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- PA Revenue Strong Midway Through Year; Tax Cut Could Have Big Impact
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Bold ideas to fix the budget
Submitted by Ben Waxman on Tue, 11/18/2008 - 12:06pm.
A crisis of this magnitude is license to do some serious reinvention of government. It's a time when you can get away with bold thinking, and radical ideas. A few more of those were what we were hoping for.
First, let's be clear: We know how easy it is to be armchair experts, and how hard it is to have to make the decisions. But we also believe the city and its citizens are richer when we can have discussions about these challenges, with many at the table trying to solve the problem. This is a time for us to tough it out together. We hope that during the town-hall meetings the mayor announced yesterday he has a chance to listen as much as to talk.
Meanwhile, "It's Our Money," a project on the budget by the Daily News and WHYY (funded by the William Penn Foundation), has been reaching out to experts and insiders for different approaches to the budget problem. None is a quick fix. None will solve the crisis by itself. One or two might be crazy. But we hope they're added to the mix:
1. Fast-track full valuation. Correcting the city's fractured and unfair property-tax system is as politically appealing as wrestling alligators. But it's crazy and irresponsible not to: Right now, the rich generally underpay and the poor overpay. Correcting the system, discussed for years, is supposed to be revenue-neutral, but it won't be. But it will be fair.
2. While we're at it, raise property taxes. Ours are traditionally low - mainly for reasons having to do with No. 1. We could temporarily raise the tax. Forty percent of any increase would go to helping fill the shortfall. (The schools get the rest.)
3. Close the courts. The city pays $115 million for the First Judicial District even though the state is supposed to pick up the tab. Why shouldn't the mayor just announce that the city has to close the courts because it no longer is able to pay for them? That crisis would no doubt spur quick action in Harrisburg. And even if that action was to punish us with a cut somewhere else in the budget, at least we'd remain whole.
4. Put out bids for every aspect of government.
And include the departments that are providing the service. We don't think privatizing government is the answer. But neither should we assume that all departments are as efficient as possible, nor that the job of government is public employment. The 1 percent cut of 200 workers isn't pretty, but compare it with the rate at which corporations are shedding jobs.
5. Pool health-care plans for public employees.
Benefits for city employees represent one of the largest expenditures by local government. Mayor Nutter is already pursuing the idea of consolidating the four city unions' plans into one, but he could also encourage other public-sector workers - such as SEPTA employees and public-school teachers - to participate in the effort. If it's successful, the idea could be expanded to include major universities and other institutions.
6. Tap our rich corporate citizens for whom we have built stadiums.
If the smart idea for the city to borrow directly from the U.S. treasury doesn't work, why not ask the Eagles - a team that's worth $1 billion - for some low-cost loans?
Find these and other ideas, and contribute your own, at www.ourmoneyphilly.com.
Raising the Property Tax
As it is currently structured, raising the property tax will hit poor and working neighborhoods the hardest. Any hike in the property tax cannot not be in the traditional manner. Only a land value tax will ameliorate any increase in property tax.
If anyone advocates for the traditional property tax, you will be doing the corporate citizens (actually most are out of towners) that you bemoan a big favor. I can name Sunoco and its Passyunk Refinery as one example.
Intense study of land value taxation as a revenue-neutral switch, as a way to bridge the budget gap, or as a way to shift some of the BPT revenue has been done.
Joshua Vincent
Executive Director
Henry George Foundation USA/Center for the Study of Economics
1518 Walnut Street, Suite 604
Philadelphia, PA 19102
215.545.6004
www.urbantools.org
Ben,
what "experts and insiders"? I am curious, based on the list of ideas. Or is that off the record?
To some extent, taxes aren't the solution. They're the problem.
#1 and #2 are tax increases on the people who need help the most -- homeowners. This arguably got us in this mess in the first place.
Full valuation would cripple, among others, the middle class and many senior citizens on fixed incomes unless it comes w/ a mil rate reduction to offset increases in houshold tax bills (not even sure we can lower it enough to equalize it) or a Property Fair Tax (AKA Josh's LVT). The last I checked though, Mayor Nutter wasn't sold on the Property Fair Tax, so don't hold your breath. I think we've got a better shot at stepping up the wage tax in order to make the casino revenue-generated tax reductions revenue neutral. Workers can carry that temporary baggage much better than many homeowners.
