the abatement program should generate an additional $265 million for the city and the school district — not an inconsequential sum — in the next decade. That’s on top of a city budget that has increased by $1 billion during the first term of Kenney’s administration.