Seems like time for Plan D

It looks pretty likely, based on today's Harrisburg report, and others over the weekend, that we're not going to get quick passage of HB 1828 with the Senate's pension changes. More likely, the House will amend the Senate's version, the Senate will nonconcur, and a Conference Committee will meet and meet and meet and . . .

This is no longer a question of whether we should call for changes to the Senate bill, but what the City should do now given the real possibility that there will be no bill. And the answer is: it needs to dust off some of the tax ideas that Council dispensed with in the Spring. No doubt, as we've discussed, passing any local tax bill now would create legal issues, but putting up some questionable taxes is a hell of a lot better than laying off 3,000 employees without at least trying something else. And, as I've said before, there's an excellent chance that a tax to replace the sales tax would be upheld since it would not support increased spending over the level that's already in the budget.

Then there's the revenue needed to make the City's pension payment. There is that Supreme Court case, Mastrangelo v. Buckley, that held the City can't increase taxes in the middle of a budget year to support new spending. And the pension payment isn't in the current budget. But the Court could easily distinguish Mastrangelo from the current situation. Here we're talking about spending that's required by state law, something not present in the earlier case. Any Court that wants to, not to mention our notoriously flexible Supreme Court, could use that distinction or any of a number of others to let us make the pension payment without emasculating City services.

The mayor has said the sky will fall if we don't have the revenue he's counting on from Harrisburg. Well if he means it, he'd better quickly get behind other ways to get the money.

So the solution to save stiffing workers for 5 years

is to stiff them again on paying down the pension fund in the abstract? sort of paradoxical.

I think there is a problem with a plan that convoluted. I really can't see all the union heads now saying "Its so untolerable to have our current worker's pension fund earnings redirected to propping up the system for 5 years, we want you to intentionally bankrupt the entire system potentially leaving our already retired workers in the lurch." You run the fund that far down you risk the state taking over the whole system and eroding collective bargaining completely away in one fell swoop.

I'm also highly skeptical that the same Supreme Court who stood by Harrisburg on casino gambling is going to buck them on this. And court cases take months, months that will happen after 3,000 city workers have been laid off.

I understand the anger but fear the desire to steer us into the rocks out of spite.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

You don't get what I'm saying

I made no call for bankrupting anything. Although I do think we should call the Senate's bluff, I didn't call for that in the Quick Hit. I just noted that it seems we're headed in the direction of an impasse in Harrisburg. Shouldn't we prepare for that eventuality? Or should we just put all of our eggs in the State Senate basket and hold our breath until we die? Because that's what will happen if there's an impasse and we don't have an alternative to Plan C.

Your response seems to assume that we have to get a pass from the Supreme Court before we can collect any tax that Council passes in this period. That's not the case. Someone would have to sue and get an injunction to stop it. That wouldn't be an easy burden to carry, legally or politically. If someone does get an injunction, however, the case would undoubtedly be fast tracked after that, since we'd be in a total emergency situation. We'd know pretty soon if the tax is legal or not.

You can argue that we'd be much better off bending the knee and giving the Senate what it wants. I can respect that argument and have not been pushing the other way. But those who have been arguing we have to go along in order to prevent catastrophe need a fallback plan if Harrisburg leaves us stuck with Plan C. If you have another, I'd be glad to hear it.

And I do look forward to the day that you stop demonizing anyone whose opinion you disagree with.

HB1828 Senate version isn't dying

Its unfair and workers deserve to yelling mad about it - but noone loses a job, noone's life is literally put at risk - both of which are literally true under Plan C. People have different rhetorical takes on this but I fall on the side that the Senate proposals take a substantive bite out of collective bargaining - but those bites all time out over a matter of 5 years. The easiest way for Philly and every other town or township affected to pull out is to quickly get back to full funding for the pension fund - at which point Philly or any other city can offer workers any damn benefit they want.

IF it really comes down to two crappy options, giving the State Senate everything they asked for doesn't put anybody on the unemployment line and doesn't put public safety at risk. That's the bottom line.

Its an unfair option but ultimately its less risky to both workers and the public than anything you've floated so far. I think in this economy municipal workers will pick job security and voters will pick public safety and maintenance of services.

There is no "bluff" to the Senate's proposals. They figured out a way to get what they want (which is unfair) and they are the one's with the city by the balls, not vice versa. End of story. There is no way to "get back" at them that is remotely as swift and as certain as 3,000 layoffs on Sept. 18. I personally made a small effort myself you may recall but it only had limited success. I didn't see any of the city unions make even that effort to impact the State Senate when they had months and months to. Whose fault is that?

If the Senate won't pass what the House passes, it will have to get passed as is by the House late on Friday. Its that friggin' insanely close.

Philadelphia can't collect "illegal taxes" because PICA simply cuts off existing sales tax revenue from the state and for other types of taxes people simply won't pay them. Plan C but twice as bad, in other words, because its two cents of sales tax revenue to the dollar the city is denied. Again end of story.

In terms "demonizing", my focus is on the results of a course of action - not who is proposing that action. I generally don't care one whit about the latter.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Actually the obnoxious HB 1828 amendments are dying

There is no alternative to Democrats fighting this. We wouldn't trade the right to free speech for a 1% increase in the sales tax. Well, as I argued in my initial post on the subject, people also have a right to bargain collectively. It is no less a fundamental human right than the right to free speech.

That people here don't see this is, frankly, very perplexing to me.

Here is my guess: the House is going to substantially amend it getting rid of most that is objectionable to labor.

And then the Senate is going to pass the amended version. Here is why:

1. The FOP is going to lobby them hard. The FOP probably has the best relationship with Senate Republicans of any of the unions.

2. The other unions are united on this, not just in Philly but statewide.

3. The Pittsburgh delegation, led by Jane Orie, is going to push for the revised version of HB 1828. Mayor Ravenstahl doesn't want to go into an election in November having lost control over his pension fund.

4. The Senate Democrats will help seal a deal. They voted for HB 1828 under the misapprehension that labor was OK with it. It is probably a good thing they did because it kept HB 1828 alive. Now they will insist on a better bill. There are 20 Ds in the chamber so it won't take that many Rs to get approval for a better bill.

5. Pileggi and Orie will work together to find those R votes. Pileggi doesn't want to be responsible for Plan C in Philly. He gets lots of money from here and while his delegation tilts far right, his money is a lot more moderate. The fact is that everyone that works or lives in the city will be hurt if Plan C goes into effect, and that includes businesses.

My sense, by the way, is that there is no love lost between Philadelphia Democrats and the Mayor on this one. The Philadelphia delegation is not happy that the Mayor put them in this situation and did little to help make it better.

A number of Democrats warned the Mayor that the Republicans were going to try to take something in return for voting for this bill. They suggested that he give them something like, for example, ending the Drop program.

I like your enthusiasm, Marc

and I do think the FOP angle is a good leverage point for the House version to dial things back. I guess we'll see soon enough. To be 100% clear I'm NOT cheering the Senate provisions, I'm saying we should have played this differently to prevent them.

And on that note I would suggest that really only two people bothered to try to communicate with the State Senate effectively on this. One was Mayor Nutter who pushed and pushed hard for a "clean" HB 1828. The other was Republican controller candidate Al Schmidt who claims he "corrected" the Mayor's message with key State Senate Republicans as soon as the Mayor left, helping them to "fine tune" their strategy for this pension fund play.

I was following in his wake, trying to correct the record," Schmidt said. "I wanted to explain that Philadelphia was in dire financial shape not simply because of the national economy, but because of political decisions that this mayor and former mayors and City Council have made."

His specific proposal - a state takeover of Philadelphia's pension fund - was considered by state senators but ultimately rejected as impractical, given the size of the city's fund and the administrative capacity of the state agency that would have managed it.

Nonetheless, Republican senators said Schmidt influenced the debate in Harrisburg.

"A lot of his ideas were talked about and incorporated," Orie said.

I'm only suggesting that in hindsight it would have been really smart for the municipal unions to have sent their own representatives to follow up Nutter in just such a fashion, voicing their take on matter and gauging where the Sate Senate R's were going. The fact they did not, I fear has a lot to do with the current nail biter we now face.

Which in turn leads me to want to talk about the problems with this.

My sense, by the way, is that there is no love lost between Philadelphia Democrats and the Mayor on this one. The Philadelphia delegation is not happy that the Mayor put them in this situation and did little to help make it better.

A number of Democrats warned the Mayor that the Republicans were going to try to take something in return for voting for this bill. They suggested that he give them something like, for example, ending the Drop program.

How is it that "the Mayor" and not the City Council that voted unanimously for a budget that hung everything on the sales tax approval is responsible for this? That makes no sense and has strong whiff of factional buck-passing.

Councilman Bill Green more than any other council person put together the deal in Council that set us on this path but they all voted for it. They all refused to include property taxes. Its Council who still so far has refused to act on tackling the mess at the BRT. Its Council that refused to consider ending DROP for electeds because they feared it would make them look bad in retrospect for taking advantage of a program the Philadelphia delegation was telling them they should end - putting personal pride over policy and the threat of Plan C in other words. Its Council that shied away from taking responsibility for selling the budget they put together in Harrisburg and making sure no nasty "surprises" like the State Senate ammendments got tacked on.

Basically Nutter tried his best to sell the budget Council handed him Harrisburg and now you want to say Nutter (who pushed bills for ending DROP for electeds on Council and repeatedly called for the same thing as mayor) is responsible for Council's refusal to budge on DROP? Council meanwhile largely sat on their hands and did nothing to actively keep tabs on how their very own budget progressed in Harrisburg - while refusing to act on DROP and raising their own departments budget when virtually every other city department has taken tough cuts. And at core, the pension fund problem dates from the 70's and 80's when council didn't actually put the money in for the pension benefits they were promising workers - which is ultimately a root cause of the problem according to Bill Gault's letter to the Inky.

I agree that the Harrisburg delegation may have a beef with this situation but blaming Nutter is sort of shooting the messenger for a trap Council set. In the interest of fairness we need to hold Council responsible for not stepping up to the plate for a budget plan they themselves cooked up.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Absolutely right about Council's responsibility

Everything you say is true.

But the Mayor could have kept pressure on Council to meet this summer to fix DROP and the BRT.

We have a strong Mayor system, remember? The Mayor has a lot of leverage.

You got to see where the Mayor applies that leverage if you want to know his priorities.

