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Also this issue: Deer Nuts Hedging Bets West Bankrupt? Leaky Logic |
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April 4-10, 2002
hall monitor
A well-orchestrated lobbying campaign spearheaded by the Philadelphia business community has put reductions in the wage-tax on the front burner. Mayor John Street disrupted the quiet consensus on the matter in February, when he proposed halting scheduled reductions in the wage tax begun under former Mayor Ed Rendell. Now Street is facing the real possibility of a veto-proof majority passing a bill by Councilmen Michael Nutter and Frank DiCicco that calls for continuing the scheduled cuts and increasing them if the economy is strong.
In his City Paper interview last week, Street said that Philadelphia can afford $170 million in tax cuts and that the best way to dole them out would be to target the business community by reducing the gross-receipts tax. The problem is that the business community disagrees -- as do at least 11 members of City Council who are backing Butter and DiCicco's bill.
Prominent business groups such as the Philadelphia Bar Association, the Greater Philadelphia Chamber of Commerce and Greater Philadelphia First have all come out for the bill, siding with Nutter and DiCicco against Street.
Last week the Chamber of Commerce took out full-page newspaper ads urging citizens to call their City Council representatives and tell them to vote for the Nutter-DiCicco bill.
According to Greater Philadelphia First CEO Sam Katz, "We never said one is better than the other, [it's just that] the gross-receipts tax is not the one business people talk about when the leave the city." Katz's organization is regional, and he points out that the wage tax, unlike other business taxes, is a regional tax. Suburban-based firms employ city-dwellers who pay the wage tax, and downtown firms employ suburban commuters who pay the wage tax.
Katz says the climate for attacking the wage tax "has never been better, for reasons that are probably political." His known rivals in City Council, like Nutter and Council President Anna Verna, are lining up behind wage-tax reductions. In Harrisburg, state Sen. Vince Fumo, a leader of the anti-Street camp, has proposed his own bill to force Philadelphia to make even deeper cuts in the wage tax.
With momentum clearly on the side of the Nutter-DiCicco bill, even Councilwoman Jannie Blackwell is backing away from the bill she had presented as a compromise between Council and the mayor. The Blackwell measure set a higher standard of economic growth before cutting the wage tax. Almost as soon as she proposed it, Blackwell began backtracking.
The councilwoman is now calling for consensus: "It's apparent that we have to do something, [but] I don't want us to have to choose between the neighborhoods [that need city services] and businesses."
Blackwell says most of the pressure for more aggressive tax cuts have come from the business community, not from her constituents.
This has been Street's contention all along -- that wage-tax reductions mean little to most Philadelphians. Street argues that the tax-reduction proposals mean only a buck a month for the average Philadelphia household earning $30,000 a year.
But opponents of the wage tax say that reducing the tax would help keep middle-class and wealthy residents in the city and attract new businesses. Street and allies like Pat Gillespie of the Building and Construction Trades Council, an organized labor group, say the best way to keep these residents and build the business base would be to improve city life with better city services and public-works projects like the Kimmel Center -- things that cost tax dollars. Gillespie dismisses the so-called groundswell for tax cuts as "pandering and grandstanding" by politicians who have re-election concerns. "I'll be for a tax cut, [but] I think the only legitimate tax cut is if they turn around and point to areas where they say, in effect, whose ox will be gored for this tax cut."
Other union leaders share Gillespie's skepticism. Tom O'Drain, president of the Philadelphia firefighters union, says cutting the wage tax is a decision between "putting pennies in people's pockets" and giving his members a decent contract.
Nutter dismisses the contention that services will have to be reduced, maintaining, "I would not propose something irresponsible ... nor would you have the city controller or the executive director of PICA [the Pennsylvania Intergovernmental Cooperation Authority] or business leaders" supporting the bill if it didn't make fiscal sense. As for the accusation that he's grandstanding, Nutter says that wage-tax reductions have been happening for years now and nobody has "made a campaign platform out of it."
Debate on the Nutter-DiCicco measure is expected to be held on Monday. While the Council members duke it out inside City Hall, a rally will be held outside. Who shows up to that rally will say a lot about who's behind the push to cut the wage tax. Will it be the proverbial peasants with pitchforks or the buttoned-down business types of the "I am Arthur Andersen" rally of a few weeks back?
Some already see a hot-button political issue in the making. George Bochetto, who sought the Republican nomination for mayor in 1999 on a platform of eliminating the wage tax, says, "If Mayor Street doesn't have the vision to [continue cutting the wage tax], he may be in trouble for his re-election. ... There are a number of Republicans who are watching this closely, one of whom is me."
