Many Philadelphians will likely get property tax relief amid skyrocketing property assessments, along with wage and business tax cuts, thanks to a compromise between city council members and the administration of Mayor Jim Kenney that was approved in a key committee vote late Wednesday night.
Under the tax plan that culminated in last-minute city budget negotiations that begin July 1, the property tax rate of 1.3998% will remain the same, but the homestead exemption , which reduces the assessed value of owner-occupied homes, would increase from $45,000 to $80,000.
During the virtual committee meeting, lawmakers also amended Mayor Jim Kenney’s $5.6 billion budget proposal to include several substantial funding increases, including $15 million in rent assistance, 5.8 million more for the Public Defenders Office and another $5 million for the Judicial Police.
» READ MORE: How the pandemic, progressives and property assessments are fueling a Philadelphia tax debate
Approval by the full Committee, which includes all members, sets up a final vote on the budget at the June 23 Council meeting, the last before lawmakers adjourn for their summer recess.
This year’s focus on taxes was driven in part by the first citywide property reassessment in three years, which saw residential property values increase by an average of 31% and much more in the rapidly gentrifying areas.
Kenney proposed in April to increase the homestead exemption to $65,000, and some lawmakers, including Council members Kenyatta Johnson and Brian O’Neill, have since pushed to increase it to its legal maximum of 90,000. $. But a majority ultimately backed the $80,000 compromise, primarily out of concern for the tax relief’s impact on the Philadelphia school district, which receives 55% of property tax revenue.
Johnson said the budget deal ‘represents investments in Philadelphia to move our city forward,’ applauding its investments in anti-violence spending and elements of its ‘Save Our Homes’ property tax relief plan. who made the final compromise. These measures, he said, “will help reduce the property tax burden for Philadelphia homeowners and make property taxation fairer and more transparent.”
The most surprising news from the final day of negotiations was the last-minute majority that emerged to cut corporate income tax and receipts on net profits from 6.2% to 5.99%, a result of a lobbying effort by the city’s chambers of commerce.
Council member Isaiah Thomas, who presented the cup, said he was motivated by one question: “How can we empower people to provide a quality life for themselves and their families? “
The compromise plan also included a small payroll tax cut, carried by council member Katherine Gilmore Richardson, lowering the rate from 3.8398% to 3.79% for city residents, and 3 .4481% to 3.44% for people who work in Philadelphia but live outside the city limits.
The talks came at the 11th hour: the Council needed to pull tax and spending legislation from the committee before its Thursday morning meeting in order to approve the budget before the current budget expires at the end of the month.
Members of the Kenney administration worked hand-in-hand with lawmakers to approve the budget in a process overseen by Council Chairman Darrell L. Clarke that involved an unusually low level of friction between the powers executive and legislative.
Philly is the only major US city with a municipal legislature that still meets remotely, and Council members conducted the negotiations in a chain of phone calls.
“I had to charge my phone about five times today,” Clarke said in an 11 p.m. speech, “but everything is fine.”
Almost all of the committee’s votes on Wednesday night were unanimous votes, but Council members Helen Gym, Kendra Brooks and Jamie Gauthier voted against the payroll and business tax cuts.
The budget deal represents a victory for the business community, which for several years has seen its influence at city hall wane amid the momentum of the city’s progressive movement.
“Tonight we saw bold leadership from the city council,” said Sue Jacobson, president of the Greater Philadelphia Chamber of Commerce. “Their decision to cut taxes for job creators is a clear signal that Philadelphia is committed to restarting its economy post-COVID and increasing the number of people working in the city.”
The Council’s progressive trio of Gym, Brooks and Gauthier was largely left out of the latest round of tax negotiations. However, many of their spending priorities were included in the final budget, including rental assistance and quality of life issues like the removal of abandoned cars. Brooks’ “wealth tax” proposal never received a vote.
In a speech explaining his votes against the payroll and business tax cuts, Gym said, “We’ve spent far too long responding to powerful interests and the House, rather than the 100,000 families in the district. Philadelphia school.
Gauthier said she voted against the tax cuts because they benefit big business and do not target small businesses or minority-owned businesses, despite a lobbying campaign that emphasized their benefits for disadvantaged businesses.
“Tax cuts have always been presented to us as being about small business,” Gauthier said. “These are cuts that would also benefit much larger companies, and at a time when we are trying to bounce back.”
Meanwhile, several members who plan to run in next year’s mayoral race played central roles in the negotiations, including Majority Leader Cherelle Parker and three members who have long been advocates for reform of the professional tax: Derek Green, Allan Domb and Maria Quiñones-Sánchez.
“It was not an easy budget,” Parker said in a statement highlighting increased funding for policing and quality of life issues. “We are approving property tax relief measures to mitigate the effects of reassessments. We endorse payroll and business tax cuts – to provide much-needed relief to small neighborhood businesses.
The budget deal will receive a first reading at the next Council meeting at 10 a.m. Thursday before moving to second reading and final passage the following week.