I had been thinking about Michael Nutter's first budget address for the past 24 hours and feeling fine... until I got an email from Brett Mandel this morning with the subject line, "Tax Reformers...This Budget's For You!" I thought we might be in trouble after all, but another review of the Mayor's address, and it seems like we're gonna be ok.
That said, there are two things Mayor Nutter has proposed which could become very big problems:
- He sets aside a specific amount of money for city contract negotiations with unions--no more--while relying on a bond to deal with city pension obligations.
- He proposes cuts to the net income portion of the Business Privilege tax.
The problem with the first point is we don't really know if a bond can work. As the Inky reports
today:
"It is a creative solution, and that's a good thing, but there are lots more questions that need to be answered before we know if it'll work, when it'll work," said Uri Monson, executive director of the Pennsylvania Intergovernmental Cooperation Authority, which oversees the city's budget.
We also don't know what the city employee unions are going to be asking for just yet, and without the knowledge, it seems a bit inflexible to name a dollar figure now. Remember, the city is the largest employer, and any drastic change to the livelihood of its employees can have a big impact on our entire region's economy.
The problem with the second point--and Jennifer and Dan pointed this out
last week--is it is hard to support cuts to the net income tax without knowing how it currently impacts businesses in real numbers. I am sure the Mayor knows of course--since he is privy to data from the department of Revenue that would indicate how the tax is affecting different kinds of businesses--but we, the public, do not.
In the spirit of Mayor Nutter's "new day, new way" approach to open records and transparency in government, Jennifer
wrote a letter to the Department of Revenue requesting this data. After all, there is growing evidence that for the very largest corporations, despite a real or perceived high business tax burden here, other factors like proximity to roads, train stations, cultural events, restaurants, etc. have been more important factors in making decisions about business relocation.
And, perception often trumps reality when in comes to the free-market, and Nutter sent a pretty strong message that will change the perception of Philadelphia when he said
this at a Chamber of Commerce luncheon:
"The doors at City Hall are now open," he said, in a silent nod to the strained relationship prevalent during the Street administration. "You will always have a friend at City Hall."
That's not to say that business taxes do not matter--and I think we all agree that our business tax structure seems uneven at best. But without a public release of the data, it's hard to know how serious of a problem this is, without relying solely on anecdotal information.
Despite these potential problems, you have to give credit to Nutter for proposing a budget which:
- expands single-stream recycling
- gives $3 million to city health centers
- $4 million a year to CCP to expand its reach
That said, it is a humble budget, which makes sense for a first budget from a new Mayor. However, I have to express some concern that the entire Jobs and Economic development portion of the Mayor's speech really includes only 3 ideas: arts & culture expansion, tax cuts, and dealing with unions. For a city whose real wages have been on the decline every single year since 1969, and that has yet to produce a real economic sustainability plan for the future--as opposed to piece-meal economic development deals, often at the discretion on Council members--we could do better.
However, as Nutter himself said:
We don’t walk into this process under the assumption that we have a monopoly on ideas, but we believe the proposals set forth here today will put us on a course for a safer, cleaner, greener city, where our children are protected and educated, where government performs its tasks in an open, honest and efficient manner and where performance is measured, improvements are made and services are delivered.
And until we see the line-item budget, that sounds good enough for now.
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