There's a budget deal - sort of.
City Council yesterday gave preliminary approval to a $3.9 billion budget with a temporary 9.9 percent property tax boost and new taxes on some tobacco products - but Council didn't act on a soda tax pushed by Mayor Nutter.
Despite days of frantic lobbying behind closed doors, Nutter was unable to win the nine votes he needed to pass a sugar-sweetened beverage tax - most recently discussed at 3/4-cent per ounce.
Nutter has projected the city's deficit at up to $150 million. The plan passed by Council will give the mayor enough money to balance the books. But Nutter said that without soda-tax revenue, the city will not have the needed cushion to get through the year.
"I'm very, very concerned that we do not have sufficient revenues to fully support the budget," said Nutter, who had championed the soda tax to raise money and improve health. "If we can't properly fund the providing of city services, we will have to lay people off."
Nutter said he will attempt to gather support for a soda tax and try again next Thursday. But the prospects of the tax surviving look slim. "We need nine votes," said Councilwoman Marian Tasco. "The mayor has a week to talk to people."
Council voted 10-7 yesterday to give committee-level approval to the property-tax boost, which would last two years and would raise about $88 million annually. The legislation needs final approval next week.
The budget also features:
* $17 million in additional cuts, which the mayor agreed to after Council pressure.
* An increase to the commercial trash fee, which applies to businesses and landlords of multiunit residences without private haulers. It will go from $150 to $300 annually and is expected to raise $7 million a year.
* A tax on some tobacco products. Chewing and pipe tobacco would be taxed at 36 cents per ounce and individual cigars at 3.6 cents per ounce. Those taxes would be levied on retailers as part of their business tax and are expected to generate about $4 million annually.
The budget passed by Council would give the city a surplus fund balance of $42 million in the coming fiscal year, which starts July 1. Finance Director Rob Dubow said that balance would be at about $57 million if a soda tax passed at 3/4-cent per ounce.
Nutter said a smaller fund balance could make it hard to pay vendors, or fund union contracts. Contracts with the city's four unions expired last June and only the Fraternal Order of Police, has a new agreement.
If Nutter had succeeded with a 3/4-cent per ounce soda tax - which would be charged to retailers as part of their businesses taxes - he would have gotten about $29 million annually, and a little over $14 million in the first fiscal year because it would not kick in until January.
Nutter's original budget plan included a $300-per-household trash fee and a soda tax of 2 cents per ounce. Council quickly expressed a preference for a property tax hike over the flat-rate fee.
And the tax on sugary beverages instantly faced massive opposition from the soda industry, local unions and business owners.
A new pitch from the soda lobby was revealed yesterday. Members of the beverage association have considered offering $10 million to the city, via the Pew Charitable Trusts, to fund health and recreation programs, said Edward Hazzouri, a lobbyist for the American Beverage Association.
But mayoral spokesman Doug Oliver said the city was not interested in the proposal and that it would not provide the annual revenues needed.
This year's plan marks a dramatic shift from last year's budget process when Council balked at a proposal from Nutter to increase property taxes. Many said it was unfair to increase the rates when the assessment system was widely agreed to be broken. An Inquirer series chronicled the legacy of political patronage and inaccurate assessments at the Board of Revision of Taxes.
In December, Council passed legislation to abolish the BRT and replace it with two new entities, which will go before voters next week.
Council members this year noted that with a property-tax hike, there would be protections for low-income families and seniors, while others could deduct the amount on their tax returns.