Nutter proposes temporary property tax hike

Mayor Nutter yesterday made his case for a substantial but temporary hike in the city's property tax, saying the failure to do so would trigger deep service cuts and hundreds of layoffs in two critical departments: police and fire.

Alternatively, increasing the tax would ensure no layoffs in the departments and not a single fire company would close, said Nutter, who was flanked at a City Hall news conference by more than two dozen uniformed officers and firefighters.

"We've heard the public," he said, referring to the pleas of residents at neighborhood budget forums to leave the police and firefighters relatively untouched.

"I refuse to do anything that halts our march toward a safer city," the mayor said.

Linking an unpopular tax hike to the future of the city's most popular workers reflects a well-thought-out strategy by the administration as it looks to City Council for approval in the weeks ahead.

On Thursday, Nutter is scheduled to unveil his 2010 budget and five-year spending plan, which will show how he proposes to close a deficit that has ballooned to well over $1 billion.

Although he has hinted for weeks that he would likely call for higher property taxes, yesterday was the first time he officially made the pitch and outlined the details.

Nutter said he will ask City Council to increase the property tax by 16 mills, or about 19 percent over the 2009 rate. If Council approves, the rate would decrease in 2011, to 14.5 percent over the the 2009 rate.

The mayor billed the property-tax increases as an antidote to a "temporary financial emergency," and he stressed that the legislation authorizing the levies would include provisions rolling the tax hike back in 2012.

Even if it lasted only two years, the property-tax increase would cost most city homeowners hundreds of dollars. Property owners with homes assessed at $17,000, for instance, would pay $20 a month extra in 2010 and $16 more a month in 2011 - $432 over the two-year span of the increase.

Nutter cited his own home, assessed at $33,000, as an example: He would pay $43 a month more in 2010 and $33 a month more in 2011 - $912 over two years.

Although the School District of Philadelphia currently gets 60 percent of all local property-tax revenues, with the rest going to City Hall, the schools will not share any of the proposed increase, Nutter said. If the tax hikes are approved, the split in 2010 will be close to 50-50.

A complication is the city's long-delayed plan to change its assessment methodology, which administration officials acknowledge is unfair and inaccurate. That switch, which the mayor said the city would make next year, would lead to dramatically different assessments on hundreds of thousands of properties. The transition is likely to be an enormous political challenge on its own. Pairing it with tax hikes will not help.

Nutter does not have appealing revenue options. Although he declined to address it yesterday, budget documents leaked last week confirmed that the mayor will also seek a temporary three-year increase of the sales tax, from 7 percent to 8 percent. Getting that, though, will require approval from the state legislature.

State approval is not needed to raise the wage tax or the business-privilege tax, but Nutter is dead-set against increasing either levy.

"I believe it would severely damage our ability to save and create jobs," said Nutter, who has fought to lower those taxes throughout his career.

Although he vowed no police and fire layoffs yesterday, the mayor made no similar pledge regarding the city's two other unions: District Council 33 of the American Federation of State, County, and Municipal Employees, which represents 9,400 blue-collar workers, and AFSCME District Council 47, with 3,400 white-collar workers.

It is "certainly possible," Nutter said, that spending cuts would necessitate layoffs elsewhere.

"If his intention is to upset the union, he just did it," said Herman J. "Pete" Matthews Jr., president of DC33, the city's largest union. "If he believes he is going to balance this off the backs of city workers, you can forget that."

The Police and Fire Departments, however, would not be immune from budgetary pain. The mayor said he will seek a $12 million cut next year in police and fire spending in overtime, fleet reductions, and other expenses.

"As I see it, reducing the number of police officers and firefighters in this city would be . . . taking away from the progress we so diligently moved to make," Nutter said.

The mayor's proposals are almost sure to face resistance.

"I don't agree with the premise that we have no choice but to raise the property tax," City Councilman Bill Green said.

Green argued that a temporary wage-tax increase should be on the table. Though agreeing that the levy discourages job growth, he contended it would distribute the burden more evenly by directly taxing more people, including commuters.

Councilman Curtis Jones Jr., who joined Green at yesterday's news conference, was thankful for what he viewed as good news.

"For the first time," Jones said, "we're not talking about closing libraries."