City Council’s tax-cutting budget deal represents a return to the center in Philly politics

Call it the revenge of the centrists.

After several years of momentum for the left in which many moderate lawmakers feared becoming targeted by progressives, members of City Council’s centrist Democratic majority are once again unafraid to tout priorities such as business tax cuts or boosts to police funding.

The change in the dynamic in City Hall was most evident in the budget deal hashed out by Council and Mayor Jim Kenney’s administration last week. It includes a cut to the net profits portion of the business income and receipts tax to 5.99%, its lowest level since 1988, as well as a boost to the Police Department budget beyond what Kenney had proposed.

» READ MORE: Philly budget deal expands property tax relief and cuts business taxes. But most homeowners will still have tax hikes.

That’s in stark contrast to recent budget cycles, when lawmakers effectively froze police spending in response to the social justice protests following the death of George Floyd, and steered away from proposed tax cuts that benefited corporations that were criticized by progressives.

“In this budget process, members of Council who have a relationship with small businesses, especially those in our commercial corridors, wanted to find a way to help support our small businesses,” said Councilmember Derek Green, who played a central role in the tax-cut negotiations. “The best way to address gun violence and public safety issues is to have a job.”

To be sure, Philly’s political spectrum remains well left of center compared to the nation as a whole, and many in the business community view the budget as a small, but important first step toward their goals. But the fact that the business community can claim a significant victory in next year’s budget marks a notable change for a Council that has recently created several new business taxes, become a national vanguard of worker protection legislation, and adopted far-reaching housing assistance policies during the pandemic.

The budget deal also helped set the tone for next year’s municipal elections, when an open mayoral race and all 17 Council seats will be on the ballot. Several potential candidates positioning themselves to appeal to moderate voters were heavily involved in the negotiations.

“Council has been caught up with some polarizing debates in recent years, so it’s good to see most of them return to focusing on the pocketbook issues,” said John Hawkins, a City Hall lobbyist whose clients include development and other corporate interests. “There’s nothing like a looming election to remind officials that voters are concerned about the base issues that matter.”

» READ MORE: How the pandemic, progressives, and property assessments are fueling a debate over Philly’s taxes

Cooperation among those members during the budget talks was notable for a Council where some in the past have been loathe to support a policy that could be a win for a rival-to-be.

Council members Green, Allan Domb, and Maria Quiñones-Sánchez, for instance, have each worked to reduce or reform the BIRT tax in the past, but they all supported the final package. One strategy that made that possible was allowing freshman Council members Isaiah Thomas and Katherine Gilmore Richardson, who are not viewed as likely mayoral candidates, to formally propose the tax cuts.

“Those egos didn’t get in the way of these budget negotiations,” Thomas said. “There were multiple times where people said, ‘Isaiah, I don’t want to be the one who leads this because I don’t want it to be about me running for mayor.’”

Majority Leader Cherelle Parker, another likely mayoral contender, has championed a “community policing” plan to address the city’s gun violence crisis, and was the driving force behind Council’s increased support for the Police Department in next year’s budget. After Kenney proposed a $23.7 million increase for the department, lawmakers added another $6 million.

The compromise budget plan, which won preliminary approval in a late-night committee vote last week as lawmakers approached a legislative deadline, was approved at Thursday’s Council meeting, and will take effect July 1.

There are several reasons for the shift in the political wind.

New York City Mayor Eric Adams’ 2021 victory over more liberal rivals has emboldened Philly politicians aiming to follow his blueprint in next year’s elections. Additionally, the local progressive movement that flourished under former President Donald Trump’s administration has yet to prove it can maintain its momentum without its chief bogeyman.

But the most direct reason for the way next year’s budget came together is that the city’s business community this year demonstrated levels of political organization and unity that it had been lacking in recent years.

Green cited the strength of a campaign by the city’s chambers of commerce — including the Chamber of Commerce for Greater of Philadelphia and the Diverse Chambers Coalition, such as the African-American Chamber of Commerce, the Greater Philadelphia Hispanic Chamber, and others — as a major reason the business tax cuts became politically feasible.

“One thing that has changed is that the diverse chambers came together collectively, and were making a strong push for businesses, especially Black and brown businesses, in the city of Philadelphia,” he said.

» READ MORE: The 2023 race for Philly mayor is starting soon. Meet the candidates who might run.

The progressive movement, however, is far from dead. Three Council members — Jamie Gauthier, Kendra Brooks, and Helen Gym — consistently vote in line with the priorities of the city’s progressive activist groups, and they cast the lone votes against the business tax cut and a smaller cut to the wage tax.

One way of looking at the reemergence of the center-left majority is to see it as the end of a period in which that trio wielded outsized influence over Council.

Their presence loomed larger than their numbers because of their movement’s electoral success: Gym won more votes than any other Council member in the 2019 Democratic primary, the same election in which Gauthier unseated longtime Councilmember Jannie Blackwell. And that November, Brooks ran as a Working Families Party candidate and won a historic victory for a seat reserved for minority party candidates that had been held by Republicans for 70 years.

Council is expected to see significant turnover due to an unusually high number of members eyeing the mayor’s race, potential retirements, and competitive races that could feature challengers from the left. If progressives make more inroads in next year’s elections, they may once again be in the driver’s seat. And if Gym runs for mayor and wins — in a race that could see several business-friendly candidates competing for voters, while she alone claims the mantle of the left — the politics of City Hall will be fundamentally altered.

“With the first few years of the pandemic, I think that you saw many big business and corporate interests reluctant to push for tax cuts out of fear of seeming insensitive to already dire budget shortfalls,” Brooks said. “We had an opportunity with this budget to deliver a real recovery for working families, and we fell short. By prioritizing the bottom lines of big businesses and the ultra-rich over working people and failing to insulate our public schools from future funding shortages, our city is promoting an inequitable vision of growth.”

Brooks said she looks “forward to seeing how City Council political dynamics shift next year.”

Correction: An earlier version of this story incorrectly described the coalition of chambers of commerce that campaigned to lower taxes.