Great post as always, Helen. I too was less than inspired by the Mayor's speech and budget, but not fired up with anger at it. Probably that's because my low expectations of this Mayor have been in place so long that my emotions toward him are set in a permanent state of "blah."

But on its merits, emotions aside, the Mayor's proposal is pretty bad. Keeping our libraries limping along in their current broken state may be the budget's greatest "accomplishment." Other City services, in their current state of mediocrity, will also be maintained at current levels. The 25% of the population that's poor? (Probably closer to 30% now, given the recession.) There's nothing for them except higher taxes. They'll just have to put up with their status a little longer.

It's not really surprising that the Mayor thinks poor people should pay more for services that are getting no better. They're not his constituency. But the sugar tax that he's chosen as one of his main two vehicles for pounding them is rather odd. I haven't seen the actual text of the legislation on that, but it appears that the tax actually falls on the sellers of the drinks, not the consumers. The Mayor's only strategy for getting sellers to pass the tax through to consumers is to jawbone them to, a technique that he previewed in his speech. That will be ineffective. The sellers will spread the cost of the tax along their whole product line, imposing more of it on products that they think are immune to price pressures, less on those that they think will cause consumers to close their wallets.

So the tax is unlikely to achieve its alleged social purpose, of deterring consumption of "bad" beverages, because 1) much of it may not ultimately fall on those beverages, and 2) the City will not really press for lower consumption since it needs revenue from the tax. But what's really curious about this tax is that it runs completely contrary to the major theme of Nutter's whole career, starting from his days in Council. That theme, repeated yesterday is, that the only way that this City can ever really thrive, is to sharply cut business taxes. It's so important to him to do this, that he proudly announced yesterday that across the board business tax cuts will resume again in FY 2013.

But how can he justify this tax on sugar sellers and laud himself for cutting business taxes in the same breath? The answer goes to the heart of who this Mayor really is and who he really serves. It's taxes on big business -- which happens to contribute big bucks to campaigns -- that he is really obsessed with driving down. The sugar tax will hit mostly small, neighborhood businesses. Walmart and other superstores sell such a wide variety of products that this will increase their tax burden modestly, if at all. But the neighborhood businesses are already feeling tough competitive pressures to survive. This tax will affect a higher percentage of their product, which is much more narrowly focused on beverages than the big stores, and will not easily be passed on. Some of them might not survive.

In this light it gets even more disspiriting that the Mayor has ignored initiatives by Councilpersons Quinones-Sanchez and Green to target the BPT at out of town and larger businesses. It's not that these proposals are slam-dunks; doing any tax targeting is complicated in light of the Uniformity Clause of the PA Constitution. But the Mayor has shown no interest in a dialogue about these ideas because, clearly, he does not agree with any target that includes big business. And now we find out that he's not just interested in protecting big business; he's completely OK with doing real harm to small business. He's creative as can be in finding ways to tax them.

It's not that the Mayor has easy choices; it's clear that the biggest problem we face is lack of adequate funding from the state and federal governments. There shouldn't be any local tax increases at all. But it's sad that when push comes to shove, those who the Mayor shoves the hardest, even off the cliff, are once again the City's very most vulnerable residents and businesses.

This trash fee is a poor attempt at trying to masquerade a tax as as a la carte service. It's such a bad idea on so many levels. Primarily, what happens if people don't pay the fee? The next thing I question is how will this be implemented?

It was insulting that they said they can't play with the property tax because it's a broken system. Yes, it is a broken system, but who cares? If we need an extra $300 per house, just slap an extra $300 on the existing property tax bill. Then we would be able to properly adjust it as needed whenever the property tax system is fixed. This also helps some homeowners because the trash fee would be spread over 12 months if they elect to pay it on a monthly basis through their mortgage.

I can imagine what is going to happen now. Instead of increasing an existing bill, the City is going to have to create a new department and a new billing system. More and more expense. It's no wonder we need to be increasing taxes to balance the budget.

They do get points for the soda tax though. The only problem is that it would be more effective if it were done on the state or regional level. Either way, impulse shoppers will think twice before grabbing a soda.

As a side note, the City continues to treat budget shortfalls by covering up symptoms and not fixing root causes. I still don't buy the argument that we would be cutting to bone if we cut further. We almost need independent consultants to come in and give an objective analysis of the situation. Also, the pension fund is apparently the major problem here. Fix it! If we can't go back and buyout employees so we can get that liability off the books, then stop enrolling new employees in an unsustainable system!

The City also needs to be pulling out all the stops to lure business to the city. Ultimately, business means jobs, which mean everything gets better. That should be the focus.

Helen,

Can you explain your last paragrph some more? Where were you going with the comment about businesses?

Tom

i own a row house on a street in kensington where an llc was able to buy up 4 abandoned houses for a dollar each. they each need about 25k to fix up, but the owners refuse to sell and make a reasonable 5 to 10 k profit on each house and are just sitting on them until a sucker comes along willing to pay 25 plus k , per house. the taxes only run about 700 bucks a year combined so their just sitting on these eyesores, probably for years, with no pressure to sell .

than the mayor's stupid trash fee.

I hate to say it, but it seems symptomatic of an executive who's lost his mojo.

Status quo just doesn't cut it in a City that continues to fail to live up to its potential.

A speculation tax might be great, but you'd have to honestly research whether it would have a deleterious effect on development.

hardly necessitates an exact model.

I mean, how anti-innovation is that?

I'm no huge LVT advocate, and I certainly don't prefer LVT to plain old vanilla graduated income taxes. I'm also the last person to look for solutions in older or forgotten practices, let alone pay homage to 19th Century prophets, a habit I associate with nostalgia.

That said, municipalities do get a little positive bump from raising land taxes, in that doing so pressures those holding onto empty or underused land to use the land more fruitfully.

There is no positive bump from a trash fee.

Plus, the amount needed to adjust land taxes presumably is relatively small, in order to raise the revenue the mayor was planning to raise from the trash fee.

So rather than cowering at this little bit of unknown, I say why not?

I have but one prophet and his name is Iggy Pop.

That said, LVT is used a as a tool to raise revenue in a more progressive way in many nice places to work and play over the past century. I think what we want is a way to block the imposition of a flat ANYthing on those that can't afford while keeping revenues flowing.

So, playing with the rough cut numbers from the budget message, and without knowing how the city plans to do do the "credit" for low-income properties, I applied a small extra millage rate on taxable land values for all classes of property, even including 10-year tax abated properties (which still pay on the land, so the Ciras and Comcasts have to kick in as well.

Applied across Council districts, and filtering for residential, this is what I got: (All numbers rough cut as well, but close to what would happen. The graph is here . Yet, this is by definition a first run, nothing I'd submit yet as testimony, but I am confident enough about the numbers to put the idea into play.

I think I see a correlation between low-income districts and lower trash fee payments. I think this falls in line with the benefits-received principle of taxation. I welcome comments and suggestions on how to proceed, and what analysis to look at.

Joshua Vincent
www.urbantools.org
www.ourcommonwealth.org
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