There are a few facts that everyone can agree on with respect to the Philadelphia School District budget wars:
- The school district is operating at a deficit.
- The school district can’t open its doors without staff.
- Nobody likes to pay taxes.
What everyone can’t agree on, however, are how those facts are going to intersect.
The budget crisis in Philadelphia is nothing new: I’ve been writing about it for years. Despite the dire warnings every year, there has been no real movement to move the discussions forward. Each year, the District screams about the lack of funding, and a band-aid gets slapped on, the school year goes on, summer starts and the screaming starts again. Somewhere in the middle, there’s a lot of finger-pointing, accusations, and promises. But the result is always the same.
And before you click onto another story, thinking that this is simply a local matter, don’t be fooled. The Philadelphia School District is the 8th largest school district in the country. Its budgetary woes are legendary: last year, they even got a mention on Saturday Night Live. But perhaps more important, the debate that is happening in Philadelphia is one that is happening all over the country: how do you best fund schools?
In Pennsylvania, as in most states, property taxes are a primary source for school funding; in the United States, nearly half of all property tax revenue is used for public elementary and secondary education. As I wrote last year, that makes funding tricky because property tax dollars are closely tied to the economy with affluent areas clearly bringing in more revenue than impoverished ones – exactly what is happening in Philadelphia. However, funding formulas tend to stress equality among schools within the same district (and in some cases, the same state) even when the sources of funding are not equal.
Since property taxes are already unpopular as a means for funding schools, when there’s a hole, it’s not a simple fix. You can’t just boost property taxes – not if you want to stay in office.
That leads to all kinds of creative ideas… Raise the income tax? Raise the sales tax? Tax soda?
School districts across the country – including Philadelphia – have debated those tax increases and sometimes implemented them (in Philadelphia, they did increase the sales tax) and sometimes not (still no tax on sugary drinks). Most of those taxes fail – or are simply temporary – because they are not popular. Which brings me back to my point earlier: nobody likes to pay taxes.
But what if you targeted a tax on bad behavior?
Enter the long-suffering cigarette tax. Cigarette taxes have become our “go-to” sin tax of late because there’s clear evidence that smoking is bad for you and it’s hard (unless you’re Big Tobacco) to find many taxpayers who will defend it.
That is, of course, why Philadelphia looked to taxing cigarettes for its latest round of fundraising: it had a better chance of passing than other tax increases. It would raise revenue off the backs of smokers which, whether you believe that’s good from a policy standpoint notwithstanding, would bring in millions of dollars since statistically, Philadelphia residents like to smoke: projections indicated that the tax would raise $45 million in the first year alone. Even better? It would appear to relieve the rest of the state from paying over to Philadelphia schools, a sticking point to date.
First, however, the City needed to get the approval of the Pennsylvania legislature. It did – at first. The $2 per pack (yes, per pack) tax on cigarettes originally passed in the Pennsylvania House of Representatives. It was a good start. But the Senate wasn’t so amenable to the tax, voting 43-5, to add amendments.
The amendment that affects Philadelphia the most is a cap on the length of the cigarette tax: it would end after five years. That’s concerning for the Philadelphia School District because one of the problems that legislators (and, in fairness, the School District) can’t seem to wrap their collective heads around is the idea of a deficit. The District has been running in the hole. Much like our country, the District has been borrowing and shuffling funds around. The result is that simply tossing a budget that includes a temporary boost at the problem will not make it go away. There is a chronic shortage of funds. Looking ahead, the prospect of losing money in five years is worrisome to those crafting the budget.
Other amendments including authorizing hotel tax increases for municipalities other than Philadelphia and earmarking funds for City Revitalization and Improvement Zones.
The new bill, now with amendments, now goes back to the House. The problem? The House is on summer recess. They won’t be back until August. And even then, the House isn’t thrilled with the amendments. Mayor Michael Nutter referred to the situation as “a vortex of political hell with no way out.”
For now, Philadelphia families sit and await the outcome of the vote in Harrisburg. It’s a status with a sad, familiar ring. Even passage doesn’t mean that we won’t have this discussion next year or in a few years… and not just in Philadelphia. Other school systems, including ones in Texas and North Carolina, are having similar debates on this point: how do we fund our public schools?
