City Council is poised to raise property taxes nearly 4 percent as part of a package to deliver $53 million in new funding to the Philadelphia School District.

Council approved, in a committee vote Thursday night, the city's $3.5 billion 2011-12 budget after a wild day of negotiations that saw Mayor Nutter's sugary-drinks tax proposal fail for a second consecutive year and the district receive slightly more than half the financial aid officials asked for.

Superintendent Arlene C. Ackerman said Council's action would let the district salvage several priorities, with details to be negotiated with Council over the next week.

The budget is up for a final vote next Thursday.

At one point, Nutter thought he had a majority for his 2-cents-per-ounce tax on sweetened beverages, but that coalition evaporated within 20 minutes.

In its place arose the property-tax proposal, declared dead by Council President Anna C. Verna on Wednesday night and at various times Thursday. The measure would generate $37 million by raising the property tax rate by 3.5 mills, or 3.85 percent, and increase a $2,000 property-tax bill about $77.

Coupled with a $10 million appropriation and $6 million from increasing the price of street parking in Center City and University City, Council's package would send $53 million annually to the district. The city currently raises $600 million for the district through the property tax.

At the end of the long day, which ended after 8:30 p.m., Ackerman said she was "happy, because we started off with zero this morning, and we leave with money." She vowed to work with Council and the mayor to figure out where the funds will go.

"We just know there are four areas that were really important to them," Ackerman said. Those include yellow bus transportation, some alternative schools, the reduced-class-size initiative, and early-childhood programs.

Ackerman had asked for $102 million to save those and other priorities such as arts, music, school nurses, and counselor positions.

A combination of expiring federal stimulus dollars and Gov. Corbett's cuts to school funding statewide helped create a $629 million gap in the School District's 2011-12 budget.

The School Reform Commission approved a budget in May, making cuts including more than 3,400 layoffs and elimination of many programs.

"We will continue to work with them to restore as many of those cuts as possible," Ackerman said. "Maybe not at the same level that we wanted, but some of them."

Councilwoman Blondell Reynolds Brown, a leading proponent of higher school funding, said she feared arts and music programs were "on the cutting-room floor." Brown voted for the bill.

Nutter declared the deal a victory.

"It's very, very clear that our city did take a stand for education today," he said.

Councilwoman Maria Quiñones Sánchez said she did not want to hear anyone say Council shortchanged schools. "We should all be happy. This was a win for children, and I'm not going to let anyone couch it differently because it was not the win they wanted," said Sánchez, who voted for the measure.

The property-tax bill passed out of committee on an 11-6 vote.

In addition to Brown and Sánchez, voting in favor of the plan were Darrell L. Clarke, W. Wilson Goode Jr., Bill Green, William K. Greenlee, Curtis Jones Jr., Jack Kelly, James F. Kenney, Donna Reed Miller, and Marian B. Tasco.

Against were Jannie L. Blackwell, Frank DiCicco, Joan Krajewski, Brian O'Neill, Frank Rizzo, and Verna.

Over the course of the day, Council members became convinced - with the help of representatives of and lobbyists for the beverage industry, and Teamsters who deliver its product - that the property tax would not be vulnerable to the kinds of legal challenge that the beverage industry promised.

Nutter's proposed tax on soda would have doubled the price of a two-liter bottle. He hoped to raise up to $80 million annually for schools from the soda tax.

In 2010, the measure was touted as a way to cut consumption of sweetened drinks and combat the city's obesity epidemic, particularly among children. This year, Nutter said the proposal was all about the money for schools.

"We're grateful to Council for doing the right thing," said Danny Grace, secretary-treasurer of Teamsters Local 830. "It was about keeping family-sustaining jobs within the city."

After Council voted, Nutter said he made calls to Harrisburg to let some key players, including Vincent Hughes (D., Phila.), the state Senate Minority Appropriations chairman, know what had happened.

Nutter had said that Council would have to offer some help to the district if the city had any hope that a skeptical, Republican-led state legislature would restore any funding.

"Sen. Hughes was very excited and said this will help send the right signal to Harrisburg," Nutter said.

Goode said district officials had asked the city to simply increase the district's share of the existing property-tax pie just two days before the hearing.

That request was about equal to what Council ended up voting for on Wednesday, he said.

"So we actually gave what they requested," he said.

The afternoon and evening of negotiations followed testimony in the morning, when Council chambers were packed with beverage workers protesting the soda-tax proposal, students and parents urging politicians to focus on education, and others who just wanted their voices heard.

Children chanted and sang in the fourth-floor hallway outside the three-hour hearing. Nearly two dozen witnesses testified.

Contact staff writer Jeff Shields at 215-854-4565 or jshields@phillynews.com.
Inquirer staff writer Alia Conley contributed to this article.