Biz owners: Tax hike will be strain
Wednesday, September 4, 2013 1:00 AM
Business owners and others packed a public hearing at City Hall Tuesday night to tell the Philadelphia Mayor and Board of Aldermen they can't afford the proposed 10-mill hike that will double the city portion of property taxes.
"We're trying to survive, too," said a business owner who pays more than $7,000 total in taxes on a car wash.
The mayor and aldermen defended the tax hike in the $7.4 million budget, saying it was necessary to close a $565,000 gap.
Aldermen set a special meeting for Sept. 10 at 5 p.m. to formally adopt the budget.
Concern was expressed over the loss of business and industry. "What are we doing about it," one citizen asked.
The mayor's response was, "All we can do is roll out the red carpet."
Former state Sen. Gloria Williamson pressed aldermen for details on expenses, but they offered none. Copies of the proposed budget were unavailable at the meeting and citizens complained. An alderman finally gave Williamson his copy of the budget, but that did not include detailed expenses.
Ward 1 Alderman Josh Gamblin said aldermen had "taxed our way out of a deficit."
One business owner asked specifically about cuts and if the city had shaved expenses.
"Nothing. No legitimate shaving in the budget," Gamblin said.
Mayor James A. Young read the proposed general fund budget that includes $7,435,767 in revenue and $7,405,575 in expenditures.
The general fund budget reflects a $30,192 surplus, Young said, but then he mentioned an additional $62,839 shortfall for the public school district.
Stanley Tolbert and his wife, owners of the car wash, told the board that they were already struggling to pay their taxes from the past year which are currently delinquent.
"You are doubling them and we have nothing to fall back on," Mrs. Tolbert said. "I am being very honest with you."
Her husband agreed.
"Our names are in [the delinquent tax list] the paper," Mr. Tolbert said.
The couple said they already owed $7,000 in taxes on the car wash and fear if they raise their car wash prices from $1 to $1.50 it would cut their business in half.
"We are begging," Mr. Tolbert said. "I know you have an operation to run but we are trying to survive too."
Gamblin responded to a question during the public hearing about the additional sales tax the city would receive from liquor sales.
"We put in $49,000 in the budget for that," he said. "We are banking on that generating more revenue."
Philadelphia resident Cathy Moore, who owns several rental properties in the city, told the Mayor and Board of Aldermen that the tax increase was going to hurt her financially, if "it doesn't drown me first."
She and others at the public meeting were told by the Mayor and Aldermen that the millage rate could be reduced for fiscal 2015 should the city see enough growth to generate enough revenue to balance the general fund budget.
Philadelphia resident Chip Bailey tried to get aldermen to pledge they would repeal the tax hike next year, but they would not as a whole, although Ward 2 Alderman Jim Fulton said he would when finances cleared up.
Attorney Robert Thomas skirted the question when he responded that the board adopts a new budget each year and sets the millage rate.
The millage rate, however, would not automatically be reduced. The board would have to vote to lower taxes.
When pressed, officials kept saying the budget figures were available through the City Clerk. Citizens asked if it would be possible to publish details in the Democrat before a public hearing and Thomas said it would not be.
Another business owner, who did not identify herself, expressed concern about the cost of the city-funded employee health insurance.
"Business people can't afford a $500 deductible for employees," she said. "We had to drop to a $1,000 deductible. Have you looked at that angle?"
Mayor Young said the board plans to address the insurance issue starting in October.
Gamblin also responded to the question.
"I feel your pain," he said. "There is not a taste here to do any employee match. This plan is rich and nobody with a business can afford it."
Gamblin said increasing employee deductibles from $500 to $1,000 would save the city about $15,000 annually.
Business owner Steve Smith asked aldermen if they had explored ways to cut expenses instead of passing additional taxes down to business owners.
"I just cut a deal on a building and now it looks like I'm going to pay a big tax on it," he said.
Gamblin said there had been no legitimate cuts to the departmental budgets, which sparked disagreement from the mayor and Ward 4 Alderman Cecil Nichols.
Nichols said the city had constructed and manned a new fire station and added two new fire trucks in recent years.
"We spent a million dollars and we didn't have the money," he said.
He said the police and street departments were operating with many older vehicles and little money in capital outlay.
"The only thing we can do is lay off employees," Nichols said. "That is the only thing we can do."
He said layoffs would compromise public safety.
Without the tax increase, Nichols said in three more years "the city will be broke."
One unidentified man asked aldermen if the tax increase would affect the upcoming taxes, due in January 2014, or whether it would be pushed to January 2015.
Hearing the taxes would be due next January, the man said many people had not budgeted for an increase.
"Well I have miss planned my upcoming tax dues," he said.
Several others voiced similar issues.
Philadelphia business owner Rex Rousaville told aldermen that he had been vocal during the budget discussions.
"Where will this end?" he asked. "What conversation will we be having this time next year?"
Rousaville pleaded with aldermen to control spending in the new year.
"If you can't afford it, you can't buy it," he said. "I don't envy you. I feel your pain. As a business owner, my plea is to please be fugal. There are no sacred cows. Thank you for your efforts. Just control the costs."
The crowd applauded when Rousaville finished his comments.
Williamson told aldermen that city-funded employee health insurance was a tool to recruit good employees in the fire and police departments.
"Healthcare is so expensive," she said.
Mayor Young went into lengthy defenses after citizens spoke. Near the end of the meeting he said, "How do we grow? Everybody take a part."
The tax increase that will generate about $565,000 is necessary to close the gap on six years of deficient spending, the mayor and board have said. The city has spent about $6 million more than it's taken in.
Should the Mayor and Board of Aldermen adopt the proposed budget, a resident owning a home valued at $112,920 would see city taxes double, from $112.92 to $225.84 on top of additional schools taxes to fund the 2010 shortfall on debt service.
The board plans to shift about $200,000 in TIF reserves for street paving. Street paving has been on hold for about six years.
Under the proposed budget, Police Department employees would receive a 63-cents-an-hour raise, while all other city employees would receive a 2-percent pay hike.
The mayor and board excluded themselves from the raises.
The raises do not affect employees with less than a year of service.
Aldermen have projected about a $520,000 shortfall for fiscal 2013 which ends Sept. 30.
The fiscal 2014 budget would see the fire department budget increase from $1,458,416 to $1,499,420. The police department budget would decrease from $1,795,356 to $1,679,719. The street department's budget would increase from $691,011 to $735,953.
The general government budget would decrease from $2,632,028 to $2,442,062. Most of that reduction reflects a drop in grant monies.