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April 14, 2015

Nutter defends proposed property tax increase

Finance Director says plans by other Democrats unworkable

Politics Education
Michael Nutter Thom Carroll/for PhillyVoice

Former Philadelphia Mayor Michael Nutter.

Mayor Michael Nutter continued to push a school funding proposal that increases property taxes, despite receiving universal criticism among the six Democratic candidates running to succeed him.

City Finance Director Rob Dubow defended the plan Tuesday as the only proposal that will provide the recurring revenue necessary to meet the School District of Philadelphia’s $105 million funding request in time for the 2015-16 school year.

The proposal, which would increase real estate taxes by 9.34 percent, does not require any state funding to fill the district’s $84 million deficit. It also provides money for investments advocated by Superintendent Dr. William Hite. 

“I think the reason that we wound up with a property tax increase is that we looked at the other options,” Dubow said. “It was the only one that fit the criteria that we needed, which was stable, recurring revenue for the school district that would start right away and not damage the city’s services.”

The proposal would cost the median valued property owner less than $9 per month — about the cost of a pizza, Dubow said.

Yet, the Nutter administration is having a difficult time selling the plan, which must be approved by City Council as part of the budget package. Council recesses in June.

Each of the six Democratic mayoral candidates has publically opposed the proposed real estate tax increase. Many have released their own school funding plans, seeking to increase education funding by shifting tax revenue, zero-based budgeting or revamping the city’s tax abatement program, among other ideas.

Nutter blasted those plans last week when he visited Kensington Health Sciences Academy alongside Gov. Tom Wolf. His administration then sent out Dubow Tuesday to defend its own proposal.

Dubow outlined 13 funding proposals, including Nutter’s property tax increase. He pointed to varying deficiencies in the others, claiming they leave the district without the funding it needs for the upcoming school year.

“I don’t think any of them work other than this,” Dubow said. “They all have downsides. There are a couple that we are actually looking at and trying to implement — the tax lien sale, the land value assessment — but they don’t get the district what they need. 

“It’s not that these are all horrible ideas. It’s just that they don’t get the district what they need.”

One proposal would increase the percentage of property tax revenue allocated to the district to 60 percent, lowering the city’s share to 40 percent. The district currently receives 55 percent.

Yet, that proposal would leave the district $50 million shy of its funding request while sapping $50 million from the city budget, Dubow said.

The proposal is part of Anthony Williams’ plan to raise $200 million for education. Williams’ plan also depends on receiving $100 million in state charter school reimbursements and $50 million from the Philadelphia School Partnership.

"We simply disagree with the mayor’s approach on a very fundamental level," Williams said in a statement released by his campaign. "Traveling across the city meeting with voters, it is clear to me that there is no appetite for a 9 percent property tax increase when they are still reeling from the flawed AVI formula. Our proposal looks for efficiencies to fill a gap that is less than 1 percent of the total city budget. Any time that the city has met a crisis in Philadelphia before, they have used efficiencies to fill gaps." 

Funding proposals to sell commercial tax liens, reassess land values and implement zero-based budgeting also leave the district shy of its requested funding total, Dubow said. The latter two cannot be completed in time to fund the 2015-16 school year.

Jim Kenney has supported those proposals as part of his plan to fund schools in Fiscal Year 2017 — the first budget proposed by the next mayor.

Campaign spokeswoman Lauren Hitt said Kenney would dedicate all of the revenue generated from reassessed land values and tax lien sales to the district. Dubow’s critiques split that revenue between the district and city.

Hitt also said the mayor has more budgetary control than the 44 percent indicated by Dubow, who claimed 56 percent of the budget is beyond the mayor’s control.

“The Nutter administration is saying they don't have control over the other 56 percent because they're claiming it's mandated by union contracts or the federal and state government,” Hitt wrote in an email. “But in reality the mayor has the ability to renegotiate those contracts and work with the federal and state government on funding allocation. So to say that they're completely out of mayoral control is a stretch.”

Dubow also questioned a plans to vary commercial and residential property rates — which requires an amendment to the state constitution — and eliminate the school district portion of the property tax abatement program.

Those proposals are among several backed by Nelson Diaz, whose education platform seeks to raise $215 million in short-term revenue and $500 million in long-term funding. 

“We're still waiting for someone else — whether Mayor Nutter or one of the other candidates in this race — to explain how we get from this year's initial funding increase to the long-term increases students desperately need,” Diaz campaign spokesman Barry Caro wrote in an email. “If Mayor Nutter expects to get there by just raising property taxes, that's not a path we think is remotely plausible.”

Among the other mayoral candidates, Lynne Abraham has pledged to work with Harrisburg lawmakers to implement a fair-funding formula. Doug Oliver has suggested modifying the tax abatement program and increasing delinquency collections, among other fundraising options. Milton Street has advocated selling city assets.