(August 2013)

Philadelphians are getting a raw deal in the city’s latest tax debate.  Pay more, get less.  Not only are our elected officials not complaining about it, too many are charging forward with their plans and asking us to thank them for the lousy deal.

Philadelphia’s ongoing long-term challenge --¬ the central issue that we must overcome to avoid a collapse like Detroit's -- is to REDUCE the cost of living and doing business and INCREASE the quality of life and quality of the marketplace so we can attract and retain neighbors and employers.  If we continue to pay more and get less, we are fighting a losing battle.  

For years, we were -- slowly but slowly -- moving in the right direction.  For nearly two decades, our elected officials reduced tax rates, our city saw increased tax revenues and increased service-delivery expenditures, and our debates focused on which taxes we should reduce and how quickly we could reduce them.  We significantly lessened the burden of Philadelphia's Wage Tax.  We made meaningful cuts to city business taxes.  Despite the reduction of tax rates, the city realized increased tax revenues, which were invested in expanded service-delivery efforts across Philadelphia.  But, despite that measure of success and even modest some population growth after decades of exodus, Philadelphia continues to lose jobs and employers and it is clear we must do more if Philadelphia is  to grow and thrive.

When the economic downturn hit, we reversed course and halted the progress.  Our elected officials enacted “temporary” tax increases and reduced services.  We paid more and got less from the city while we all had to economize our own household budgets to make ends meet.

Now, with the economy improving, we return to our regularly scheduled fiscal crisis and find the schools in need of hundreds of millions of dollars while the city’s unfunded pension liability is a multi-billion-dollar hole.  How would City Hall solve these problems?  By asking us to pay more and get less.

Remember those "temporary" Real Estate Tax increases?  They are here to stay.  But, that's not enough.  Remember that “temporary” Sales Tax increase that was slated to go away next year?  It’s back!  

Some officials would make it permanent, but not so that other more detrimental taxes can be reduced, or that important services can be expanded.  Instead, they would use it to compensate for underfunding of city schools as they lurch from fiscal crisis to fiscal crisis.  Other officials would make the Sales Tax hike permanent and use it to pay part of the unfunded pension obligation.  This would not increase retirement benefits for current employees or do anything else to invest in today's workforce.  No, this extra money would be used to make up for decades of underfunding and irresponsibility by generation after generation of elected officials.

In the end, will we have solved either problem?  No.  

The schools will still be underfunded and struggling.  The pension fund will still be underfunded and struggling.  We’ll just be paying more and getting less.

These fiscal band aids do next to nothing to improve the challenges that confront Philadelphia and hiking taxes to throw money at our problems is a horrible way to create tax policy.  We need to be looking harder at the services we need as a city, determine what we think we can "charge" in taxes to fund these services, and then figure out how to levy those taxes to raise what we need.

What we have with the proposals to make permanent the 100-percent increase in the Sales Tax is definitely a failure of public policy; certainly a failure of imagination on the part of our officials; but, most important, a failure of accountability from all of us who elect them.

Instead of demanding real solutions to our problems, too many are mistaking the Sales Tax hike as progress.  Too many are asking for anything to be done instead of demanding that something meaningful be accomplished.

Pennsylvania's public schools located in Philadelphia need to be thoroughly and funded as mandated in the Pennsylvania Constitution and we need a state solution to this problem.  Pension funding in Philadelphia requires a multi-billion-dollar fix, not dozens of millions of dollars in additional annual funding.

If we are to pay more, we need to get more in response.  Or, better yet, we need to work harder on ways to do what we have all had to do in our own households and businesses and achieve more with less.  The current proposals involving the Sales Tax are taking a step back when Philadelphia needs to do more to move forward.