Philadelphia has joined a long list of US cities grappling with budget woes in the midst of falling revenues and increased expenditures. This week, things grew dimmer as Mayor Nutter and City Council failed to work out a compromise to address the deficit.
There is no question that taxes will increase: it’s more a question of how and when.
Mayor Michael Nutter has proposed a three-year sales tax increase from the now current 7% to 8%. He has also suggested a two-year increase in property taxes of about 20%.
City Council wants to delay the increase in property and sales taxes to five years. Council has also indicated that they want the City to consider an additional loan to be paid off with future revenue, a move that Nutter denounced as too speculative.
Councilman Brian O’Neill remained optimistic about the borrowing scheme, noting that two municipal finance firms were already giving an informal okay to loaning the City more money, despite its shaky bond rating. This makes sense, of course, since the last year has proven that the best way to get yourself out of a jam when you’re in debt is to borrow even more… (read that with the proper level of sarcasm, please)
Council had also suggested bumping up the unpopular wage tax. Nutter was quick to reject that plan; the City of Philadelphia has, for years, been working to reduce, not increase, its wage tax. Shortly thereafter, Council declared the wage tax proposal dead with Council President Anna Verna saying, “The wage tax is definitely out. We don’t want to touch the business tax if we can avoid it, so we have very little to go on.” Of course. Cause goodness knows Verna wouldn’t want to appear too fiscally responsible – then she’d have to explain the more than half a million dollars she’ll personally take away from the City’s controversial DROP plan.
But that kind of sums up Philadelphia’s issues in a nutshell. A lot of entitlement, a lot of expenses, and not a whole lot of answers.
When nobody is willing to cut spending, raising taxes and borrowing are all that is left. It probably won’t change until the country is near total bankruptcy. As in Atlas Shrugged, the looters are taking control, raiding the producers, while completely rejecting the obvious repercussions of their ill guided policies. We have had 8 years of “cut taxes and increase spending” by Bush and now we have a president that has basically expanded on the same theme. Cut taxes and increase spending. I think most people would be happy if they would hold taxes where they are and balance the budget. I don’t need any more tax cuts if all they are going to do is borrow and print more money, there by devaluing all the dollars I earn. Inflation will be the real tax increase we will see in the near future and no political party currently has a plan to change that.
My home City is short $19M. They are trying to cut their way to balance.