Council votes to raise property taxes 3.85%

In a major reversal, City Council last night opted to raise property taxes for a second year in a row to help bail out the school district, rejecting Mayor Nutter's preferred soda-tax proposal.

In a committee-level vote, Council approved a plan that would raise property taxes for one year by 3.85 percent, providing $37 million directly to the district. It also would dip into the city's surplus fund balance and raise parking- meter fees, bringing the total aid for schools to $53 million.

For weeks, Council members said there was no way they'd do another property-tax increase after raising the tax by 10 percent last year to deal with a city budget hole. But Councilwoman Blondell Reynolds Brown said "all of us knew we had to do something. Soda fell flat. We had nine votes for 60 seconds."

Council members Jannie Blackwell, Frank DiCicco, Joan Krajewski, Brian O'Neill, Frank Rizzo and Anna Verna opposed the budget plan, which is expected to get final passage on Thursday.

The deal will likely be viewed as a political defeat for Nutter, who asked Council to consider either a 2-cents-per-ounce sugary-drinks tax or a 10 percent property-tax hike to help provide the up-to-$100 million requested by Schools Superintendent Arlene Ackerman to stave off painful cuts.

Nutter openly favored the soda tax, which he unsuccessfully tried to get passed in Council last year. Again, he put all his chips on the line, personally petitioning Council members to approve the soda tax. But he was foiled by powerful soda-industry lobbyists and a Council with which he has had strained relationships with many members.

But Nutter said this was not about politics.

"My focus has always been on trying to get additional funding," the mayor said. "We did in fact send up two pieces of legislation, and one of them passed."

Ackerman said the funds would help cover some of the priorities agreed on by the district and Council, including bus service, reduced class sizes, early-childhood education and accelerated schools.

"We came here it was zero, and we're leaving with more than what we had this morning," Ackerman said. "I hope we can work together and fund the priorities that are mutual between the mayor and Council, the district."

Nutter also said he spoke with lawmakers in Harrisburg and was hopeful that the funding provided by Council would spur further action in the state Capitol, where the schools hope to get more dollars.

Reached after a marathon day of closed-door meetings, the funding plan concluded several whirlwind weeks of debate over helping the schools, which face a $629 million funding gap in the fiscal year that starts July 1. Nutter was publicly supportive of Ackerman's plea and asked Council to pass either his soda tax or property-tax proposal to supplement the $815 million in tax revenues and grant funding that the city was already set to provide the district.

But the campaign hit bumpy ground two weeks ago, after Ackerman announced that she was shifting federal funds to cover her most high-profile planned cut - an end to full-day kindergarten. That move spurred heated questions about Ackerman's priorities and credibility and prompted Nutter to seek an agreement between the city and schools that would require more information disclosure.

Nutter has had consistent problems getting Council to agree with him on how to raise revenues. Last year, he tried to get Council to pass a soda tax that he billed as an anti-obesity measure and a way to close a city budget gap. But Council instead chose to pass a 10 percent temporary property-tax hike. Back in 2009, Nutter sought a property-tax hike, but Council instead went with a temporary sales-tax hike.

According to city data, the median city property-tax bill is $1,261 per year. So a 3.85 percent increase next year would raise that bill by $49.