Maybe they are wrong, but it is not at all clear to some members of the Senate or to some labor leaders in Philadelphia, that getting a clean bill out of that body was one of his top priorities.

Not to sugar coat it

For more than 3 months straight Nutter consistantly pushed and pushed hard for what the House eventually passed as the "clean" version of HB 1828. When the Senate tacked on their provisions, which went way, way, way past anything Nutter at any point said he would have asked for in budget neogtiations, he didn't say "hold everything this isn't fair", he kept on his consistant message that every day the budget approvals don't pass is a day of revenue he has to cut out of services - "pass it now".

If your read on it that Nutter is the source of everything anti-union in the world (as some folks I think wrongly do) then you are inclined to believe that he somehow convinced the State Senate to pass these horrible provisions, even though he couldn't get them to budge on doing anything at all with it for more than 3 months, forcing yet more unwanted cuts in Plan A. I think thats a paranoid misread.

I absolutely do take Al Schmidt on face value when he says he was systematically undermining Nutter's message for all of those 3 1/2 months. I also do think the way the State Senate played the timing, using the city's dire need as a negotiating tactic with first Gov. Rendell and then with municipal unions bears all the trademarks of "Cool Hand Dom" Pileggi, as his fans like call him. I'm sure at some level Nutter doesn't mind at all that the Senate's move makes them, rather than him, the bad guy in contract negotiations and there undoubtedly a little bit of oportunism going on there - but the paranoid notion that he secretly ordered around Senators Orie, Browne and Pileggi doesn't really hold water. I give Schmidt and Senate Republican opportunism every ounce of "credit" they proudly claim for this.

The way this played out, I can also see how House leaders would want to hand off responsiblity for caving in any way to the Senate onto Nutter but he was pushing on the House to move on passing the budget approvals with or without the Senate for months before the House acted. The House, for reasons of its own, didn't actually move on the clean HB1828 till mid August, handing the Senate Republicans yet one more excuse. Nutter's actions were consistant with someone whose plan was from the get-go to get the budget aproval ASAP and who would settle what he could on pension funds over the negotiating table - the way it should be done.

Thats my personal honest read. But feel free to offer yours.

I also am 100% sincere in wondering if the unions didn't make an error not "checking up" on how Nutter's sell to Harrisburg on the budget proposals was going. Schmidt wanted a total state takeover and claims to have fine tuned what the Senate Republcans put forward. As a former GAO fiscal expert of the staunchly Libertarian persuasion, he has the know how. It would have been very wise for unions to been as involved in getting their own version of the facts communicated directly to ever camp in H'burg, rather than making paranoid second guesses after the fact about how "pure" Nutter was in delivering the message for them.

To quote Ronald Reagan way out of context, "trust but verify".
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Reality check

The mayor produced a budget that raised sufficient revenue by means of a real estate tax hike that did not require approval from the State Legislature.

Council nixed it.

Council countered with a sales tax that required approval by the State Legislature.

Council's plan put the City's budget at the mercy of State Senate Republicans.

The two eventualities we face, cutting nearly a billion dollars out of a single year's budget or five year slashes to City Worker pensions, are the direct result of the City's adopting Council's sales tax instead of the mayor's real estate tax.

Nonetheless, for more than a month before the budget (with Council's sales tax) passed on May 22, the mayor had been diligently lobbying Harrisburg to get the approval necessary.

On May 22, Jeff Shields wrote in the Inquirer:

Council voted, 17-0, for each of nine bills that codify the budget and five-year plan as protesters criticized the mayor and Council over cuts in service.

Nutter is expected to sign the bill and continue lobbying the state legislature, which would have to approve key components.

On July 30, Nutter held a rally at City Hall to enlist Philly residents to help lobby Harrisburg for approval. No Council members attended. Al Schmidt attended and protested against passing 1828.

At that point, Nutter had already been lobbying for more than three months for sales tax approval.

For those three months, approval of the sales tax had never been tied to City Worker pensions.

Only in mid-August, when Al Schmidt suggested amendments to 1828 to Senate Republicans, did approving the sales tax become tied to cutting City Worker pensions.

Pitching after-the-fact conspiracies about the mayor only wanting sales tax approval if it came with amendments is baseless. It runs counter to the facts.

Of cheapshots lobbed at Nutter, that has to be one of the more meretricious.

Fact: Nutter worked hard for 1828 before the pension amendments had even been thought of.

Nutter did so because he believed that the alternative to passing 1828 is layoffs, closures, and service cuts that will reek havoc on the City, especially on the lives of its most vulnerable citizens.

When they vote, House members should focus on the reality of Nutter's long campaign, and the dire, dire realities the City faces if it does not get 1828.

And Sean

taxes are not illegal until a court says so.

I would bet that a lower court will not enjoin the City from collecting taxes until the Supreme Court says it can't.

And PICA can't withhold any tax money unless it can make a convincing claim that the city's budget is out of balance. And they won't do so while a court case is being litigated. They are not going to reach that conclusion on your say so.

If the standing case law is that new taxes violate state law

any number of people subject to those new taxes will immediately contest them. You can't spend taxes that people don't pay and people won't pay taxes that they rightly claim has a giant legal black cloud hanging over them.

Put yourself in their shoes - "tough times economically and these 10 councilpeople say the tax is legal but these 3 say its not and all these state reps say its not and there is an ongoing court case". Would you pay that tax or wait and see how it plays out? Heck, Philly has a huge problem with people (particularly commercial property owners) who wrongly believe that property taxes are a mere suggestion that you might or might not pay, based historically lax collection practices. There is a pretty steep drop off in collection rates for taxes of dubious legal standing, for good reason.

That in turn is surely not in the current situation a reliable way to "balance a budget" per PICA and sales tax revenue collected by the state does not get redistributed to city on top of the contested tax that noone is actually sending in. Again Plan C but much worse.

The only chance PICA calls such dubious legal maneuvers a "balanced budget" is if the Governor and the state legislature puts a tremendous amount of pressure behind it and fully supports the legal wrangling for "taxes on the fly". I don't see either happening but the very second you have an actual statement from Ed Rendell saying he wants the city to be able add new taxes mid-fiscal year every time the cash drawer is low be sure to correct me on that, Stan.

I always find these schemes completely pointless. The point is not figure out new ways for the city to pretend to pay its bills with fictional, dubious revenue streams that cause yet bigger problems. The point is for necessary services to actually be paid for with real, legally secure and dependable revenue. If you value the services, value them enough to pay for them with "real" money.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

A substitute for the sales tax is not legally dubious

So we could raise $120 million without much doubt. Whatever tax we use to raise that money would not support new spending, it would just replace the sales tax revenue that the budget as passed relies on. The Supreme Court has never ruled that the City cannot substitute revenues in mid year if spending levels remain static.

Any additional tax that the City imposes to pay the pension obligation -- something not provided for in the City's current budget -- would raise questions. But this would not be the first time that the City has imposed a tax that could be challenged. Sometimes it's won; sometimes it's lost. In this case, we'd probably know very quickly. It's not at all clear we'd lose since pension spending is required by state law.

If we lost, we'd have to adjust. As Marc points out, our problem is only a one year problem in a Five Year window. There are ways of managing a shortfall over that period, ways that would include increasing taxes a bit more next year to cover the shortfall that might exist this year. But there's nothing to be lost from trying to get the revenue we need now by enacting enough taxes to close the entire gap this year.

Again, I'm not going to get into the debate about what the State ought to do. But we need to prepare for the possibility that it will do nothing, leaving us with no option other than Plan C. Simply sitting on our hands while the Mayor shuts down the City would be irresponsible, to say the least.

Cheering for the FOP to get the Senate to go with a dial back

Thats where I'm at.

I'm just extremely skeptical that outside of that field of legislative negotiations any of this other stuff has a chance in hell of working. Not because I don't want them to work, but because it does not sound to me like a remotely sane plan to hang something so important on. At the very least you have admit your scheme is extremely "inventive" to say the least and PICA cooperation would depend on a tremendous amount of pressure from Rendell which in itself is quite dubious. I still say the best plan is not to go there in the first place.

And its deeply misleading (and reflective of holding a political grudge) to say the mayor alone would be shutting down the city. Every single member of City Council's be an equally culpable partner in the failure of the budget they all passed unanimously.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

There's no question that Council is at least as culpable

as the Mayor. And there's no question that the best option is for the Senate to dial back. But when the only option on the table if legislative negotiations go nowhere is Plan C, then we have to look around for something else, even if it's a long shot.

Talk to me when that turd

actually hits that fan.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

The moment the ordinance is

The moment the ordinance is signed, there will be a taxpayer ready and able to challenge the ordinance. They would likely seek, and get, a TRO while the permanent injunction or declaratory judgment action is litigated. Particularly if there is authority that would render the statute more likely to be struck down than not.

The City may never collect a penny from the scheme due to the TRO.

The whole taxes aren't illegal until a court says so is a little more complicated than you think.

It's Chinatown, er, I mean Philadelphia

You may be right in general, Gaetano. I'm not a lawyer and I don't pretend to be.

But this is not a normal legal system we are talking about. We are talking about Philadelphia. Tell me you haven't seen our courts rule in ways that are entirely contrary to the law for political reasons.

If it weren't the case that the three rulings of that sort that immediately come to mind were in favor of positions I advocated, I'd mention them here.

It's not about fault, it's about fallback

I'm not debating here the merits of of HB 1828 as amended by the Senate. From what I've read over the weekend, it's going to be further amended in the House and sent back to the Senate regardless of what any of us say here. We should know one way or the other by Thursday. If the House does pass the amended bill, then this discussion is moot. We get the pension deferment and the sales tax. But if the House sends it back, then we're left with Plan C or waiting -- perhaps forever -- until a compromise is worked out. I'm just saying we need to have fallback plan if all that's left to us after Thursday is Plan C. And we need to start thinking about the fallback now.

I don't think there is a fall back

Except a joint letter from the Gov and Pileggi asking for more time from PICA. Which Pileggi already asked for and PICA ignored. And that is very, very limited. I think the Senate will give some but not much depending on what the House passes. They don't give a dog turd about Plan C's impact on the city but the Senate R's do care about getting a bad rep from the FOP as budgetary accomplices to "cop killers". That is the only reason - at all - the Senate has to give in any. But it is one not to be sneezed at. I dearly hope that whatever the House has cooked up involved some "off the record" negotiating with the Senate.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Of course there is a fallback

We are only talking about one year of a five year plan.

