Council set to raise $70M for schools via tax hikes

City Council set the stage Wednesday for a wave of tax increases designed to produce $70 million for the cash-strapped Philadelphia School District.

But the plan still falls far short of the district's $103 million funding request, and it appears to come with strings attached.

Council plans to hold $25 million of the projected $70 million in its own budget - because it isn't keen on the district's plan to possibly outsource the hiring of substitute teachers and nurses, a move that has angered unionized teachers and their political allies.

That $25 million would have to be sent to the district separately. Jane Roh, spokeswoman for Council President Darrell L. Clarke, called the cash hold a way to "prolong the conversation" between school officials and Council.

"It's pretty ironic to ask City Council for additional funding just so you can lay off a bunch of personnel," Roh said.

District officials said they need the money to avoid layoffs, and to fund the hiring of 1,200 new employees. Superintendent William R. Hite Jr. said that he hopes the money will eventually come to the district, but that he worries what conditions Council may place on it.

"I have no idea the mechanism that moves that $25 million from the City Council's budget to the schools," Hite said.

One thing is clear: The funding package advanced Wednesday would hit a huge swath of Philadelphia's taxpayers, from those who own property to businesses that rent office space in the city - and anyone who pays to park in garages or lots.

The plan is designed to provide the district $50 million from a 4.5 percent property-tax increase, $10 million from an increase to the Use and Occupancy tax on businesses, and $10 million from a hike to the tax on off-street parking.

It is $33 million shy of the $103 million in new revenue Hite requested from the city. The district - which without new funds faces an $85 million deficit in its next annual budget - is also seeking $206 million from the state.

Mayor Nutter proposed meeting the schools' request with a 9.34 percent property tax increase - a plan received unfavorably in Council.

Council's alternative materialized after weeks of wrangling that continued up until Wednesday's hearing. That session took place in a Council chamber teeming with school officials and members of the business community who have pushed back on some tax measures.

On Council members' desks, advocacy groups had placed art and music supplies - brushes, paint palettes, tambourines - to signify programs decimated by school budget cuts, as well as a can of soda to encourage Council to instead consider a tax on sugary drinks. (That twice-failed measure was briefly floated, then dismissed, this year.)

Clarke called the overall funding proposal a "balanced plan."

"Some would say we're spreading the pain," he said. "But the simple reality is that we don't think it's fair to only go back to the taxpayers as it relates to real estate."

He said he intends for the full $70 million in new revenue to go to the district. His attempts to hold some of it in Council's coffers a bit longer comes amid tension between the legislative body and school officials.

In budget hearings, members of Council have expressed skepticism over how the district spends its money. On Thursday, Clarke plans to introduce a resolution urging Nutter to create a city board to oversee the district's finances.

Also on the table as a potential revenue stream for the schools is the sale of city tax liens. Clarke has said such a sale could bring in at least $30 million - revenue his office counted Wednesday when it said in a news release that Council was on track to provide $100 million for the district.

But only the Nutter administration has the ability to hold a lien sale. The administration plans to sell 1,400 liens this month, but officials have said they do not know how much that will bring in.

Clarke - who has sparred with Nutter over any number of the mayor's initiatives - has introduced legislation his office said will expedite the sale process.

The proposed tax increases that Clarke wants still face a vote by the full Council next week. But because the bills were supported in a voice vote by a majority of Council members at Wednesday's committee hearing, they are likely to stick.

Mark McDonald, Nutter's spokesman, said the district now must see how much funding Harrisburg provides.

He called the $70 million "absolutely necessary" revenue, then added: "But it's also clearly not enough."

215-854-2730@TriciaNadolny