Philadelphia Closes Its Doors

Philadelphia joined a host of other cities and towns – as well as states – across the nation hanging up “closed” signs on government funded institutions. Just months after Chicago ordered non-unionized employees to take unpaid furloughs and Hawaii warned of state employee furloughs, signs on Philadelphia public libraries and recreation centers warned of impending shut downs. The Free Library of Philadelphia, which once held the world’s largest circulation of books, warned:

As a result of the state budget crisis and legislation impasse, the entire Free Library of Philadelphia system is set to close October 2nd.

So, how did it come to this? Shutting down libraries, recreation centers, and other services? These shut downs are on top of other recent shutdowns (including my local firehouse).

Of course, there’s a budget crisis. Not enough revenue coming in. We get it, we’ve heard similar horror stories in other places. The recession has hit state and local coffers hard – not a day goes by practically that you don’t hear the Governors of New Jersey or California warning about budget shortfalls.

But in Philly, we have something worse than revenue shortfalls: the dreaded “legislation impasse.” And here’s how it works…

Philly needed extra revenue. After considering a host of options, Council and the Mayor agreed to a “temporary” (*cough*) increase in the sales tax of 1%. In Pennsylvania, the sales tax rate is currently 6% with a 1% increase in Philadelphia. So if you spend your dollars in Philly (and we certainly hope that you do), you pay 7% sales tax. With the additional increase, Pennsylvania sales tax would remain at 6% but Philadelphia sales tax would increase to 8%. Even with the additional increase, the sales tax would remain below that of other major cities, including Chicago, New York City and Los Angeles.

So, with that in mind, everyone nodded agreeably and the proposal was made to the Commonwealth that the sales tax be increased. Under the Pennsylvania Charter, increases in sales tax must be approved by the state legislature. Philadelphia submitted its proposal and held its breath.

The legislation was approved in the House. The increase would allow Philadelphia to raise its sales tax and temporarily defer pension payments. When it made it to the Senate, the legislation was amended to allow the state to step in and manage “Level 3 distressed municipal pensions.” Level 3 pensions are those funded at less than 50% – in Pennsylvania, currently Pittsburgh fits that bill, coming in at just 31% funded. The Senate also insisted on a pension freeze and reductions in benefits for incoming municipal workers.

And that’s where the sales tax increase got de-railed. The GOP won’t vote yes on the sales tax increase unless the other concessions are included. The Democrats, facing considerable pressure from organized labor, won’t agree to include the cost-cutting provisions. The result? A legislative impasse.

What’s a legislator to do? Here’s a thought: make them separate issues.

The GOP and the Dems both agree on a sales tax increase for Philly. City Council and the Mayor agree on a sales tax increase for Philly. Should be end of story.

But politicians like the idea of leverage. They like the notion that they can hold bills hostage while tacking on new, controversial and generally unrelated measures (that’s why, for example, the credit card reform bill that passed Congress this fall included language to allow concealed weapons in national parks). And so Senate Majority Leader Dominic Pileggi (R – Del) has said that there will be no compromise to split the bill.

Hey, I like Pittsburgh – but what does their distressed pension system have to do with my Philadelphia sales tax? Exactly. Nothing.

So, while legislators in Harrisburg argue about pension plans and benefits for union workers, signs are being tacked up on libraries announcing closures. Trash pick up may be reduced in the City. Letters informing workers that they’ve been let go are going out next week (a good friend has advised that her entire department will be receiving them). The Fire Commissioner will announce six engine and three ladder companies, plus five medic units, which will close. Two health centers are closing. Thanks, Harrisburg.

If you live in Philly, you should be angry. Angry that this has been allowed to happen. And if you live further afield – whether in West Chester or Pittsburgh – or even in Boise, Idaho, you should be concerned that so much of our tax policy has nothing to do with taxes at all: it’s about politics.

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7 thoughts on “Philadelphia Closes Its Doors

  1. Perhaps, they are getting what they really deserve? The Democrats are dependent on the votes of the people that don’t pay taxes, they just receive from the system. The real question, will be will they tax the County completely out of “Business”?

