Philly ready to increase property tax breaks and reduce business taxes thanks to last-minute compromise

Many Philadelphians are likely to see property tax relief amid rising real estate appraisals, as well as pay cuts and business taxes, thanks to a compromise between City Council members and Mayor Jim Kenny’s administration that was approved by vote on a key committee late Wednesday night.

According to the tax plan gathered in the last minute negotiations for the city budget, which begin on July 1, the property tax rate of 1.3998% will remain the same, but the release of the farm, which reduces the taxable value of homes inhabited by owners will increase from $ 45,000 to $ 80,000.

At the commission’s virtual meeting, lawmakers also amended Mayor Jim Kenny’s $ 5.6 billion budget proposal to include several significant funding increases, including $ 15 million in rent, $ 5.8 million more for the public office. defenders and an additional $ 5 million for police forensics.

┬╗READ MORE: How the pandemic, progressive and property valuations fuel a debate over Philly’s taxes

The approval of the entire committee, which includes all members, puts a final vote on the budget at the Council’s meeting on 23 June, the last before MEPs adjourn their summer holidays.

This year’s focus on taxes was prompted in part by the city’s first property revaluation in three years, in which the value of residential properties increased by an average of 31% and much more in fast-paced areas.

Kenny proposed an increase in the household exemption to $ 65,000 in April, and some lawmakers, including Kenyan Council members Johnson and Brian O’Neill, have since demanded an increase to its legal maximum of $ 90,000. But the majority ultimately backed the $ 80,000 compromise, largely over concerns about the impact of tax breaks on Philadelphia’s school district, which receives 55 percent of property tax revenue.

The most surprising news on the last day of the talks was the last-minute majority, which emerged to reduce the tax on business revenues and revenues from net profits from 6.2% to 5.99%, as a result of loud lobbying efforts by urban trade chambers.

Council member Isaiah Thomas, who introduced the cuts, said he was motivated by a question: “How do we put people in a position to provide a quality life for themselves and their families?”

The compromise plan also includes a small reduction in payroll tax made by council member Catherine Gilmore Richardson, lowering the rate from 3.8398% to 3.79% for city residents and from 3.4481% to 3.44% for people, who work in Philadelphia but live outside the city limits.

Talks reached 11 a.m.: The council had to move tax and expenditure legislation out of committee before its meeting on Thursday morning to approve the budget by the time the current budget expires at the end of the month.

Members of the Kenny administration worked hand in hand with lawmakers to approve the budget in a process overseen by Council President Darrell L. Clark, which involved an unusually low level of friction between the executive and the legislature.

Philly is the only major city in the United States with a municipal legislature that still meets remotely, and council members conducted the talks in a chain of telephone conversations.

“I had to charge my phone five times today,” Clark said at 11 p.m., “but it’s okay.”

Almost all of the committee’s votes on Wednesday night were unanimous, but council members Helen Gim, Kendra Brooks and Jamie Gauthier voted against cutting taxes on wages and business.

The budget deal is a victory for the business community, which for several years has seen its influence in the mayor’s office diminish amid momentum for the city’s progressive movement.

“Tonight we saw the brave leadership of the city council,” said Sue Jacobson, president of the Greater Philadelphia Chamber of Commerce. “Their decision to cut taxes on job creators is a clear signal that Philadelphia is committed to restarting its economy after COVID and increasing the number of people working in the city.

The Council’s progressive trio of Gym, Brooks and Gauthier were largely isolated from the latest round of tax talks. However, many of their spending priorities fell into the final budget, including rental assistance and quality of life problems such as the removal of an abandoned car. Brooks’ proposal to sign a “wealth tax” never received a vote.

In a speech explaining his votes against pay and business tax cuts, Gym said: “We’ve spent too much time serving powerful interests and the House, not 100,000 families in the Philadelphia school district.

Gauthier said she voted against tax cuts because they benefit large corporations and do not target small or minority businesses, despite a lobbying campaign highlighting their benefits for disadvantaged businesses.

“Tax cuts have always been offered to us as a small business,” Gauthier said. “These are cuts that would benefit much larger businesses and at a time when we are trying to recover.”

Meanwhile, several members considering running for mayor next year have played a central role in the talks, including majority leader Cheryl Parker and three members who have long supported business tax reform: Derek Green, Alan Domb and Maria Quinones-Sanchez. .

“It was not an easy budget,” Parker said in a statement, noting increased funding for police and quality of life issues. “We are approving property tax relief measures to mitigate the effects of the revaluations. We approve reductions in payroll and business taxes – to provide much-needed relief to small neighborhood businesses. “

The budget agreement will be in the first reading at the next Council meeting at 10 am on Thursday, before moving to the second reading and final passage next week.

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