Council presses Kenney officials over federal money and tax cuts

Secretary of State warns of misleading business direct mail

Councilwoman Helen Gym asked why the administration is pushing for decreases to the wage and business income and receipts taxes instead of directing more money to minority-owned businesses in the form of targeted grants. “We took a specific track of trying to ensure that the city could provide and expand the services that we could provide and to do so with a balanced budget for five years,” Jim Engler, Kenney’s chief of staff, told Council. Kenney’s proposal is the largest cut to the wage tax in a decade and would bring the rate to its lowest in 50 years, officials said.

The injection of cash, part of President Joe Biden’s American Rescue Plan, saved the Kenney administration from having to consider tax hikes or city employee layoffs to close what was projected to be a $450 million budget deficit. “If there ever was a time for us as a government to be bold and bolder and change the trajectory of our city now, this is it,” Councilman Alan Domb said during a virtual hearing Monday morning.

His proposed spending plan calls for $575 million in ARP money to be spent in the 2022 fiscal year, which begins July 1, with $425 million earmarked for the following year and a combined $393 million for fiscal years 2024 and 2025. Several members suggested that the city use a greater share of the $1.4 billion in federal funding over the coming months to speed up Philadelphia economic recovery from the COVID-19 pandemic.

Compared to property taxes, it’s a much more volatile source of revenue. About 40% of the tax is paid by commuters, and the Kenney administration is projecting that 15% of those people will continue working remotely, resulting in a $100 million a year hit. Rob Dubow, the mayor’s finance director, said the city expects to pay $100 million in refunds for non-residents this fiscal year and another $70 million next year. Representatives from the mayor’s office said the city is attempting to move away from its long-time reliance on the wage levy, which must be paid by anyone who lives or works in Philadelphia.

“Our businesses absolutely need a front-end investment right now, and I do not understand the pursuit of broad-based tax cuts,” Gym said. A household in the city making $45,000 would save an extra $14 to $15 a year, according to Marisa Waxman, the city’s budget director.

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