    Raise revenue by lowering taxes on those that pay taxes, you don’t raise revenue by raising taxes on those that pay taxes. You don’t really raise revenue by taxing companies. Corporations don’t pay taxes, they collect taxes. By taxing companies, the taxes are just included in the prices, then those that consume those goods pay the taxes.

    Is it really so bad, they “bite the bullet” by curtailing some of the services provided by the library closing a cple days a week? Is it really so bad, they “bite the bullet” by not delivering spam mail via the USMail 6 days a week?

    Now the damocrats (sic) want to provide even more socialization called the ObamaUnHealthCare. So those that pay taxes can benefit more for those that don’t pay taxes.

  2. Taxgirl said:
    “Hey, I like Pittsburgh – but what does their distressed pension system have to do with my Philadelphia sales tax? Exactly. Nothing.”

    Well, Taxgirl is Wrong. The grievously underfunded pension in Pittsburgh will be taken over by the state at which time it becomes the problem of ALL taxpayers in PA including those in Philadelphia. We have to make up the difference. Well, I’m tired of making up the difference and if the state is going to take over the underfunded pension I want changes in the pension rules so I don’t have to pay so much, and my children don’t have to pay so much, and my grandchildren don’t have to pay so much.

    The Pittsburgh politicians have given away the store and now want us (that would be non-Pittsburghers) to bail them out. We’ve got enough problems of our own to deal with without bailing out profligate politicians and municipal workers.

    No pension reforms in Pittsburgh; no sales tax increase for Philadelphia!!

  3. Because neither one will pass on its own merits. You help me get the Pittsburgh pensions under control and I’ll help you squeeze your own residents for more money even though I think it’s a BAD idea.

    Why should any politician outside Philadelphia risk getting tarnished as a tax raiser by voting for higher taxes in Philadelphia (even though it doesn’t affect their constituents). There’s absolutely nothing in it for them. But there is a benefit for all politicians who profess to be for reduced taxes if they can reduce the burden on ALL PA taxpayers by getting the Pittsburgh monster under control.

  4. But see, that’s exactly where this whole thing falls apart. It DID pass in the House on its own merits. And it likely would have in the Senate (indications were that it had enough support, there was no active opposition). The ONLY reason the sales tax increase is not passing in the Senate now is because the add ons have slowed it – which is exactly my point. If it’s good enough to pass on its own, then pass it. Stop making it a monster bill. This is exactly what’s wrong with Harrisburg and Washington.

    Same thing with stimulus plans, federal estate tax, etc. If you look at these bills when they start – and what they look like at the end – it’s atrocious. Add ons are generally not beneficial to anyone except the politician who had something to gain by the add on in the first place.

  5. My 2 cents is…why should we suffer with no library, health clinics closing, rec centers closing, etc just so politicians don’t have to worry about being ‘tarnished’ by voting for higher taxes in Philadelphia? Don’t we elect them so they make the ‘hard’ decsions? Shouldn’t these decisions be based on what is best for the ‘greater good’? As someone who lives (and spends) in Philadelphia I can’t say I LOVE the idea of a tax increase, but for a few pennies a day to have the libraries open…I’m willing…

  6. If this chart is accurate, then of the $3.9 billion budget:

    24% goes to bloated government employee pensions & benefits
    15% goes to welfare
    14% to police
    9% to city administration
    6% to prisons
    and only 2% to Recreation, Libraries, & Art

    Cut the number of unfair laws sending numerous non-criminals like pot smokers to jail and you could cut the prison budget down to 1% of the budget.

    Most city offices I’ve been in are not models of efficiency or hard work. Cut the administration costs and make the govt employees actually work.

    Police thugs mostly antagonize the citizenry. Cut the number of laws and make the police force “protect and serve” the citizens instead of the overlords and you could cut that 14% down to 7.

    Welfare breeds dependency, so that should definitely be cut.

    Govt employee benefits are usually twice as generous as in the private sector. Since govt pay is equal or greater than the private sector, cut the benefits to something more normal and you have another 12% in savings.

    Personally I don’t see a need for govt funded libraries, but if they can’t find 2% to cut out of this budget, the city officials are a bunch of f’ing idiots.

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