The Call To Reserve New Revenues To Fund Tax Reform Gets Louder

Today's (Tuesday, July 20) Philadelphia Inquirer editorial "City Tax Reform:  Let's Try This Again" points out how unanticipated new revenue streams for the city make it possible for even those who do not embrace "supply-side" economics to back tax reform.  (Full Editorial)  The editorial concludes that City Council should (again) pass legislation to eliminate the Business Privilege Tax that chases so many jobs from Philadelphia:  "It's rare that politicians get such a good chance to rectify a mistake so soon after making one. And a second chance is a terrible thing to waste."

Last week, Philadelphia Forward called on the Mayor and City Council to 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.  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.  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 starting in FY 2007. 

So far, the response from the city administration is a predictable no-can-do.  Where have I heard this before?  Maybe it was in 2001 when the city administration said it could not afford tax reform, but then found more than $45 million per year to fund the state takeover of city schools.  Or maybe it was in 2002 when the city administration said it could not afford tax reform, but then found about $40 million per year to pay for expanded police overtime.  Maybe it was just a few months ago when the city administration said it could not afford tax reform, but then found $18 million per year to bail out the failing Philadelphia Gas Works. 

I seem to recall that Philadelphia Forward pointed out that city tax collections were outpacing projections just a few weeks ago.  The Inquirer recounted the projections in an article on Sunday, June 20th, titled "The two views of Phila. budget dispute."  Here's a memorable exchange...

"Brett Mandel, executive director of Philadelphia Forward, the group pushing an aggressive tax-cut plan, said tax revenue as of June 30 will exceed the current budget by $20 million to $25 million.

"Rob Dubow, the city budget director, called such claims "premature." Wage tax, a key revenue source, is so far not exceeding expectations, Dubow said.

"Better data will be available a month from now."

Well, I guess I was wrong...better data showed that the city is up by about $34 million and now we can add future revenues from the expansion of gambling to provide $40 million more per year beginning in 2007.  The city administration is busy coming up with a new set of excuses about how we still cannot afford tax reform (I imagine those excuses will be released by the city's new spinmeister shortly after the city announces that it has found an ability to pay for new raises for city employees). 

They're right about what they say about excuses...we all have them and they all stink.  The city finds the money to do what it wants...but finds excuses to avoid the tax reform Philadelphia so desperately needs.