Even if the city can't raise taxes this years--and it definitely should try to do so and see what happens in the courts--it can raise taxes more in subsequent years and borrow to avoid massive service cuts this year.

The city can borrow not just from a bank but from the water department rate stabilization fund which has a surplus. It can delay SEPTA payments since SEPTA has a surplus. As Michael Nutter has already proposed, we can stop paying for the Court costs and tell the state to do what it is legally obligated to do.

None of this is easy. Some of it will lead to litigation. But there is not going to be great eagerness on the part of, say SEPTA to take steps that will lead to massive service cuts. And by the time any of it gets to a resolution, the next fiscal year will be upon us.

There is just no excuse for going along with a violation of the right to collective bargaining.

Except that in a democracy rights stil need to be defended

And in this instance many of the municipal unions showed a deadly level of passivity to the state process since mid-May - which is their own, not the mayor's, fault. Maybe they can make up for lost time. Thursday is a very big day.

The larger point is if its really Plan C vs. a 5-year infringement on collective bargaining, the worse case scenario is still an infringement that happens to be better than the furloughs many neighboring states are facing and it times out. And Plan C can't happen.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Deadline?

Does anyone know the point-of-no-return deadline for Plan C? Is it statutory and is it clear?

Friday PICA votes approving Plan C

Sept. 18 the layoffs in Plan C actually begin.

When the House passes what they are going to pass, if it includes revisions (which we all hope) there is a conference committee and the Senate has to revote. Hopefully the House has "pre-bargained" the conference committee process so we still stay on target time-wise but its really, really down to the wire. If the Senate says "No Friggin' Way!" there is a chance the Governor and Pileggi and Dwight Evans together can ask PICA for little bit more time. When Pileggi asked alone PICA stayed on its schedule (which it has it should be said been surprisingly flexible for Hburg deal-making so far).

Its the nailbiter of nailbiters basically.

And as I said, I hope both the unions and House leadership has engaged in a little "pre-bargaining" with the Senate. It would really not be smart if what the House votes on Thursday is a cold surprise to Pileggi (as much as I have come to dislike the guy).

PICA sets the deadlines but it should be noted that we are deep into the current fical year already and sales tax revenue does not turn on like a switch. Its already possible that no matter what happens in the state legislature that the city won't receive sales tax revenue for Oct but that the extra sales tax revenue we were counting on starts Nov.1, 4 months late or 1/3 of the fiscal year short.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

I'm pretty sure such bargaining

is going on.

The Republicans konw they over-reached. The Democrats know that they have to allow the Republicans to walk back on the worse stuff without looking like cowards.

Fortunately, neither side has gone out on quite the limb that the Republicans have gone out on with regard to the budget, where their no-tax promise is a real difficulty. If and when they give that up, everyone will know they folded. Here, it's a lot easier to give them a fig leaf.

That bargaining has been ongoing for days was confirmed

I guess I assumed everybody had read this, the best news of the day:

Paul Parsells, chief of staff to House Speaker Keith McCall (D., Carbon), said top legislative staffers worked over the weekend on new pension amendments that would assuage union concerns while meeting the city's needs.

That needs to get done, so fewer people are looking at libraries reopening by Independence Day 2010 as a victory.

And you gotta "appreciate" the guv adding his "sound" 2 cents

Rendell said he appreciated police and fire unions' concerns that the bill would remove major pension issues from collective bargaining.

"That's true, but this is an emergency," Rendell said. He questioned whether Senate Republicans would be willing to accept major changes, calling their proposals "basically sound."

Basically, he can't be bothered.

Is Plan C a farce?

I'm glad someone is wondering about this publicly. Waxman is the man.

http://www.philly.com/philly/blogs/our-money/Plan_C_Does_the_C_Stand_for...

A very good piece by Ben

And he didn't even raise the question Stan and I have raised here about the city actually raising taxes.

I think the key point he makes is that, even if Stan and I are wrong, Nutter assumes that the city can never raise taxes after the fist fiscal year of the five year plan. That's simply not true.

Right. The biggest problem facing us is the hole in the budget

that has to get solved in the next nine months and three weeks.

After that it's the simple measure of raising more revenue in the highest taxed city in the country.

letters and more letters

I see letters being issued by the Fairmount Park Commission and the Historical Commission saying that they will have to shut down and blaming the State Legislature. If Plan C is a farce, then I guess these letters are part of it. I would understand if the letters were purely administrative in tone and substance but the letters put the blame squarely on the State Legislature. "Only immediate action by the State" will prevent disruption of services. The letters are careful not to blame the Republicans -- I guess that's because it would be mixing politics overtly with City business.

It's a mix (like so many things in politics)

I agree with Ben that the mayor is over-dramatizing, and I DEFINITELY agree that over-dramatizing too much can be wearing and eventually deleterious to political discourse.

But all that said, it's also true that layoffs and cuts will happen if 1828 fails.

We're two months and two weeks into a fiscal year, and the City has failed to collect any revenue from a major source. If that source is cut completely for the fiscal year, immediate actions have to happen.

And as I wrote earlier, given the way things work, Fairmount Park and the Arts are likely to take the first hits.

Nutter's credibility at issue because of his distance from us

I have not met anyone in this city, either in or close to the city government or distant from it, who believes that Plan C will be as bad as Nutter says.

Why not? What's happened to the Mayor's credibility?

Part, but only part, of the problem is the over-dramatizing combined with a lack of specificity and detail.

Part of the problem is the hangover from the library fiasco.

Part of it is general cynicism about government.

And part of it is that the Mayor has treated us like the audience for his actions not like citizens who can play a role in resolving this crisis. Citizen's are more likely to believe their leaders when their leaders believe in them.

This is an administration that not only didn't want to activate the citizens but--I learned today from an insider--actively discouraged city officials from activating citizens.

I hate to say this, but it reminds me of the atitude of SEPTA to transit activists when I first started on that issue, three transit crises ago.

No.

Having to make up hundreds of millions of dollars of lost revenue in less than ten months is not funny.

Having to reallocate tens of millions of dollars to sink into the pension plan is not funny.

Accomplishing all this likely requires layoffs, closures, and service cuts worse than those that so many people protested earlier this year.

No one thought they were funny.

Ben's probably right. At this later hour, the mayor likely is over-dramatizing a bit.

But let's not be the kind of extremists who, when finding an overstatement or bit of melodramatic rhetoric in a political sales job, decide to throw out the baby with the bathwater. That's what right wing and centrist talking heads are doing with health care.

Maybe weekly trash service can be saved with a fee. But, face it, we'd be counting on legislation that hasn't been written to pay for services that are already accruing costs.

Huge funding gaps are left in this year's budget without a reliable revenue source.

Gamble that you can fill those gaps adequately, and you are gambling with the lives of the kids and seniors and everybody else who use services like health centers, rec centers, and libraries.

Likely overstated, but not a farce.

And if worrying about rec centers is too prole

Remember, the Arts get hit too.

With so many necessary services at risk, their funding likely would be the last restored too.

Even if you restore some funding through fees, how likely is that money is going to trickle down to, for example, the Mural Arts program, and the City's funding and subsidies to the Art Museum, the African American Museum, Atwater Kent?

They're all scheduled to get cut.

Bye bye Office of Arts, Culture, and the Creative Economy too.

And who knows, maybe not all 140 positions with Fairmount Park and the Parks Commission will be eliminated as Nutter says he plans to; maybe some parks will be able to fundraise or get volunteers to do some clean ups. But I'll bet plenty of parks in more economically challenged neighborhoods would get left out.

Is anyone really laughing at this?

Not laughing

No one is laughing at it. It is, however, appropriate to ask questions about what is really going on. When you say that Nutter is likely over-dramatizing and over stating it, do you mean that you think there's a Plan D waiting in the wings? If so, shouldn't it be put center stage?

A couple of points about "Plan C for charade"

Things folks might be missing by taking Ben's piece out of context.

1. The courts - Yes Nutter basically completely cuts all of the courts (which the Supreme Court said the state should be paying for anyway) - but that means in reality Plan C would be far worse than already discussed because you can't cut off courts. And the money we will have to come up with for the courts will have to come from somewhere else.

I'm not sure this is all not intentional. If Plan C doesn't quite add up and Harrisburg is close, PICA rejecting parts and sending them back for tweaking could be an intentional short term stall tactic. Eventually of course they cut off the portion of sales tax reimbursements we already recieve from the state. And more revisions will come from PICA saying "you can't cut this" about public safety things, meaning that paying for those "required services" means yet more has to come from other places.


2. "Trash Fees" and "Fees for service" are either just really flat property tax hikes or else unenforcable.

Ben is right also that there is no limits on "fees for service" as a revenue service so yeah trash fees could pay for weekly pickups - but why not just privatize the whole thing at that point? Realistically, there becomes a point with "fee for service" when maybe its just cheaper as a consumer of city services to "buy" those services directly from a private contractor.

Fees can only take you so far for another reason, also, because eventually too high fees breed non-compliance - short haul dumping to evade trash pickup fees, for example. Also since we don't have any technical means for implementing "pay as you throw", isn't any "trash fee" just going to be like the "trash fee" they are already putting on small commercial buildings - i.e. a regressive flat property tax by another name. The city doesn't have a means to tell what all gets tossed by who so such a fee would have to be a flat fee attached to a BRT #, just like the "trash fee" on commercial buildings. Its realistically just a flat property tax hike across the board and quite regressive - especially against seniors and people who own their homes but are cash poor.

With fees there is always a point of dimisnishing return with enforcement (you have to hire a lot of expensive employees to force people to pay them) unless you attach it to something solid like a lien on a house, which basically turns it to a flat property tax.

3. "Only one year" has it wrong
From what I have read, we actually save more numerically on the pension fund refi through stretching out the terms of payment then we are supposed to be getting in new revenue from the sales tax - and that larger problem does stay with us for the whole 5 year plan and beyond. Just because the Senate pension plan is a too heavy handed "solution" - the pension fund problem still remains a problem without HB1828 and its actually worse for us fiscally than the loss of the extra cent of sales tax revenue.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

yes and no

1. The court strategy is meant to force the courts into ordering the GA to pay for them. Can they do it? We don't know. I don't think Nutter has in mind closing the courts.

2. Yes there are limits to fees. As a one year temporary measure, however, they can help us.

3. That's ture, but we don't need the pension fund refi immediately. It can help in years 2-5 if we get it at some point. And we will because we are not the only municipality that will benefit from it. Others want to do the same thing.

