PHILADELPHIA (KYW Newsradio) — Mayor Cherelle Parker presented a $6.7 billion dollar budget proposal to city council Thursday, seeking cuts in business taxes and a major new investment in housing.
“Big opportunities warrant big changes in the status quo,” the mayor said during a 90-minute address amid the annual fanfare as officials pack council chambers to hear what the mayor has in mind for the coming fiscal year.
Her message was upbeat despite the threat of federal funding cuts looming over future planning.
Parker laid out a plan to gradually cut the Business Income and Receipts Tax (BIRT) so that by 2039, the gross receipts portion of the tax would be eliminated and the net income portion of the tax would be reduced by more than half, from the current 5.81% to 2.8%.
She fashioned it as a “tax investment.” She also proposed reducing the wage tax by .01% a year so that by 2030, residents will pay 3.7% and non-residents 3.39%. Another tax on the chopping block is the construction impact tax, which she’ll seek to repeal in order to spur housing construction.
“I know we’re going to have some naysayers,” she said, “but this is what we can afford and I shall not be moved on this delicate balance of enacting business tax reform while protecting fiscal stability as a city. This proposal will spur businesses to grow and new ones to locate here, allowing our residents more and better opportunities to get good-paying jobs.”
The mayor also proposed some tax and fee increases, including a $3 increase in the document recording fee and a .3% increase in the real estate transfer tax. Both would support her housing plan. A proposed $1 increase in hourly parking meter rates in great Center City would generate money for both the city and school district.
The budget also calls for a .5% shift in the percentage of the property tax going to the school district, beginning in 2030, to support raises for teachers.
And while the BIRT will be lowered, the mayor said the City would also have to sunset exemptions in it, and also in the Use and Occupancy tax, which used to provide a break for small businesses. Courts have ruled the exemptions violate the state law requiring uniformity in taxes.
“These $212 million in tax reform investments are historic and unprecedented and I’m proud to stand behind them and I hope you are too,” she told council.
Council members were generally receptive to the budget but some were, indeed, skeptical about cutting taxes.
“How is the city going to balance proposed revenue cuts at this time as we face down pending federal funding cuts that will lead to a loss of services?” asked council member Rue Landau in an emailed statement.
Mayor Parker told KYW Newsradio that federal funding uncertainties are precisely why she proposed the tax cuts.
“Philadelphia has to be prepared to take care of itself and if we want to generate more revenue that comes from us, we can’t do that without growing the economic pie,” she said in a one-on-one interview.
The budget also includes a $95 million reserve fund to protect against the loss of federal grants. Officials say the Office of Sustainability has already lost some federal funding.
New Investments
On the spending side of the budget, the mayor proposed $3.77 billion in new investments over the next five years to expand her vision of making Philadelphia the safest, cleanest and greenest big city in the nation with access to economic opportunity for all.
They include:
--$550 million reserve for new contracts with city worker unions.
--$216 million for the “wellness ecosystem,” which includes another $100 million in capital spending and staffing for the newly-opened Riverview recovery house that serves people leaving addiction treatment
--$67 million for a new forensics lab which the mayor revealed would be housed at 4101 Market St.
--$400,000 for police e-bikes
--$30 million a year for the Jumpstart Business Program which provides capital for small start-ups
--$ 5 million next year and $30 million through FY31 for Vision Zero, the effort to end traffic fatalities in the city. The mayor was criticized for cutting Vision Zero funding last year though she said she simply moved some of it to the Streets Department.
--$4.6 million for the Animal Care and Control Team
--$100 million for the city’s 2026 celebration (some of which was already transferred in this year’s budget).
--$10 million for workforce development, including the City College for Municipal Employment
The mayor also proposes new spending to expand the twice weekly trash collection pilot to North Philadelphia; add 15 more schools to the 25 offering Extended day, Extended Year programs; allow the new “wellness court” to operate five days a week; and to upgrading technology.
The largest new investment, though, will be focused on fulfilling her pledge of 30,000 units of new or renovated housing, aimed at those making 30-60% of the Area Median Income.
Mayor Parker told council she’ll be proposing $800 million in bonds to finance the program, which she’s dubbed H.O.M.E. (Housing Opportunities Made Easy). She said she’d offer more details about funding the program at a briefing on March 24.
“This is going to be a historic, unprecedented investment for Philadelphians,” she said.
Council Reactions
Council members were generally positive about the mayor’s spending plan.
“I’m excited about the commitment to affordable luxury housing,” Curtis Jones said.
Jaime Gauthier, an affordable housing champion, also approved of the direction the mayor is taking.
“We’re talking about the development of new units, we’re talking about preservation, we’re talking about streamlining processes,” she said. “It will take that kind of multi-layered effort to get to where we want to be.”
Council president Kenyatta Johnson was enthusiastic about the tax cuts, which were in keeping with recommendations from the Tax Reform Commission he convened last year.
“This was a thoughtful process,” he said. “If we’re going to address the issue of poverty, we need jobs.”
Council, though, likes to put its own stamp on the budget. There will be months of public hearings on the spending plan before it goes to a final vote in June.