A six-year effort to expand the toolbox that Philadelphia has to promote economic growth is about to die a stealth death in Harrisburg. The least we can do is hold a wake.
The city's high wage and business taxes have often been blamed for a myriad of Philadelphia's problems — slow economic expansion, sluggish job growth, and poverty. Paul Levy, president of the Center City District, is just one of many vocal supporters of reducing the wage and business tax burden. According to the CCD, between 2010 and 2016, Philadelphia's economy was the slowest growing among the 26 largest cities. The Bureau of Labor Statistics points out that Philadelphia has fewer jobs today than it did in 1990.
In 2015, Levy and Gerard Sweeney, president and CEO Brandywine Realty Trust, issued a job growth plan that would allow Philadelphia to reduce wage and business taxes without losing revenue by increasing property taxes on commercial properties The plan, in the making since 2012, had wide support from various unions and civic groups in the city. They joined Levy and Sweeney under the name of the Philadelphia Job Growth Coalition. But, for the plan to move forward, there was one barrier that had to be cleared — the Uniformity Clause in the state constitution.
According to the state constitution, all taxes must be imposed in a uniform manner on their subjects regarded to class. In the case of property taxes, for example, the tax rate must be the same for all classes of property — commercial or residential. If the tax rate is different, it is unconstitutional.
Rep. John Taylor, a Republican from the Northeast, introduced a bill in 2016 to amend the constitution. The amendment would create an exception to the uniformity clause that allows only Philadelphia to impose a commercial property tax rate that is up to 15 percent higher than the residential tax rate — as long as they city reduces wage and business taxes so that it is not getting new revenue.
For a constitutional amendment to pass, both the state House and Senate must pass a bill in two consecutive sessions before it can go in front of voters in a statewide referendum. Taylor's bill was passed by the 2015-16 Assembly, but to amend the constitution, it needs to be passed by the 2017-18 Assembly.
That means the House has to pass the bill this week in the last few days of the session. If they don't, the entire process has to start over again from scratch … after a delay of three more years.
Don't bet money this bill is going anywhere. Which is a shame, since altering the Uniformity Clause would give Philadelphia much more freedom in solving problems or adjusting its revenue streams. The city and the state should at least have a chance to debate it fully — even if the city opted not to use it.
For now, it appears the opportunity has come and gone for another few years. Too bad the state's restrictive tax code can't do the same.