And you don't mention borrowing either from a bank or from the water stabilization fund while we see whether we can raise taxes legally or not.

Thoughts

1. Suing the state won't provide quick revenue relief regardless of how the court case goes.

2. Fair enough. Fees can help. They can also help establish two-tier systems where rich neighborhoods subsidize privatized services and undermine support for decent baseline services in poorer neighborhoods. The darkside of BID's.

3. How do other communities benefit from our refi? The refi is just stretching out our repayment to ourselves, allowing big banks to make interest on us buying time. The refi is necessary but it isn't "good" and it only effects us, not other towns. Without the refi, the point is the hole we are filling in is more than twice the hole of just the sales tax alone because without the state approval we have to go back to our higher payment schedule on pension funds. Also why do we think as long as the ballance of power remains the same, the Senate is going to be any nicer to us on the pension funds next year?

4. Borrowing from the bank and racking up interest on a bet over a court case is still not something PICA is going to buy - therefore we lose yet more sales tax revenue. I'm dumbfounded by the idea that racking up expensive interest on debt to complicate matters would somehow make legally sketchy new taxes any more palatable to PICA. Obviously its even less likely to be approved because its "doubling down" on a bet we could easily lose.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

one more time

1. We stop paying for the courts. The state sues us. We counter-sue.

2. It's only for a year.

3. We can start the stretch out next year not this year if we have to. Other municipalities in the state want to do the same refi.

4. There is no question the city has the authority to raise taxes to repay the loans. They don't have to be repaid with sales tax revenues. That was Bill Green's bad idea, not mine.

Ben's piece says he's understating, not overstating

The fact that we can't actually stop processing criminals means Plan C is basically more a sign Nutter hasn't seriously planned for how to try to live under Plan C than an indication Plan C is not as bad as all that. Its just as likely worse. We will really have to pay for courts and courts are very expensive, thats more money that has to come from some place else - and that some place else will not be the state this year, at least. SB850 cuts a yet higher percentage from the support they are supposed to contribute to county court costs.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

The City is Insolvent

The wrangling here over Plan R and Plan C has yielded little discussion over what insolvency really means.

When individuals sense insolvency coming, they have to re-prioritize their spending. Maybe the credit cards get put at the end of the queue while the housing and utilities move to the front? Perhaps one takes up a 2nd job or has their non-working spouse go back to the workforce to whether the financial storm? Perhaps you give up an expensive to maintain asset in exchange for one that's less-so?

I am really surprised that the Senate R's actually permitted a tax increase in Philadelphia to actually go through. How politically unlucky for the City that Jupiter was not aligned with Sagittarius that day and Harrisburg didn't rubber-stamp what Nutter asked for. I guess that's what happens when you rely on a legislature that has a risk of changing political whim, unlike Philadelphia's which does not.

We've talked about cutbacks and pension reform. But I have yet to see anything anywhere online, including here, including Philly.com, where we actually pose what to do about our eroding tax base. The number of taxable individuals and businesses in Philadelphia has been flat or has decreased over time, yet our spending has gone up.

This is unsustainable.

Moderate tax increases can pass, but to really attack the budget you need a plan for aggressive tax base growth. In the last 60 years of Philadelphia's history has there never been a remarkable effort with the full backing of City Council to aggressively court growth and development, and we suffer for it.

I am afraid that Plan C will only light a match under an already upset tax base and agitate some more people to leave Philadelphia [for starters, the 3,000 City employees who are to be fired and have their pensions forfeited].

And when people leave Philadelphia they leave behind property that declines in value which erodes the property tax base, which reduces funding to the School District, which accelerates neighborhood decay, etc. You can see where this leads to.

Yout not all wrong but you are missing big specifics

City government can move and has moved towards greater efficiency. Parts of the city are attracting lots of new and more prosperous residents. Its just the growing areas have not quite tipped the balance over the areas made up of decaying row houses, crappy schools, abandoned factories, high crime and low hopes - which are steadily bleeding population - but the growing parts have been making steady progress on catching up. The rate at which we lose folks on balance has been going steadily lower for many years.

The point is that people failing - failing in schools, failing competitiveness in the 21st century job market, failing and falling into the criminal justice system - costs a whole lot more sometimes than investing in basics that circumvent that path to failure, rather then cutting away the remaining windows to opportunity for Philadelphia citizens that can and want to move with the city to greater prosperity.

This current fiscal crisis, furthermore, is especially exacerbated by pension fund problems - partially because of years of City Council failing to invest enough in the pool multiplied by a historic losses in the pension funds holdings. So that part is real and something the city does have to get a handle on - even if the Senate bill does it in an overreaching way.

The other huge problem in terms of the rapidly escalating cost of city government is local jails. Huge, huge growth in costs there.

There are also of course still problems with patronage and corruption in city government that I love to bitch about with the best of them but their costs have been slowly going down and overall are tiny in comparison to the rapid escalation in costs of local incarcerations and "catching up" with employee retirement benefits.

The bitching about "declining values" seems a little odd too. Despite the recent downturn, parts of Philadelphia have seen tremendous increases in value overall in the last couple of decades. I might be blessed but of 3 properties I've owned in Philadelphia over the last two decades, two have almost doubled in value even including recent minor drops and one more than quadrupled. Owning a house in Philadelphia has been the only truly financially rewarding thing that has happened to me here I have to say. A lot more rewarding both financially and dare i say it "spiritually" than our stil somewhat sub-par job market.

Also BTW firing 3,000 workers does not forfeit their benefit if they have worked long enough to earn one. They don't accrue anymore benefit obviously and it diminishes the union's overall political clout but if they earned a retirement benefit over their years of service, the city still has to pay them the benefit they earned over their years of service. That retirement benefit (just as in 401ks) is part of their compensation they earned for the time they put in on the job. Firing that many hurts the city's livability in a big way, but it by itself does not help the pension fund problem much.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

That's well and good

even if we did dramatically check our prison population and reduced it. Suppose we sift through all the conviction records and identify 2,000 who can be let go right now. Rest assured very few of those in the overall prison population have employable prospects at the moment going forward for the next 24 months, and it's also quite likely that same population will also utilize city services elsewhere; in other words, their release solves a cost problem, but it doesn't create a revenue benefit.

The issue I am raising, again, is that the tax base is not increasing.

And yes, we've come a long way in revitalizing a few hundred blocks of Philadelphia, including CC, a couple parts of West Philadelphia, some of South Philadelphia, and completely revitalized Fishtown and Northern Liberties.

At the same time, areas that were once middle working-class, like Oxford Circle, are now in freefall. Same for Tacony, parts of Mayfair. Decimation is now almost complete in the Frankford section. A large chunk of Oak Lane is in jeopardy and it also has a high rate of sub-prime mortgages and foreclosures in Philadelphia... it's very alarmingly high; and this is an area that sought a lot of revitalization, which is very troubling.

As for property values, it's going to be very, very interesting with the dramatic pullback in lending how property values play out with city unemployment now a few tenths of a point off from 10% and climbing and a lot of leveraged dollars pulled out of the consumer lending market.

Ask questions. Just don't assume happy answers.

The first question I'd ask is "How in the next ten months will we pay for the something like $400 million that, in the budget that Council passed in May, was either covered by revenue from the proposed sales tax or temporarily saved through the proposed pension payment deferral?"

The mayor provided answers with the Plan C budget.

By all means, question it. Question whether it isn't more onerous than it needs to be. Ben shows some places where it goes overboard.

It's even ok to speculate about restoring some money through things like a trash fee, though no such legislation is written, and we're more than two months into the fiscal year.

What's less ok is assuming too much, jumping from one extreme to another, or forgetting the facts we know. The mayor may well have been hyperbolic in arguing for the sales tax.

But we should avoid the temptation to jump from finding problems in Plan C to assuming the crisis itself is a joke, or assuming that there are a lot of possible fixes out there. If there were -- or if a viable alternative to Plan C could be easily assembled -- why wouldn't the mayor's savvy rivals, such as Bill Green, have proposed them?

Most importantly, we can't forget what we already know.

We know a $400 million hole will exist if we don't get 1828, and that filling such a hole in ten months would be very painful.

As Ben wrote in May:

Plan for the worst. If Harrisburg refuses to pass the enabling legislation, the city will be in serious trouble. It will be impossible to raise taxes mid-year and city government will be forced to cut hundreds of millions of dollars in an extremely short amount of time. That could mean layoffs of thousands of city employees, including police officers, firefighters, libraries, and other personnel. City facilities, such a libraries and health centers, might also be slated for closure. It's not entirely clear if City Council will have to approve these reductions, but you can sure there will be a lot of political fallout from such major budget cuts.

Why is it better to raise property taxes as a flat "trash fee"?

Is it fair that people in $100k row homes are charged the same as folks in $800k mini-mansions? I continue to have a problem with trash fees that aren't geared to incentivize recycling and are also regressive at the same time. On the sales tax at least clothes and food are exempt. Presumably landlords will just try to pass the "trash fee" to tenants.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

The Nutter Strategy for winning support in the General Assembly

has almost entirely focused on quiet lobbying by him and his administration.

Council has not been involved.

And citizens have not been involved.

Compare that to the Street Administration's role in securing funding for SEPTA. The Street Administration basically gave about half the time of one of their top officials, Lance Haver, to the Pennsylvania Transit Coalition. (I know because Lance, Howard Cain, and I worked together out of the AFL-CIO office on 22nd street.)

Under the leadership of Pat Eiding and Tom Cronin, Lance and Howard with some help from me, built a big statewide coalition. We engaged an large number of unions in support of our efforts here in Philly and around the state. We engaged other municipalities in our efforts as well. Mayor Street did some of the outreach for that personally, if I remember correctly. He came to coalition meetings and met with our leaders. One day, to thank us, and to get a photo op on the Broad Street line, he took us by train to the Wachovia Center and let us sit in the City Box for a Sixer game. (He didn't stay for the game, though.)

And we went en masse to Harrisburg. We took a train and maybe 20 buses from Philly with about 1700 people. And we brough another 2000 people to Harrisburg from other parts of the state. The Mayor kept us guessing about whether he was going to speak. But he showed up and gave the best fifteen minute speech I think I've ever heard. He was passionate and funny and moving. (Unfortunately, as sometimes happend with Street, the speech when on for about twenty minutes in a pouring cold rain. If he had stopped five minutes sooner I'd think of it as the best rally speech I had ever heard.)

