Philadelphia Forward: Reserve New Revenues To Fund Tax Reform

Philadelphia Forward today calls on the Mayor and City Council to reserve a portion of unanticipated future revenues to fund additional tax reform.  The new revenues remove any doubt about the City's ability to fund tax reforms.  Philadelphia Forward and other tax reformers have consistently argued that Philadelphia can't afford NOT to reform its taxes...now we can show that we can afford to reform taxes!

In the few short weeks since the City budget was adopted, projections for future City revenue collections have dramatically increased:

  • Local taxes generated about $34 million more than expected in the last fiscal year, which raises the base for this current fiscal year and future years.  (This figure does not even count the fact that the City collected an extra $60 million in additional Business Privilege Tax revenues as much of this extra revenue may have to be refunded to taxpayers who overpaid their obligations.)
  • New revenues related to the expansion of gambling in the Commonwealth of Pennsylvania are expected to generate an extra $40 million per year for Philadelphia -- beyond the tax relief other gambling revenues would pay for -- starting in FY 2007.  (Some estimate this revenue could account for $55 million or more per year.)

During the most recent debate on tax reform, certain elected officials balked at the idea of additional tax reform because they feared that "paying for" tax reform would reduce the City's ability to fund critical services.  If the argument is not whether we should reform our taxes, but whether we could afford to reform our taxes, then these new revenues eliminate any discussion.  If we just reserve half of these unanticipated and uncommitted new revenues to fund tax reform, we could afford to implement the tax reform measures that were debated this spring without changing the City's budgeted priority -- and still leave many additional new millions of dollars for other priorities.

 

In a few weeks, the Mayor and City Council will have to revise the City's Five-Year Financial Plan to incorporate the forthcoming contracts with municipal unions.  Philadelphia Forward calls on the Mayor and City Council to make this commitment to tax reform and to the city's future:  Reserve half of the unanticipated revenues related to increased tax collections and gambling revenues for funding tax reform in the revised Five-Year Plan; and then enact the tax reform legislation Philadelphia so desperately needs this fall.

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