Philly City Council will reject Mayor Parker’s proposed taxes on Uber and Airbnb as it moves to advance $7.1 billion city budget

Philadelphia Mayor Cherelle L. Parker picked a fight with big tech companies.

In the end, the tech companies won.

City Council on Thursday morning gave preliminary approval to a more than $7.1 billion budget for the fiscal year that begins July 1. The plan does not include the mayor’s tax proposals meant to squeeze revenue out of gig economy companies like Lyft, Uber, Airbnb, and DoorDash.

To plug the School District of Philadelphia’s budget shortfall — which Parker hoped to help fund with a controversial $1-per-ride tax on rideshare services — Council instead amended the city budget to this year allocate an additional $48 million to the district. Those one-time dollars are coming from a grab bag of extra savings from a variety of departments, including $10 million from the department of commerce’s contracts with outside vendors and a $9 million savings in debt service.

Lawmakers also rejected Parker’s plan to increase funding for pothole repairs by imposing a 25-cent-per-order tax on retail delivery services like GoPuff and Amazon, and they killed her plan to increase the city hotel tax and a tax on short-term rentals like Airbnb and Vrbo to fund homeless prevention services.

Council members did agree to pass one tax change proposed by Parker: applying the use-and-occupancy tax to cell phone towers, a move that is expected to generate about $2.4 million annually in additional revenue for the school district.

The Committee of the Whole, which includes all 17 members and considers budget legislations, approved Council’s version of the taxing and spending measures in a series of unanimous voice votes Thursday. The budget package is now on schedule to be approved at Council’s June 11 meeting, the final session before lawmakers adjourn for summer recess.

This is Parker’s third city budget since she took office in January 2024, and Council’s near-wholesale rejection of her tax proposals marks her most significant legislative defeat to date.

That came at a cost for some members. Typically, in the final rounds of budget negotiations, the administration agrees to a laundry list of small funding allocations for pet projects proposed by individual Council members and compiled by the Council president, such as extra funding for a specific neighborhood recreation center or favored nonprofit.

Because Council largely rejected Parker’s tax agenda this year, the administration did not agree to any last-minute line items for new funding requests from lawmakers, according two Council sources who spoke on the condition of anonymity because they were not permitted to discuss private negotiations.

Vince Thompson, spokesperson for Johnson, said that the Council president will call for hearings on how the city’s public schools are funded in an effort to find new recurring revenue streams. The district is facing a $300 million structural deficit and has planned to cut more than 300 staff positions.

Parker had for weeks insisted that her proposed $1-per-ride tax on rideshare services was the best way to generate the nearly $50 million that the district needed to stave off its planned staff cuts. Council members and Uber lobbyists floated several alternatives, including increasing the existing 1.4% state tax on rideshare, that the mayor rejected as inadequate funding streams.

However, her plans began to collapse late Tuesday when state lawmakers signaled that there was little appetite in Harrisburg to raise taxes associated with Parker’s budget plan. That doomed the mayor’s proposed increase to the tax on hotels and short-term rentals, which would have required the General Assembly pass and Gov. Josh Shapiro sign authorizing legislation.

» READ MORE: Pa. state lawmakers won’t back Mayor Parker’s tax hikes, jeopardizing key pieces of her budget proposal

The mayor was attempting to win support for the rideshare tax through much of the day and into the night Wednesday, including by personally lobbying Council members. Ryan N. Boyer, the head of the politically powerful Philadelphia Building and Construction Trades Council and a close Parker ally, also lobbied Council members personally, but to no avail.

Ultimately, Council members were convinced — in part by Uber’s aggressive lobbying and public relations campaign — that the rideshare tax was politically unpopular and could exacerbate existing constituent concerns about the high cost of living.

“We thank City Council for rejecting the Mayor’s proposed $1 rideshare tax and standing up for affordability for the hundreds of thousands of Philadelphia riders and drivers who spoke out against it,” Uber spokesperson Jazmin Kay said in a statement. “Philadelphians want affordable transportation options and oppose higher costs on working families.”

Superintendent Tony B. Watlington Sr. has made clear that he’s not attached to the Uber tax or any other funding stream, per se — just the money the Parker administration promised it would produce.

“While I’m agnostic to how we get the dollars, I want to note that we desperately need additional revenue,” the superintendent said at a school board meeting last Thursday.

The school system stands to lose 340 positions as a result of its $300 million budget deficit, caused by the end of federal COVID dollars, rising benefit and charter school costs.

It was not immediately clear how the district will react to Council’s solution for its budget shortfall this year. Given that Council’s plan relies on one-time funding, the district cannot assume it will get the same level of support in future years, meaning the cuts Watlington has warned about may not be off the table.

Regardless of what Council does, Watlington still plans $169 million in central office cuts, including slashing contracts and not filling open positions.

But the school-based cuts have drawn the most attention and outcry, with parents, principals and teachers pointing to on-the-ground impact the cuts would have — larger class sizes, less secure hallways and schoolyards, fewer supports for struggling students in a district already bracing for 17 school closures.

“We know that losing school staff will devastate school communities,” Moira Hull, a first-grade teacher at Hancock Elementary in the Northeast, said at a rally at City Hall on Tuesday.

The district already passed its own $4.6 billion spending plan — it’s required to do so by the end of May — and schools were ordered to build budgets that account for the cuts, which has led to a chaotic teacher-hiring season.

Watlington has said if the city comes up with the $50 million, he will reverse the cuts, though it’s not clear what that would look like, because many teachers and other school staff have already accepted new positions, either in the district or outside the system.

This is a developing story and will be updated.