And we eventually won.

Would it really have been impossible to do something similar in this case and maybe not just for the sales tax and the pension re-fi, but for additional support for muncipalities and / or for a decent state budget? We are not the only municipality in the state that has a serious budget problem and a serious pension problem. There are municipal unions in all those other cities and towns. And he could have mobilized all of us, the progressive community, to help build that coalition.

Wasn't there an opportunity to create a big statewide urban coalition? And who could lead that other than the city of Philadelphia?

And not only that: John Street was not well loved outside the city. Michael Nutter is, especially in the suburb. He could done much more personally to move an outside / inside strategy this year.

And at a time when the library fiasco had aliented him from progressive and neighborhood leaders, by engaging us in a fight for more support from Harrisburg, the Mayor could have rebuilt the trust and connections he had lost.

I can't imagine no one in the administration thought of this strategy. The question is why they didn't adopt it? After all, it worked before.

What does it tell us about this Mayor and his style of politics, that he only very haltingly and at the end of the process, tried to engage the public in fighting along side him for the city?

I agree a wider coalition that Nutter alone should have gone

but only a small part of that is on Nutter. Council basically refused to own up for the budget plan they themselves put together. That is a huge abdication of resposiblity on their part.

And city unions I think now see in hind sight it was majorly important for them to have exercised a direct voice in what was being shaped in back corners of the State Senate this summer. Pity they didn't come to that realization more fully before the State Senate used last minute timing to engage this game of pension fund "chicken".
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Only a small part?

He's the Mayor in a strong Mayor government. (At least that's what he tells us when he wants the authority to close libraries without question.)

Who else is supposed to take the lead if creating this coalition if not the Mayor?

Now some of us thought about helping create such a coalition last spring. But the people inside the administration I talked to were discouraged. The unions were alienated by the Mayor's tough line on their pay and benefits. And progressive activists were still pissed off beause we had to fight to keep libraries open and because we had been fighting the Mayor about taxes.

No one very interested in it. And given the heath care campaign, I was in no position to do much about it myself.

The problem with administration, I tihnk, is that you can't use an inside/outside strategy unless you want to cede a little power to the outside.

Of course, if you are really clever pol, like John Street, you cede as little power as you can while making maximal use of the outside activists. But you have to recognize that so long as you need those activists, you also owe them something. (And maybe that explains why Mayor Street was relatively accomdating to the unions and was so adamant in supporting transit activists when SEPTA tried to stop transfers.)

This administration, it seems to me, doesn't want a partnership with unions or progressive activists because it would mean ceding some power to them. And that's why it had no interest in building a broad movement.

It's an administration of the experts by the experts and for_________.

Well I'll let others fill in the blank.

What the Senate did was BASICALLY SOUND

"What the Senate did is basically sound," Gov. Rendell said in an interview with The Inquirer Editorial Board on Tuesday. "It's very, very difficult to oppose it."

-- Gov. Ed Rendell

http://www.philly.com/inquirer/opinion/20090910_Editorial__Philadelphiac...

basically sound?

Just because the governor and the Inquirer think it's a good idea to eviscerate collective bargaining rights doesn't mean the rest of us should follow like lemmings. The Senate made a cynical end run around union rights, perhaps thinking the city was so desperate for this money that the citizens would swallow anything. Wrong. They especially hadn't counted on the backlash from police and firefighters.

There's no question that pensions are in trouble in PA municipalities and many other places. Mandating a state takeover and draconian benefit cuts is not the only and certainly not the best way to deal with these problems. The Inquirer assumes that bargaining over pensions (or anything else) automatically means increases and improvements. Would that it were so! But even when unions have to agree to concessions, we would still prefer to bargain those provisions and not have them shoved down our throats. At least then we know we get to fight another day, and achieve something better when the economic climate changes.

Marc is absolutely right about his contrast between the Street and Nutter administration's strategy. It's especially laughable to hear Nutter now complain that the legislature is holding the City hostage when it was his and City Council's refusal to deal with their own budget mess in the first place, instead abdicating the fix to the State Legislature. They were handed millions of dollars worth of suggestions for revenue increases and service streamlining by the hundreds of concerned citizens who showed up at their citizen forums. They chose to ignore them. He put himself and all of us in this jackpot. Everyone knows much of the state legislature has no love for Philadelphia and many of them delight in sticking it to us.

So I take it you would help push Council for fixing the BRT?

Property taxes are the one piece of common city revenue collection schemes that are both woefully mismanaged and undercollected and also regressive and punishing of the row-house neighborhoods in terms of how assesments are askew. There is no path to a workable budget free of state approvals that does not involve retooling property taxes and the BRT as a major component. But its the one City Council fears the most because old people vote and old people hate property tax increases - even if it makes the system overall more fair.

And that piece of the puzzle is all Council.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

You forget the BPT and the wage tax

It is very likely the wage tax can be legally increased, next year, if not this. And there's no question that Council has the legal power to make the wage tax more progressive by exempting low wage workers. Furthermore, we also know the BPT can be rearranged to be more progressive and increase revenues. So no, we don't necessarily have to put ourselves at the mercy of the legislature to get out of this fix.

But the wage tax was not legal this year

which was maybe yet another reason why city unions might want to look more critically at the State Legislature. On face value casino gambling would have nothing to do with city worker retirement benefits but how Act 71 tied the city's hands on the budget was something many did not expect. If I worked for DC33 or DC47, I might also want to look over that portion of the gambling legislation very carefully - maybe even talk to members of the Philadelphia delegation after the dust settles on the current crisis. I'm sure many critics of the casino siting process would welcome city unions joining their ranks in looking at problems with how gambling was imposed upon Philadelphia by the state.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

The wage tax may be legal now

There's a place and time for looking at who made which strategic mistake, and when. But whatever variant of Plan C we face now, that's the problem we need to spend most of our time confronting at this time. I'm told that the legal basis for going back to the wage tax may exist right now. Council needs to come back immediately to look at that and other options in the event the legislature deadlocks over 1828. In that light, here's the letter that the Coalition for Essential Services is delivering to the Council President today.

Dear Council President Verna,

It now appears that Republicans in the State Senate are determined to hold the City hostage to its demand that City unions give up their bargaining rights over pensions. If current reports are true, the House will not go along with this reckless gambit and the City may well not obtain authority to defer pension payments or enact a sales tax increase.

The Mayor has stated that the City’s only option in the event the legislature fails to go along with Senate Republicans, is “Plan C.” Actual implementation of Plan C, with its mass layoffs and facility closures, would be catastrophic. Instead of passively accepting Plan C, City Council must immediately initiate steps to raise the revenues that would remove Plan C from the table.

In that light, we call upon you to immediately take up the tax proposals we made in the Spring. These would include rollbacks in recent cuts in the Gross Receipts Tax and the Wage Tax. These could be coupled with protections for low wage workers and small businesses so as to make these tax measures far more progressive than the sales tax proposal that is now before the legislature.

We believe that these emergency taxes could pass legal muster. We are aware of an old Supreme Court case that suggests such taxes would be illegal, but for a variety of reasons we think this situation is not governed by that case. In any event, we have no other good option at this point, since doing nothing might pave the way for Plan C and catastrophe.

We urge Council to immediately hold a special session to enable introduction of these measures and to enact them as speedily as the City Charter allows.

Thank you for your consideration of this urgent request.

Respectfully,

Coalition for Essential Services

Cc: All members of City Council

"It now appears"? "current reports"?

The day after the Inquirer ran

Compromise in works on Phila. budget crisis

By Mario F. Cattabiani, Marcia Gelbart and Jeff Shields

Inquirer Staff Writers

State House and Senate leaders are looking for a compromise on controversial pension language in the Philadelphia budget-relief bill ahead of a possible House vote tomorrow.

Paul Parsells, chief of staff to House Speaker Keith McCall (D., Carbon), said top legislative staffers worked over the weekend on new pension amendments that would assuage union concerns while meeting the city's needs.

Explain the timing.

I really don't want to assume you were hoping for 1828 to fail, so you can run in with a newer, bigger tax hike.

But without explanation, it suggests something like that.

Guess you haven't been reading all of this thread, Sam

since it's all about fallback positions, not retracing our steps. The fact that the House may consider amendments doesn't mean the Senate will accept them. Ergo, there may be stalemate. At that point we won't be having an abstract discussion about the impact of the taxes you hate. We will be faced with either going to those taxes or some variant of Plan C. I know you don't want to make that choice, and if there is no impasse none of us will have to. But it seems to me that the possibility of impasse in this state is hardly idle thinking.

Personally, to make clear, I would prefer that the City be funded by the State as if it weren't a stepchild so that we would never have to increase taxes again, whether that be the wage, property, sales or business tax. But the greening of the legislature isn't happening soon. We need to do due diligence in light of the legislature we have. That means starting the process of averting Plan C through other means if the State once again cuts us off at the knees. Even if, in the abstract, you hate all taxes other than the sales tax, you might want to reconsider in light of the alternative we may be facing. You can be comforted by the fact that if Council introduced tax measures today, it still wouldn't be able to pass them for at least two weeks under the Charter. By then, hopefully, the whole process would be moot because the legislature finds a way to act responsibly. But if, as usual, it doesn't, we will have another alternative that we can put in place quickly if Council and the Mayor begin to plan now.

The vote is today.

I just want to know why didn't you wait for the outcome, given the letter's language?

Because the mad scientist never rests

on his quest to set off a compicated chain of events to bring the "Franken-tax" to life.

Must never let even the slightest opportunity slip by.

A man becomes very attached to his progeny.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Funny, I like that

And to do anything to conjure up a Mel Brooks film I consider to be a proud moment. Unfortunately, after we've all had our good laugh, we're still sitting around waiting for the good folks in the legislature to snatch our [insert your favorite body part] out of the fire. Do you have a good, funny film reference for that?

No but I have one for Sam's fears

about a seemingly "fairer" BPT stalling out much needed job growth. I guess the irate crowd would be the Chamber of Commerce.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

And then they'd walk out

heading straight for City Line Avenue.

But if we didn't sic the monster on them

they'd just love the show. Then they'd dance through the streets, happily throwing hundred dollar bills at the poor people everywhere simply at the joy of not being eaten alive by the bad tax monster. Then everyone would live happily ever after.

You are right, with no studies

its better to just assume the monster will be well behaved despite "Abbey Normal"'s long track record of contributing to job loss in his last passage through life.