We're in a housing correction period here. Raising real estate taxes won't do anything to get us out of it anytime soon. In fact, watch city revenue from transfer taxes get even smaller with pure full valuation (w/out mitigating measures). With higher real estate taxes, that home you wanna buy just got more expensive.
Another thought I just had was the tax, errr...."license fee" required to be paid for every piece of vacant land in the city. If we could make sure the RDA and PPA and PLC and others actually had to pay it (unlike real estate taxes) along with the other owners of vacant land, large and small, I say let's tie the fee to the square footage of a piece of land.
We could collect the kind of revenue an LVT would generate on big open spaces without having to retool the tax code. But I digress.
Aside from that, I can't disagree with numbers 3, 4, 5 or 6 though (no matter how tough they'd be to accomplish).
Really?
I don't think I understand #4.
This: 3. Close the courts.
This:
Is not bold, it is irresponsible.
Closing courts to spite Harrisburg will injure Philadelphia and further alienate us from the rest of the state. A few examples: mothers who require the courts to enforce child support awards; women (and men) who require the courts to enter protection from abuse orders; prosecutors who have criminal cases to present to keep criminals away from citizens; criminal defendants who are entitled to a speedy trial; civil litigants and business litigants who seek their day in court.
Even if it's just for a week, it's irresponsible. Moreover, the court funding structure is not as simple as you may think. Certainly the state has a share to pay (that is doesn't).
Irresponsible yes, but overdue
The city is well overdue for some kind of big newsmaking symbolic protest over the state's failure to deal with paying its share of the courts. We've taken the state to court, they've lost and still they refuse to pay up - for years. What if we ship an entire court to H'burg one day and hold court on the the capitol steps. Something, anything to underline that the current situation can not continue.
I'll withhold my earlier suggestion of simply dropping those accused of violent crime off in the capitol building without bus fare home for sometime after a few beers.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.
Practically, Ben's
Practically, Ben's contention makes no sense. We shouldn't be enacting irresponsible policy because we're upset with the State Legislature. I agree they should be funding these courts per the mandamus order. However, the State is feeling a fiscal pinch that is not insignificant. Closing the courts, if you're actually advocating that, will do nothing to send more money to Philadelphia and, will hurt the thousands of Philadelphians (non lawyers) who rely on the courts to enforce orders, judgments, etc.
Now, moving onto your underyling point, there needs to be a stronger effort for the state providing the level of funding needed for courts across the Commonwealth. Whether that is holding a rally or holding court on the capitol steps, I don't know.
Plus, I don't believe Mayor Nutter would have the authority to simply close the courts. I suppose he could cut funding, but politically and practically, it is suicide.
I don't get it
What makes Philadelphia County so different from, say, Carbon County that allows the Commonwealth to not pay for courts in the former, while paying for them in the latter? Yes, I know, for the most part Philadelphia County exists only as a formality, but it still exists. That being the case, requiring the Commonwealth to pay for its courts as well as those in other counties is a simple case of equal protection under the law. Open and shut, I'd say.
Thoughts?
-Z
Zorro, the Commonwealth is
Zorro, the Commonwealth is not living up to its obligation in EVERY county in Pennsylvania. Not just Philadelphia. The Court issued an order for EVERY county. Not just Philadelphia.
Right
Its just that because our entire county is urban and relatively high crime and high population density rather than just a proportion of it, a bad policy that hurts many counties, hurts Philadelphia disproportionately worse.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.
Bingo! The administration
Bingo!
The administration of the Court system is a huge undertaking. We're not just talking about judges and their staf, but the administrative support for court procedings. In Philadelphia, the court system is heavily burdened with an overcrowded criminal and civil docket. We have over 90 judges!
2nd thought...
Now that you all mention it.... does number 4 mean privatize everything? If so...not so bold.
And closing the courts would make a great symbolic statement but then what? have to say, i tend to agree with the others if you're actually serious.
So if taxing people more, privatizing everything in government and bringing criminal and civil justice to a standstill isn't bold, what's left besides asking Jeff Lurey for some extra cash?
My guess is ben was sorta joking with this list. Just poking the bear perhaps. Yes?