Philly is poised to increase property tax breaks and cut corporate taxes through a last-minute compromise

Many Philadelphia residents are likely to see property tax cuts amid rising real estate valuations, as well as wage and business tax cuts, thanks to a compromise between city council members and the administration of Mayor Jim Kenney who was approved in a key committee vote late Wednesday evening.

Under the tax plan brought together in the last minute talks on the municipal budget starting July 1, the 1.3998% property tax rate will remain the same, but the farm exemption, which reduces the value The taxable amount of owner-occupied homes would remain to increase from $ 45,000 to $ 80,000.

At the virtual committee meeting, lawmakers also modified Mayor Jim Kenney’s $ 5.6 billion budget proposal to include several substantial funding increases, including $ 15 million in rental assistance, $ 5.8 million. extra dollars for the office of public advocates and another 5 million dollars for police forensics.

»READ MORE: How the Pandemic, Progressives and Property Valuations Are Fueling a Philadelphia Tax Debate

Approval by the Whole Committee, which includes all members, establishes a final vote on the budget at the June 23 Council meeting, the latest before lawmakers update for the summer holidays.

This year’s focus on taxes was spurred in part by the first citywide property revaluation in three years, which saw residential property values ​​rise an average of 31% and much more in rapidly gentrifying areas. .

Kenney in April proposed increasing the farm exemption to $ 65,000, and some lawmakers, including council members Kenyatta Johnson and Brian O’Neill, pushed to increase it to its legal maximum of $ 90,000. But the majority ultimately backed the $ 80,000 compromise, mostly out of concern over the impact of the tax break on the Philadelphia school district, which gets 55 percent of the property’s tax revenue.

The most surprising news of the last day of negotiations was the last-minute majority that emerged to cut the corporate income tax and net income tax from 6.2% to 5.99%, the result of a intense lobbying by the city’s chambers of commerce. The order was signed by council member Isaiah Thomas.

The compromise plan also included a small cut in the wage tax, made by Council member Katherine Gilmore Richardson, which lowered the rate from 3.8398% to 3.79% for city residents and from 3.4481% to 3.44% for people who work in Philadelphia but live outside the city limits.

The talks dropped to the eleventh hour: the Council had to move the taxation and spending legislation out of the committee before the meeting on Thursday morning to approve the budget by the deadline of the current budget at the end of the month.

Members of the Kenney administration worked side-by-side with lawmakers to approve the budget in a process overseen by Prime Minister Darrell L. Clarke that resulted in an unusually low level of friction between the executive and legislative branches.

Most of the committee votes Wednesday night were unanimous, but Council members Helen Gym, Kendra Brooks and Jamie Gauthier voted no on wage and corporate tax cuts.

The budget deal represents a victory for the business community, which for several years has seen its influence in the city diminish amid the momentum of the city’s progressive movement.

“Tonight we saw courageous leadership from the city council,” said Sue Jacobson, president of the Greater Philadelphia Chamber of Commerce. “Their decision to cut taxes for job creators is a clear signal that Philadelphia is committed to restarting its economy after COVID and increasing the number of people working in the city.”

The City’s progressive trio of Gym, Brooks and Gauthier have been largely sidelined by the latest round of tax negotiations. Many of their spending priorities, however, made it into the final budget, including rental assistance and quality of life issues such as the removal of abandoned cars. Brooks’ proposed “wealth tax” never received a vote.

In a speech explaining his votes against wage and corporate tax cuts, Gym said, “We spent too much time catering to powerful interests and the House rather than the 100,000 families in the Philadelphia school district.”

Meanwhile, several members who are considering joining next year’s run for mayor have played central roles in the negotiations, including majority leader Cherelle Parker and three members who have long supported corporate tax reform: Derek Green. , Allan Domb and Maria Quiñones-Sánchez.

“It wasn’t an easy budget,” Parker said in a statement that highlighted increased funding for police and quality of life issues. “We are approving property tax relief measures to mitigate the effects of the revaluations. We are approving wage and corporate tax cuts to provide much-needed relief for small neighborhood businesses. “

The budget agreement will receive a first reading at the next Council meeting at 10 on Thursday before moving on to the second reading and final passage the following week.

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