On a serious note, I like the analogy because it underlines the problem that disaster could well be the irrational results of the crowd's fears, but its still disaster.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

We know what disaster is and its name

is not Frankenstein; it's Plan C.

Or Plan C is a crash course in bulemia

while Frankenstein turns out to be a simmering case of anorexia.
You end up at the same place, just one is the fast route and one is the slow, scenic route.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Maybe if we didn't hate them and want to set a monster on them

we could just charge them the same for a ticket as they do in, say, Boston or Atlanta.

And then they'd stay and maybe come back for more performances.

You'll never convince me that hating businesses makes for good public policy, Stan.

Because it isn't true.

Big corporations run their businesses

for the benefit of stockholders, not anyone else. Stockholders in general want maximum profits, no matter how they're gotten. That means if a corporation has to pollute the environment, drive down wages, kill their customers with chemical laden tobacco products, drop health care policy holders while they're dying, fill the airwaves with drivel, buy politicians, make children into buying machines, poison our food supply while torturing millions of animals in the process, plasticize our water supply, invent financial instruments that are giant ponzi schemes, make schools into money centers, defraud home buyers into taking out unsustainable mortgages, prey on gambling addicts, suck up public money for corporate welfare, turn prisons into profit centers and promote their growth, and last for tonight but not least, make the production of armaments and their spread around the world the single largest industry in this country, then they will and they do all of that.

Now, notwithstanding the inherently amoral nature of giant corporations, they obviously employ millions of people in this country including tens of thousands of Philadelphians. We cannot overnight put an end to the complete perversion of societal values that corporate dominance has created. But neither, in choosing how to advance our economic future should we forfeit the chance to think about our moral future. And that future lies in prioritizing other ways to provide jobs to our people than succumbing to corporate blackmail. There is a lot of thinking going on around the country about how to do that, and in Philadelphia as well. I will be writing about some of it in the future. In the meanwhile, I listen when the corporate elite says either choose us or libraries, schools, recreation centers, health centers and public services. I would rather not choose because, as I've said, I'd rather we don't have to raise local taxes at all. But the choice may be forced on us by the corporate owned Senate Republicans, and if it is, I hope we will all choose our people over their profits.

Biased much?

Stan, the computer monitor that you're staring at right now... was that manufactured by a government entity or a publicly traded corporation? Just wondering.

As an aside, I don't believe the solution for Philadelphia anytime soon is to badmouth business interests. I am for reducing some rights corporations hold, namely the legal concept of the corporation as a "person" with no liability; but that's a Federal issue, not a local one.

Considering that the Commonwealth is just as bankrupt as the City is, I can't possibly imagine solving Philadelphia's joblessness problem would come from a massive amount of investment in the form of unsustainable state bureaucracy. The Commonwealth is looking at cutting state jobs, not creating them.

Stan, you live in a city that was mostly created out of centuries of business interest. Look all around you. The huge swaths of rowhomes that stretch out into the horizon in Philadelphia, many historic buildings and a large portion of its architecture was all created out of the drive for commerce, and that commerce was privately-held or cooperative. That ocean of commercialism pulled out long ago and left us with a carcass that relies only on a few industries (government, healthcare, higher education, some tourism) and we as a public have neglected to create an inviting and hospitable environment where new suitors are clamoring to enter.

We have had decades of piecemeal attempts of public development to revitalize some areas of town, with mixed results.

I don't think very many people are singing the praises of NTI. The publicly-funded bulldozer destruction of much of the city from Old City down to South Street did create the "New" Society Hill and that turned out to be a success. The city-engineered scheme to redevelop across from the Lit Bros. building combined with the lack of due diligence gave us the Disneyhole.

Then we decided that we should turn development decision-making away from centrally-directed planning over to individual neighborhood groups consisting of the most active residents, and this has proven over time that in most cases, the civics prefer banal over beneficial, and civics that are located in areas with tall buildings have acute sciaphobia. Even more hilarious is when several of these civics [who I will omit as to not offend their sensibilities] are easily bribed by developers with permanent parking spaces in their development plans.

I don't think we'll ever return to the Edmund Bacon days where we set a macroscopic vision of our city and where we want to go with it, which is most odd since this town has been a political singularity for decades. Factionalism rules the day at City Hall.

We are in many ways similar to Boston, but Boston solved their problems with the aftermath of the Industrial Revolution and also had statewide support in doing so; Boston and Cambridge remain the economic engine of Massachusetts.

We hoped the problems our problems would just go away with time.

We're still waiting.

OK here we sit tied to the tracks

waiting for "super Dwight". Pileggi is off screen twirling his imaginary mustache. Big Ed is the clueless train engineer.

If only it were that easy to untie the ropes.

Sadly reality might be just this silly.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Do we really want to open up philosophical tax issues?

When someone suggests raising the Wage Tax and the BPT, I will always feel it's worth noting that those are the taxes cited as most deleterious to keeping and and attracting jobs, as in "Studies indicated that taxes were responsible for fully half the city's job losses. The main culprits then and now were a wage tax and a business privilege tax," from Basil Whiting's Pew study of 2007, and update of his original 1999 study.

No one argues job erosion and unemployment aren't major causes of misery in the City, relevant to a discussion in which closing health centers, rec centers, and libraries hovers as a very real possibility.

I just wonder if we want to start this argument again, when there are plenty of pressing and important City issues at hand, and given that these philosophical differences won't be relevant to real City policy for awhile.

The gross receipts tax can be cut for 85% of all local business

I just want to reiterate that for those who may not remember when our last debate about this ended. We could cut the tax for small business and still raise more money from the tax by rolling back its rate to an earlier level, one that would still be well below its high. But I don't want to get into a major debate about the specific form of any tax measures because I'd be perfectly happy if any that we enact right now are limited to the current fiscal year. That would deal with the fiscal emergency we're facing today. Next Spring will be time enough to talk about a longer range reform of our tax system, one that we can deal with absent the specter in the room of a near total shutdown of the City.

I expect you to take your best swing, Stan

for next year, that is. But outside the philosophical issues, the legality of a wage tax for the current year is very, very questionable. It goes against both the constitutional issues about "fix-it" mid fiscal year taxes and also gaming law - which still may be a significant feature in the state budget deal.

I understand you interest in looking for alternatives but in the interest of accuracy you should be careful about offering false hopes.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

But 10,000 businesses would have their taxes rise

including all the City's largest private employers, despite already paying the highest taxes in the country, and despite a continuing 60 year history of large Philadelphia businesses relocating.

And despite there being no

study that credibly compares the relative effect on business location of tax rates to all the other factors that might chase them away, from deteriorating schools, housing and other infrastructure, high insurance rates, high crime rates, political incompetence and corruption, high utility rates, etc, etc. Again, I would much rather not raise any taxes because we are seriously underfunded by the state and the tax burden needs to be spread around. But sometimes we have to make lousy choices. Hopefully this is not one of those times, but as you noted below, and maybe we can leave it there for now, it doesn't hurt to be prepared.

We continue to disagree about how much taxes play a role

in the City's continuing struggles to maintain jobs and residents and to grow its economy.

Sixty years of continual losses and having high or the highest taxes may seem like a coincidence to you, but I've never spoken to a planner or anyone else who studies the subject who comes to that conclusion.

In fact, you don't need to know to what degree taxes -- in Philadelphia's case, the highest taxes in the U.S. -- play a role in jobs escaping the City, in order to 1) conclude they play some role and 2) to do something about it.

When the temperature drops, you don't wait for a study to come back to tell you how much heat you're losing when your windows are open. No; heat's escaping at some rate, whatever rate, and it's causing you some degree of loss, so you do something. You close your windows.

I think the time has long since passed when Philadelphia should decide to somehow close its windows, so no more jobs escape.

As Marcia Gelbart noted in the Inquirer in May, Philly was one of only four large cities in the U.S. to close their 2009 budget hole (everybody had one) with a tax hike.

Most other cities, like Boston and Atlanta, used the crisis to lower costs and trim its workforce.

So, relative to other cities, Philly's tax burden is likely to seem even larger, even less competitive, once we get whatever hike is coming.

I hope that doesn't cause more economic misery, but similar situations have in the past.

By the way, Basil J. Whiting, the consultant who authored the Pew Study, used data from the Urban Institute to conclude that taxes play a very large role in Philadelphia's job erosion. He augmented it with interviews with business owners who left the City.

What about New York?

New York raised its taxes.

Boston is a very special case politically. It is the capital as well as the largest city and has a much larger percentage of the state population than Philly does. It has always been better treated by Mass. state then Philadelphia is by PA. That's why the T is one of the best transit systems in the country.

You have it completely backwards

The special case is New York, as everyone who looks at comparative economic studies of cities knows.

It's the financial capital of the Western World, Marc, an economic boon that most would find greater than um being the state capital of Massachusetts.

New York can get away with tax hikes that other cities can't. Wall Street, the multinational and international business interests, and other major parts of its economic engine really can't move. Thank you, U.N. Thank you arts institutions and Broadway.

Philly's situation is far closer to Boston's, state funding advantage and all.

And even with their tax hike Marc, New York used the crisis for major belt-tightening: they laid off 3,759 city workers while eliminating 9,782 (!) jobs through attrition.

And of the cities that Larry Eichel studied for Pew (cited in a Marcia Gelbart article in May), New York was the only one to enact a major tax hike like Philly's; Atlanta, Baltimore, Boston, Chicago, Columbus, Detroit, Kansas City, Los Angeles, Phoenix, Pittsburgh, and Seattle did not.

Boston closed rec centers. Chicago's Mayor Daley, whom you used to cite fondly, gave city workers the choice of across the board 14 day furloughs or 1,100 layoffs.

I don't like brass knuckles practices like that, but Philly has to stay aware of what the cities it competes with are doing.

And if we are raising taxes, and considering raising them further, we have to be aware of the lengths competing cities are willing to go to avoid raising taxes.

Look at how much stimulus money states passed to cities

and my guess is that you will see that Philly did substantially worse than most of those cities.

And look at what part of the overall city budget is picked up by those cities as opposed to states, and you will see that Philly did worse than many of them.

In the one area I know best, transit, Boston is the outlier. A big chunk of funding for the T comes from the state, far more than in Pennsylvania.

And, on top of that, in Philadelphia residents we pay to subsidize the train rides of commuters into the city as the subsidy for regional rail is far higher than it is for city buses.

So we are screwed twice.

