No takers for tax break to hire ex-cons

Today's tax-filing deadline is expected to come and go without a single company applying for one penny of Mayor Nutter's new $5 million tax-credit program that was designed to encourage the hiring of ex-offenders.

The mayor unveiled the initiative on the campaign trail as an innovative way to drive down Philadelphia's crime rate, and City Council wrote it into law nearly 18 months ago. Under its terms, local companies can receive tax breaks of $10,000 a year - for three years - for each ex-offender working at least six months as of Jan. 1, 2008.

This is the first tax year companies would have been able to receive the credits, which would be counted against the business privilege tax they pay the city.

But no one applied.

Instead, while a handful of businesses expressed interest, they mostly balked at the program's requirements - namely, that they be publicly identified, according to Deputy Mayor for Public Safety Everett Gillison, who oversees the initiative for Nutter.

"They want to participate, but they don't want to be named," he said yesterday.

Gillison nonetheless defended the program.

"I would not say it is a failure. Somebody has got to start somewhere to take this baby by the horn, and we're doing it," he said of the administration's effort to help former inmates adapt to society. He said the greater challenge is to change the culture so no stigma is attached to hiring former prisoners.

City Councilman W. Wilson Goode Jr. also expressed optimism.

For years, he advocated similar programs that offered less in tax credits - $1,000 and $5,000 - but drew little interest from companies.

Then Nutter unveiled his proposal for the $10,000 tax break during the mayoral race in 2007. Goode agreed to sponsor it, and the measure became law nearly two months before Nutter even took office.

"The biggest part of this is having a mayor who is willing to use his political will to push the case for the hiring of ex-offenders," Goode said. Consequently, he added, "I am not disappointed in what has happened so far because now there is some interest . . . which is more than there was in the past."

Currently, two companies are on track to apply for the credit next year. Between them (Gillison would not name them), they've hired about 15 ex-offenders.

To receive the credit, companies must provide $2,000 worth of tuition support and vow to remain in Philadelphia for at least five years. As for the ex-offenders, they must turn over 5 percent of their paychecks to the city.

The administration set aside $5 million for the tax credits, limiting the program to 500 ex-offenders yearly.

"This is one of the best crime-prevention programs we'll ever have," Nutter said last year, touting the program on his 100th day in office.

But the initiative has faced a bevy of problems.

Some companies, in addition to not wanting to be publicly named, object that the program requires them to pay ex-offenders more that their current unionized workforce. For a company to get the tax credit, it must pay ex-offenders 150 percent of the federal minimum hourly wage - which currently adds up to about $10 an hour.

"Employers don't want to set up a situation where their union employees are paid less," Gillison said. He added that the administration planned to introduce legislation before June to address this issue and others.

Ray Jones, a director at Impact Services Corp., which helps find ex-offenders jobs, pointed to another possible impediment, saying some ex-offenders opposed giving up 5 percent of their paychecks. Given that many have restitution and child-support payments on top of rent and food bills, he said, "it just does not make a whole lot of sense for them to buy into it."

Additionally, several provisions of the law creating the program have yet to be carried out. For instance, city contracts or tax abatements of $1 million or more are not supposed to be given unless the recipients identify potential jobs for ex-offenders. "We're still looking at how to get in compliance on this one," Gillison said.

In another example, the Managing Director's Office failed to file a detailed report evaluating the program by Jan. 31, as required. That will happen soon, Gillison said, attributing the delay to the administration's focus on the city's financial troubles.

Still other problems were unforeseen, most notably the national economic collapse.

"There's little doubt in my mind that the economic contraction is the retardant in getting ex-offenders into the workplace," said Mark Schweiker, president of the Greater Philadelphia Chamber of Commerce, which supports the program.

One local construction company that has hired ex-offenders plans to apply for the tax credit next year, but did not this year.

"Unfortunately, I was laying off more than I was hiring," said Bill Reddish, owner of Gensis Group in Roxborough. "Once the economy starts to pick up, we anticipate that we will be aggressive in trying to place ex-offenders on our payroll."

But for now, he said, "I need to keep the best and most skilled guys."