Council raises taxes, readies $70M for schools - with asterisk

City Council passed a package of tax increases Thursday that will hit a wide swath of the city's taxpayers while taking in an additional $70 million for the Philadelphia School District.

Under the biggest piece of the plan - a 4.5 percent property-tax increase - the owners of a house assessed at $150,000 would see their tax bill go up $72 per year.

Mayor Nutter signed the tax increases, as well as the city's annual operating budget, soon after Council approved them. He said the additional school funding was badly needed but still did not fill the district's deficit, leaving the burden to Harrisburg.

"Council has done its part. I'll sign those bills," Nutter said. "And now we need to see what the second part is, which is the Commonwealth of Pennsylvania."

The actions brought to a close months of uncertainty and at times tense negotiations over how the city would hold up its end of funding for the public schools. Superintendent William R. Hite Jr. had asked for $103 million in new revenue, and Nutter proposed meeting that request with a 9.34 percent real estate tax that was unpopular with Council from the start.

The alternative plan was adopted Thursday in a meeting that lasted nearly four hours as Council approved 90 bills and resolutions before starting its three-month summer recess.

Among the bills was the $3.9 billion operating budget for the fiscal year that starts July 1, a plan that includes more money for the Department of Licenses and Inspections, the Department of Parks and Recreation, and public safety.

The funding plan Council approved is designed to provide the School District with $50 million from the property-tax increase, $10 million from an increase in the Use and Occupancy (U&O) tax on businesses, and $10 million by raising the tax on off-street parking.

The city's parking industry has said the increase will mean higher rates for customers at garages and lots, although it was unclear how much. As for the U&O increase, the Building Owners and Managers Association of Philadelphia estimated that a tenant who rents a 10,000-square-foot space will see the tax bill go up by $1,200 annually.

Each tax needed the support of nine of the Council's 16 members (there is one vacancy) to pass, and the chamber was divided. The property-tax increase, for example, was approved by a 10-5 vote, opposed by members Jannie L. Blackwell, Ed Neilson, Dennis O'Brien, David Oh, and Brian J. O'Neill.

Councilwoman Marian B. Tasco, who is retiring after her current term, was not present. Efforts to reach her for comment were unsuccessful.

In addition to the $70 million the new taxes are expected to bring in, the city could provide additional revenue for the district through a sale of tax liens planned for this month. Council President Darrell L. Clarke has said such sales could raise at least $30 million. Nutter administration officials have said they do not have a revenue estimate.

Hite thanked Council, calling the funding a "substantial commitment to education."

But he noted that $25 million of the $70 million was not guaranteed. It is being allocated to Council's own budget and will have to be transferred to the district after Council reconvenes in September.

Clarke said he continued to have concerns about the district's plan to outsource the hiring of substitute teachers and nurses, and intends to air that issue when Council considers transferring the funds.

"Hopefully during the course of the next couple of months, we'll have a reasonable conversation with all the stakeholders about how we spend that money and what the strategy is on dealing with the structural deficit of the School District," he said.

On all the major issues up for a vote Thursday, there were no surprises. The surprise had come instead on the day before, when Councilman Bobby Henon decided to shelve a bill that would have let the city purchase land being eyed for a new prison.

City officials have said a new prison would replace the 140-year-old House of Correction in Northeast Philadelphia, which is overcrowded and outdated.

The bill had been criticized by some, including Councilman Curtis Jones Jr., who said the city was giving priority to its prisons over its schools. On the Council floor Thursday, Henon said people had conflated "school desks and prison beds."

"I've listened to a member of this body do that, and it needs to stop," said Henon, who introduced the legislation on behalf of the Nutter administration. "It's reckless and it's wrong."

Jones, realizing the words were directed at him, gave a weak smile, then thanked Henon for holding the bill until Council returns in September. He stressed the need to reduce the city's prison population.

"I would encourage humanity for the residents of the House of Corrections. I would insist upon it," Jones said. "But there are many ways to Rome."

Also Thursday:

As Council broke for its summer recess, Clarke said the body had passed "substantive and significant legislation" during the session. When asked about several key initiatives of the administration that Council had blunted - mainly the larger property-tax increase to fund schools and the prison land purchase - Clarke demurred. "If you look at the record, more often than not we came to a reasonable conclusion on any proposal or legislation," he said.

Neilson confirmed he would resign his Council seat Friday so he could run in an Aug. 11 special election to fill a vacant state House seat.

Council approved a bill authorizing the city to buy a 27-acre property known as International Plaza in Tinicum Township, Delaware County, as part of a long-range expansion of Philadelphia International Airport.

Council passed a bill that sets tax regulations on nightly rentals in private homes, such as those offered by the online marketplace Airbnb. The bill takes effect July 1.

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Each tax increase needed the votes of nine Council members for passage.

Property Tax

. . . Aye: Cindy Bass, Darrell L. Clarke, Wilson Goode Jr., William Greenlee, Bobby Henon, Kenyatta Johnson, Curtis Jones Jr., Maria Quiñones Sánchez, Blondell Reynolds Brown, and Mark Squilla.

. . . No: Jannie L. Blackwell, Ed Neilson, Dennis O'Brien, David Oh, and Brian J. O'Neill.

Use-and-Occupancy Tax

. . . Aye: Bass, Blackwell, Clarke, Goode, Greenlee, Henon, Johnson, Jones, Neilson, Quiñones Sánchez, and Reynolds Brown.

No: O'Brien, Oh, O'Neill, and Squilla.

Parking Tax

. . . Aye: Bass, Blackwell, Clarke, Goode, Greenlee, Henon, Jones, Neilson, O'Brien, O'Neill, and Reynolds Brown

No: Johnson, Oh, Quiñones Sánchez, and Squilla.

Marian B. Tasco, who is retiring after her current term, was not present for the votes.

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