And your selective quotation is impressive

Not one but four of 13 cities were raising taxes in May according to the Gelbart atricle. Atlanta was considering doing so as well and since has done so. I don't have the time to do follow-up on the other 8 right now. But it will be interesting to look more closely.

Also you give the impression that here in Philly we are raising taxes while other cities are cutting spending and positions. But the article says:

In Philadelphia, 47 workers were laid off last fall, and an additional 250 positions are expected to be eliminated as of July 1, including 74 more layoffs.

Those figures, though, do not tell the whole Philadelphia story, Budget Director Stephen Agostini said. "We feel almost 3,000 positions we eliminated in the fall were forgotten," he said. Many of those were contract and part-time positions.

Consequently, he said, "the magnitude of what these other cities are doing now looks so much larger."

Nor do you point out another relevant difference:

Philadelphia stands apart in that it is the only city that must prepare a balanced budget for the next five years, one that must be approved by the state-created Pennsylvania Intergovernmental Cooperation Authority.

As a result, the report said, "unlike some other cities, Philadelphia cannot finesse its budget problem this year with stopgap measures, thereby pushing the day of reckoning down the road."

Cities "finesse" recessions all the time by figuring out ways to run deficits temporarily. Despite requirements of a having a balanced budget Operating costs are paid for with debt not just in New York City but in New York state.

It's almost hard to imagine, but in this respect, Philly a a model of financial probity.

Plan A already was "finessing a deficit"

and many, many people criticized PICA for allowing it in the first place. And it of course already involved a tax increase.

We have a dangerously underfunded pension system due to decades of City Council not putting in enough money to cover its commitments to city workers. Plan A as it is, involves a far from riskless scheme to borrow money from that beleaguered pension fund that we are supposed to pay back with interest in a few years as the economy recovers. Councilman Green's contribution was to borrow from the pension fund rather from the banks (Republican Councilman O'Niel's plan) so that the interest we paid back goes towards increasing the health of the pension fund long term, rather than just going into few well connected banker's pockets (who said those Republicans were good at handling money).

We already are pushing the limits of what a city can or should do to "finesse a deficit". What you are suggesting - violating standing state case law to "redo" the budget mid fiscal year - goes well outside the realm of safe and prudent municipal financing. It has a tremendously strong chance of being shot down. It may lull people into a misleading sense of security about how dire the consequences are for the city.

I agree many cities are raising taxes, Philly already is - with many, many new regressive fees and with sales taxes. Many, many cities are also cutting dramatically because they have to. So is Philly. Pointing out that many cities are responsibly doing a mix of new revenue and tough cut backs is not an argument for Philly to engage in plans that depend on both unreliable and job-hurting revenue schemes.

And again Philadelphia's situation with PICA is no longer (despite the article) that unique. Pittsburgh, Reading, Norristown all have similar arrangements in place where a state-appointed board demands balanced budgets and has the power to stop state reimbursement of sales tax revenue if those cities fail to meet that target. PICA was first and has a unique name but for all intents and purposes, these other cities are under basically the same constraints.

Its well past time to stop whining about PICA. There is nothing wrong with the city actually paying for services with real revenue streams and we are not alone in having to do it in this state. Again, if you actually value city services and city workers, you find a way to pay for them with real money and you eliminate every ounce of waste and patronage-waste that puts a drag on your ability to maximize that real money.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

And you keep finessing the question

of what we should do except sit around and wring our hands.

The governor ultimately controls PICA

I don't see a lot of realistic flexibility in the current situation beyond that fact, both in terms of H'burg working a deal and the legal propsects of "re-do" taxes. If you really believe in a mid-fiscal year tax redo, do you honestly think Rendell is going to go to bat for you to bend the state constitution and PICA law to jack up the GRT on Comcast? Is it worth risking contributing to the human suffering under Plan C to hope he will, against all expectations?
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

There's no bending of the Constitution or PICA law

involved in replacing the sales tax revenue. There's just not.

Look, I want 1828 to pass no matter what you think my ulterior motives may be. Dealing with the pension hole without 1828 is a real problem, although, as I've said, the Mastangelo case is not necessarily an impossible burden even in dealing with the pension issue. But I'm not for playing Russian roulette with the City budget anymore than you are. Still, it feels to me that the theory that we should just shut up and let things play out in Harrisburg is dangerous. It's sort of the local analogue of not criticizing the War in Iraq because it will embolden our enemies. No, our enemies will do what they will do. We have to do what we have to do to prevent the casualties from getting out of hand.

Well I suppose you could be helping municipal workers

contact their State Senators to put pressure on them to accept the House 1828. Particularly effective would be municipal workers from cities outside of Philadelphia with R State Senators. Pittsburgh springs immediately to mind. Pressure from Philly workers on suburban Senate R's also might help them realize that they might as well pass the House revisions.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

That's another evasion, Sean

You know full well that furious lobbying is going on right now as we speak (blog) to get the amended 1828 through the House and Senate. So we'll see in a day or two whether this discussion becomes, as I hope, moot. But if not, we're going to have to do something here.

Dupe post.

Dupe post.

You have not made a convincing argument

That after City Council for legal purposes "approved by silence" Plan C as law if the state legislature fails that "replacement taxes" is not a violation of the prohibition on budget re-do's. There is way, way too much documentation that the city knowingly approved an overall budget that its either Plan A or Plan C for what you are proposing to win in the courts. I would be happier if I shared your enthusiasm but PICA, Council Pres Verna, the Mayor are all extensively on record that those are the only two options and that extensive record of commentary does yet more serious damage to your chances for a long-shot budget redo.

Raising wage taxes that were illegal to raise when what you would be arguing was still the "current budget" (in your argument now merely "revised") is an argument that has the seeds of its own refutal built right into it.

These are unfortunately fundamental logical flaws that would likely embarass even Pennsylvania courts to ignore.

I'm not evading, I'm just sad to say that I think your legal strategy can't win. But hey you are the lawyer, what do I know.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

What do you know, Sean?

Not much about this issue. But I'm not going to get into a point by point refutation of your argument, Sean, because the one most important thing I learned in a 35 year practice (now mercifully over) is that the only law that is real in PA is what the Supreme Court says it is on the day it says it. In many important cases (i.e. the takeover of the School District by the State) it no longer bothers even to issue opinions. It just does what it feels like doing. It's a disgraceful court.

I'll go further just to say this. Assuming the Court applied real analysis to a case that might come before it, most of the points you raised above might well be deemed irrelevant. On the other hand some judges might deem it relevant. You know the Mastrangelo case that everyone looks on as gospel was decided by a bare majority of the court over some stinging dissents. That was 40 years ago. So crystal balling what the current Court would do on the facts facing it now, compared to what a totally different Court did 40 years ago facing quite different facts is what would be truly embarrassing. I don't know, you don't know; all we really know is that we're bleeding and arguing over whether the bandages would pass legal muster.

Now, as usual, I'll leave the last word to you.

Gelbart's article and Eichel's conclusions are clear

1. The article is titled,
Phila. among few big cities entertaining tax hikes

2. Eichel studied 13 cities. Only 4 even considered hikes. Eichel called only NY's as large as Philly's.

3. Eichel stated bluntly his comparison of Philly to other cities regarding the matter I spoke of:

"It's certainly fair to say that [Nutter] has not sort of confronted the unions head-on the way, at least so far, it has developed in other cities," Eichel said. In Chicago, for instance, he noted, Mayor Richard Daley has stated he is prepared to lay off 1,100 workers on June 1 if workers do not agree to 14-day furloughs for nonuniformed personnel.

4. You misleadingly compare a defensive quote from Agostini with the authorial tone of both Gelbart and Eichel, subsequently coming to a conclusion that Gelbart and Eichel do not.

Philly a a model of financial probity.

After Gelbart states specifically that only four of thirteen considered tax hikes, only one of the size of Philly -- and that was NYC which laid off nearly 4k and eliminated 9k+ jobs -- and Eichel states categorically Philly is not confronting unions the way others are?

That's extremely misleading, Marc.

Confronting unions

We eliminated 3000 positions. Chicago, a bigger city, laid off 1000.

And we didn't confront the unions?

And, btw, is this still a progressive blog? Because "confronting unions" is not my idea of progressive politics.

No union power, no health care reform in this country. It is as simple as that.

There is more to politics than knowing who your friends are and you your enemies are.

But if you don't know at least that, then you can't be effective.

WHO CARES

Shame on you, Marc. How could you question "the authorial tone of both(!) Gelbart and Eichel, subsequently coming to a conclusion that Gelbart and Eichel do not."

I could see questioning a nice tone of Marcia's. But Marc, she had a real authorial tone here, and so did Larry Eichel. Shame, Marc, shame.

And maybe you should do some research beyond Pew

which is not exaclty an unbiased source.

According to an article in USA Today from April citie and stats have NOT been cutting spending. Indeed their spending is helping to stabilize the economy.

http://www.usatoday.com/news/nation/2009-04-13-cities_N.htm

"Think of state and local government as an automatic economic stabilizer," Georgia State University economist Barry Hirsch says. "It functions the same way as unemployment insurance kicks in during a recession."

By most economic measures, states, cities, school districts and other local governments have weathered the economic storm with remarkable resilience, government data show. Spending is up. Hiring is up. Compensation is up. Revenue is flat.

Although the private sector has cut millions of jobs, state and local governments have added workers in the 16 months since the recession began, although employment fell 12,000 in March, a drop of one-tenth of 1%, the Bureau of Labor Statistics reports.

The recession is having its effects. Nationwide, state and city spending rose 3.3% in the fourth quarter of 2008 compared with a year earlier, the lowest growth rate since 1998, the latest Commerce Department report shows. State and city revenue grew at the slowest rate since 2002.

Phoenix laid off only 10 full-time employees from the city's 15,000-person workforce. The 1,000 jobs lost were eliminated through attrition, vacancies and transfers. The city's unionized workforce got its scheduled pay raises, and spending will be about the same this year as last, although less than originally planned.

Then... why is California

and Pennsylvania mandating furloughs? Why did CA make drastic cutbacks to many state-directed welfare programs?

And why would Sam tout layoffs

Your choice of words in describing New York cutbacks is pretty amazing Sam. Here's what you said:

New York used the crisis for major belt-tightening: they laid off 3,759 city workers while eliminating 9,782 (!) jobs through attrition.

