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"Bad News for the Budget"
Submitted by Dan U-A on Thu, 09/11/2008 - 9:03am.
Mayor Nutter plans to to deliver some bad news to City Council this week: there are serious problems with the city budget. The worsening national economy means the city will have a lot less money than initially expected over the next year.
.....
With less money available, the city appears to be facing a stark choice: increase taxes or cut programs. Nutter continues to be a fierce advocate for tax cuts, so it's unlikely any major increases are in the near future. That means cuts for some city departments.
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Stan Shapiro will be shocked
Absolutely shocked.
Especially since the
Especially since the shortfall is reportedly mostly coming from... the BPT. We will have more on it soon.
Not discounting
It makes sense. Slowing economy means businesses making less money means less business taxes.
I would like to see the shortfalls actually broke out though because recent past surpluses were largely driven by transfer taxes and the housing boom. Lately however the sector of the local economy thats taken the biggest hit and the hardest has been housing. True to form it takes longer for national trends to hit Philly but they by most reports have hit Philly pretty hard recently. Tightening credit means its hard to get mortgages means it suddenly reversed course and become a so-called "buyers market" but buyers can't get mortgages so its a dead market. Less sales means a whole lot less transfer tax.
I would love to see how much the shortfalls are transfer tax, how much loss in local business revenue and how much is inflationary (i.e. higher energy and food costs effecting city agencies). Don't suppose anybody has real numbers.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.
Yeah, those numbers would be interesting
But irrespective of Dan's pending analysis, Stan was saying that the increased revenues that others were attributing to a lower tax burden for businesses, was, in fact, mostly a reflection of a stronger national economy. The budget shortfall correlating with a national economic slowdown would seem to bear Stan's analysis out. Looks like YPP may be in store for a few flame wars.
Wow! City Councilwoman Maria Quiñones Sánchez chanelling Stan
And the overwhelming
And the overwhelming majority of people in the city.
I like Stan
and I definitely believe that everything should be on the table.
But I gotta say:
if you project a budget shortfall every year for a couple of decades or so, you're bound to be right some years.
Who has projected a budget shortfall?
The city always proposes a balanced budget. And since PICA was created, a balanced five year plan. By law the city has to do so.
In fact, Mayor Street's budgets typically understated the projected annual surplus. He did this deliberately to have bargaining room with Council. He would project a tight budget that required reductions in program dear to the hearts of council members such as playgrounds. Then, once they supported his key priorities--NTI, eliminating the Cohen Working Families Wage Tax Reduction, etc.--he would discover that low and behold tax revenues were running higher and money actually was available for council priorities.
Given what Councilman Goode says below, it sounds like the opposite happened in the first year of the Nutter administration and the administration, with Council's aquiesence, projected higher tax revenues than they truly expected.
If that is so--and I don't really know for sure--then we've gone from one kind of budget chicanery to another and not to the transparency and honesty in budgeting that we were promised in 2007.
The business tax reform bill that she voted for in May, not June
Imagine incoming Mayor Michael Nutter saying in his first budget address - "I want to give the municipal unions a one-year contract with no raise, cut business taxes, cut services, consider layoffs, and increase real estate taxes for those who have been historically under-assessed." He would have been politically crucified.
But what if he knew he had to do it without saying it all at once?
The questions about overly optimistic revenue growth projections were raised during the budget process - and answered. It was agreed upon that we would slow tax cuts if we had to, based upon the worsening national economy.
Anyone who couldn't read between the lines and realize that we were going to revisit the budget issues, sooner rather than later, can try to separate themselves from a past vote but should still explain that vote.
I'm not surprised that things happened in this order or in this way.
As a legislator, you should know what you're voting for, vote the way you really want to, and understand that economic and fiscal issues are fluid - each year we do a fiscal year budget and five year plan.
Stand up for your priorities.
Business tax reform remains on my list - along with a living wage and benefits standard for city-supported employees and diversity in city contracting, among other things.
WWGjr
Help me out here, Councilman
I can't quite figure out what your position is. Do you disagree with Councilwoman Sanchez, that given the current budget shortfalls, no programs should be cut before business tax cuts are rolled back? Did you disagree with her that, when the questions about "overly optimistic revenue growth projections" were "answered," the business tax cuts were justifiable?
And moving beyond who was right when, what, more precisely, are your priorities now? Right now, given that something has to be done to reconcile the budget deficit, where do you wield the knife first: Tax cuts or service programs? If it is service programs, what service programs do you cut? At what point do you stop cutting service programs and begin rolling back business tax cuts? Can you elaborate beyond telling us what is on your list, to tell us the sequence of the items on the list?
And if I could add another question, what's your opinion on the Gallery East location for the casinos? Are you supporting locating the Casinos there, or do you advocate keeping the pressure on to have them located elsewhere - the airport for example?
With all due respect, Councilman
At hearings last Spring, and on this blog, you ridiculed those of us who said it was wrong to cut taxes when services were in jeopardy. When I testified you cut me off when I wanted to focus on the cost of your proposed, and ultimately enacted, gross receipts tax cuts, rather than the alleged benefits. However, if you're ready to now concede the reality that tax cuts don't magically create jobs and more revenue, all is forgiven.
Btw, in my opinion, it's the fact that Democrats act confused, at best, about the need to tax in order to create a decent society, that's the main reason we're on the defensive in every, single election, state and federal. At some point, when the power of the Party machine ends, we may well begin to find our automatic win-power at the local level go down the toilet as well. We have a choice. We either have to be pro-government and pro-taxes (albeit fair and progressive taxes) or neither of those things. We can't just be in favor of programs and be unwilling to levy taxes for them without sounding to the world like fools, liars or both.