Battle of bills

Like legislative ping pong balls, the budget and tax-cut bills that City Council narrowly passed on Monday continue to bounce between the mayor and Council members.

The members cut their Memorial Day weekend short to amend and pass the $3.4-billion budget in accordance with the City Charter deadline of May 31. They were joined by more than 100 supporters who cheered when bills to reduce the city wage tax and eliminate the business privilege tax were passed by a 9-to-8 margin, although the goodwill quickly dissipated when Mayor Street made it clear he would veto the budget.

"The Council did a tremendous job of listening to the recommendations of the Tax Reform Commission and to the voice of the people," said Brett Mandel, executive director of Philadelphia Forward, an organization that encouraged taxpayers to flood elected officials and editorial boards with pro-tax-reform messages. "We have to wonder, exactly whose voice is the mayor and his supporters listening to?"

Heeding the numerous recommendations of the Tax Reform Commission, which includes four members appointed by Street, Council approved several critical tax-cut bills, including a plan to reduce the city wage tax to 3.25 percent by 2014 and to eliminate the business privilege tax by 2015.

Also passed were bills to eliminate the disparity between the tax burdens of corporations and partnerships and to eradicate loopholes in the realty transfer tax.

The Tax Reform Commission has reasoned that the changes, if implemented, would attract new businesses and residents to the city, while generating 47,000 new jobs by 2010.

"I have no ability to perfectly predict the future," remarked First District Councilman Frank DiCicco, "but if you look at what our antiquated tax system has done to this city over the last three decades, you know that the time has come for us to do something drastic."

By Council’s measures, drastic action includes tacking on an additional $339 million in wage and business tax cuts to the $375 million that was included in the mayor’s original five-year budget.

If the mayor were to approve Council’s budget, the city would face a dramatic loss of services, meaning less police officers and firefighters, contended Barbara Grant, a spokesperson for the Mayor’s Office.

"To go beyond the responsible tax cuts that we’ve already implemented means asking our citizens to make do with less," Grant said.

The city has explored making reductions in other areas, she added, but Council’s requested tax cuts would require the elimination of more service jobs.

"It’s an unavoidable fact that 70 percent of our budget goes toward manpower," Grant said. "There’s nowhere else for the cuts to come from."

DiCicco said the mayor needs to take a closer look at city government before asserting that tax cuts mean fewer cops and firefighters.

"It’s a scare tactic, plain and simple," the councilman said. "You can’t tell me that there’s not a lot of waste in this government, that the cuts can’t come from other departments.

"Look at fleet management, for example — who has access to [government] cars, how much gas they use and how often they’re used for personal enjoyment," he added.

Council President Anna Verna, Majority Leader Jannie Blackwell and Minority Leader Brian O’Neill met with Mayor Street early Monday to try for a compromise before the rest of Council voted on the budget and bills, but little was accomplished.

"We negotiated in good faith with the mayor," said Bob Previdi, Verna’s spokesperson. "We were hopeful that some kind of agreement could have been reached, and although it didn’t happen, we will keep the ball rolling."

Those close to the mayor and a growing number of Council members are quietly hoping the ball doesn’t roll past June 17, when the Council is supposed to end its current term.

The mayor must agree on a budget plan with the body before July 1, when the new fiscal year begins. If no consensus is reached, "it would be a real nightmare," Grant said.

Mandel maintained the city would be unable to pay its bills and employees, or for any of its programs, if the budget isn’t resolved.

Another tax reform benefit the mayor is ignoring, according to Mandel, is the "supply-side effect" — the boost in tax revenue expected after the government cuts rates, which could be attributed to the current tax reform package that Council has put on the table.

"We are aware of [the supply-side effect]," Grant replied. "It’s just that a lot of people on Wall Street don’t agree with it, and we don’t want to put ourselves at risk with them."

While the lack of compromise on either side has been frustrating, DiCicco said his spirits got a boost when he witnessed Monday’s large turnout of taxpayers supporting Council at the hearings — rainy holiday and all.

"It was a perfect example of the people speaking in one voice about their needs. To me, it was very gratifying to see people from Society Hill, Kensington and South Philadelphia all together like that."

Council will take up the issues again today, with another budget bill to be introduced Monday by Blackwell on behalf of the mayor. Three tax bills, identical to the current ones likely to be vetoed by the mayor, also will be presented.

In a Council that remains split, DiCicco said he hopes a sense of urgency will allow something to be accomplished.

"Right now, we’re standing pat because nothing new has been given to us to digest. Hopefully, we won’t be back at square one on Monday."