What do you mean they "used the crisis"? So the crisis let them do something really great by throwing almost 4,000 people providing services to the people of New York over the cliff? Were all of those people freeloading bureaucrats sitting around listening to rock music while scratching their butts? City workers are the front line of civilization, keeping schools, hospitals (they have public ones in NY you know,) public safety, criminal justice and libraries functioning. It's just horrific to lump 4,000 people who get up every day go to work and try to help their fellow citizens into some sort of boil that needs to be lanced in the name of crisis. No, laying them off doesn't avert crisis, it feeds it.

I agree that crisis layoffs are not the smart path to efficiency

Just being forced to eliminate jobs haphazardly is never the most effective way to get to maximizing performance for the amount of tax dollars put in. You inevitably get to smarter fiscal practices when economic concerns are on slow simmer rather than on full scale grease fire. The city is currently facing a 3-alarm grease fire.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Two points

1. Many, many states and cities depend more on property taxes than we do. Property taxes it turns out are much more stable than the revenue sources Philadelphia favors.

2. Many towns and states just started to spend their Federal share on economic stimulus projects. If you were to seperate capital expenditures (because stimulus money has to go to infrastructure) vs. operating expenses, I'd be willing to bet big money that state and city spending on operating costs are down across the board for the entire U.S. You chasing a red herring in those numbers by not separating capital expenses pumped up by Federal stimulus dollars from operating expenses funded by declining local tax revenue.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Earlier you pointed out that whether we face Plan C or not

exactly as the Mayor has laid it out, we have a big problem if we don't get the sales tax and pension deferral. Are you really saying that we shouldn't even temporarily fix that revenue problem because any business or wage tax increase would drive away corporations that would otherwise love to stay in a City with little or no fire or police protection, and nothing for our kids to do after they leave their rundown schools? I don't think you can be so sure of that that you'd want to throw up your hands at a state impasse and say, OK, mayor, whack away at everything that makes this City livable.

No

Neither the mayor nor Council found a spending strategy for delivering necessary services on anything like what we'd have if we don't get the sales tax.

So, of course, we need the sales tax.

If either the mayor or Council -- or better yet, if they worked together -- had developed such a strategy, or something like it where we'd need significantly less, things might be different.

I simply choose not to hide my head in the sand regarding the practices of other cities.

But if anyone on this thread was rooting for 1828 to fail, it was not I.

People at fault in order

1. City Council for passing a budget that put the city at such risk for being hijacked by the State Senate. And for making the mess in the first place by underfunding the pension fund for decades. And for not stepping up and taking responsiblity for pushing their own budget through in Harrisburg

2. Council again for not dealing with DROP or the BRT thus showing they weren't serious about fixing the tough problems under their responsibility, thereby inviting State Senate intervention

3. Rep's Brendan Boyle and Mike O'Brien for helping to stall the budget approval in the State House, handing ammunition to the State Senate yet again. O'Brien gets special mention for issuing totally bogus statements about casino revenue (that he knew were bogus) as factional stab in the back at Nutter on Doc's behalf that turned out to really be a stab in the back of cops and city workers.

4. City unions and folks that wanted to rethink the city budget after July 1 for not pushing, pushing, pushing for the House to pass the clean version of 1828 well before mid-August. There is no "redo" of the budget after July 1. Constant misstatements on that front make you culpable in some small part for bringing Plan C if it comes to pass. For the unions, the Senate R's had made lots of hints in their statements that they weren't acting on the city budget approvals because they wanted to address pension funds in a sweeping manner. If someone keeps talking about hijacking your plane, you at the very least need to consider talking to them directly and asking what they hell they are talking about. The unions failed to address this very real threat until the city was in ransom situation due to the late timing.

5. The biggie - State Senate Republicans who could have easily introduced a bill addressing their concerns about pension fund health back in May. They knew there would be push back. They instead intentionally chose the path of budget terrorism and blackmail. They could have put up what they wanted to House earlier so there was a sane amount of time for the House to respond. They have shown in spades they put opportunism over dealing with legitimate legislative concerns in a responsible way. And opportunism over the safety of the people of Philadelphia and the on-the-job safety of Philadelphia police in particular. Philadelphia citizens and especially city workers need to think about what they can do to prevent similar acts of budget terrorism from the Senate Republicans in the future.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

This unfortunately does not help decide what we should do now

What do we do now, Sean? Just let ourselves twist in the wind? Spend all our time debating among ourselves who is most to blame and hope that the Mayor will only close half the City instead of all of it? Pray for rain from Harrisburg? Nothing?

Now there is only one option

the House passes something today that will basically re-pass the State Senate. Both houses and the Governor if necessary ask PICA for yet more time, though some closings and cuts may be required anyway, even if they do grant more time. For those closings (if they happen) I blame the State Senate, primarily.

Hopefully what the House passes today has been "pre-negoitiated" with the State Senate enough that it or something close enough for the House passes the Senate again very quickly.

You keep saying that I am not doing enough for a "what if" scenario and yet you are the one by consistently trying to repackage and resell budget proposals that Council was flatly not interested in actually implementing might possibly be contributing to actually bringing us closer to Plan C. My honest appraisal is that you didn't get the wage tax and biz tax hikes you wanted because Council doesn't want the grief. And furthermore, under Plan C they still won't want the additional legal grief of bucking state law and PICA and the Governor, because they will see it as a no-win situation. There is still a very strong chance beyond that they even still won't want the grief next year.

I don't begrudge you making the best argument you can for next year one whit. To be honest I would be disappointed if you didn't make your best effort. I do have reservations that by pushing an unrealistic option for a "redo" for this year you might be unwittingly contributing to Plan C becoming a reality.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

I think Plan C

if it happens will involve more than 3,000 layoffs because as everyone points out Nutter cuts off all funding for the courts and the D.A. for the first year and PICA will never let that fly. For good reason.

I think the city won't try "redo" taxes because PICA and the governor and the courts simply will state clearly and decisively that they will not back them. I think that if we are forced into Plan C the city will try instead hundreds of new "fee for service" schemes to lessen the impact and many of the folks here saying "we have to come up with alternatives" will suddenly be complaining even more loudly about how regressive and anti-poor all those flat service fees are and they will be right. Sales taxes are regressive but they are not as regressive as flat fees are. Per capita flat fees are the most regressive form of taxation there is and under Plan C they will multiply like bacteria in a petri dish.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Amnesia is kicking in

Somehow here I forgot that Ed Rendell used to be District Attorney in Philadelphia in the 1970s and was mayor for sometime here.

I guess his expertise in city budget matters and collective bargaining with the City unions, of which he had years of experience, is obviated.

The hints of "the deal", BTW

sound distinctly promising.

Philadelphia and other cities do have a serious issue with pension liabilities threatening (along with incarceration costs) to swallow the whole budget. It should be dealt with but as a serious issue it needs to be dealt with through careful consideration and process that allows everyone to weigh in, not through a shotgun wedding to the city's budget approval.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

No false hopes are being offered

City Council, which as you've noted, is highly responsible for putting us in this mess, ought to end its vacation now. It then should get some bills in front of it, hold public hearings and get testimony from the Law Department, the Finance Department and others about the overall fiscal situation and possible revenue measures. And then, if there is no alternative except doomsday, it ought to take a shot at something else. If that shot fails, we still get doomsday. So what's to lose?

Doomsday is not nigh. May never be.

Thank goodness, we don't yet need to gamble with the lives of the kids, seniors, and the rest of the City's most vulnerable communities who rely on health centers, rec centers, and libraries, and who most need the protection of the police and the fire departments.

We can just pass a better 1828, which it sounds like Dwight Evans is working hard, trying to do.

No harm in pushing for next steps though.

No quotes yet by Pileggi

Nobody's mentioned yet what Pileggi is going to do or recommend when the bill goes to conference.

dupe post

dupe post

Well Pileggi just said the state budget deal is done

"This represents a fair middle ground," said Senate Majority Leader Dominic Pileggi (R., Delaware.)

And if the state budget has reached "fair middle ground", are city approvals far behind?

I think Plan C is likely dead. Can council get around to fixing the BRT already?

Stalling on implementing a mix of more rational assessments with caps and deferments isn't working because obviously the BRT is still handing out 236% increases in assessments, with or without logical, fair assessments, with or without patronage and back room reassessment deals for powerful businesses. Like healthcare reform in Congress, its past time for City Council to finally get this done.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

The Fat "Lady" Hasn't Sung Yet

Of course you guys know who the fat lady is...

"Senate President Joe Scarnati says the time for a deal and bipartisanship is now. House Speaker Keith McCall says the deal is not perfect, but it involves necessary compromises. But Gov. Ed Rendell says he's not on board, and neither are House Republican leaders."

http://www.pennlive.com/midstate/index.ssf/2009/09/pennsylvania_lawmaker...

And more about Eddie's rejection here:
http://www.pennlive.com/midstate/index.ssf/2009/09/new_bipartisan_budget...

There is enough there

that for Senate Republicans fighting over the pension funds is only a political loser now. They may bicker and hammer things out on the state budget for a while but all political advantage for rushing through dealing with the pension fund problme just went out the window. Some Senate r's may have legit concerns about the pension funds, but those concerns are not so pressing they can't be dealt with over months, rather than minutes. They are going to let the House revisions of HB1828 go.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

There is enough there

that for Senate Republicans fighting over the pension funds is only a political loser now. They may bicker and hammer things out on the state budget for a while but all political advantage for rushing through dealing with the pension fund problem just went out the window. Some Senate R's may have legit concerns about the pension funds, but those concerns are not so pressing they can't be dealt with over months, rather than minutes. They are going to let the House revisions of HB1828 go and come back to the problem at a more orderly pace.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Also remember Pileggi gets his money from construction

This is a political death notice to stretching out the pension fund fight long enough to bring Plan C.

Wish I thought of it myself.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Auto-Kill the Penna Budget

Perhaps it's time to change the statewide budgeting process such that if the GA cannot agree on a budget by June 5th in the preceding fiscal year, the Governor's budget is automatically takes precedent and requires 3/5ths vote of both houses to override with a competing budget, else the Governor's budget is enacted.

That will eliminate the chance of a late budget ever happening again. No legislature would want to see budget decisions default to the executive due to inaction.

And PICA gives the missing piece

more time

For what its worth, Councilman Green should be more concerned about the "embarassment" of coming this close to Plan C becoming a reality than whether all of its pieces made sense.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Dialed back 1828 passes House

Nutter is hopeful after talking to Pileggi's aides.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

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