Philadelphia City Council Reaches Budget Deal with Less Anti-Violence Funding and Tax Cuts

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After weeks of protracted budget negotiations, Philadelphia City Council on Thursday evening brought forward a budget deal that includes $ 68 million for anti-violence initiatives and a scaled-down version of the payroll tax cuts proposed by Mayor Jim Kenney .

The compromise on funding violence prevention programs broke a deadlock that left lawmakers shortly before the start of the fiscal year on July 1 to finalize spending and tax policies that will guide economic recovery of the city over the coming year as the pandemic abates.

The Council voted 16-1 pushing legislation forward, closing a day of private negotiations. Kenney has expressed support for the deal, which is slated to be voted on next week. The council added $ 89 million in spending over Kenney’s original proposal, for a total of $ 5.27 billion in the next fiscal year.

Council Chairman Darrell L. Clarke said lawmakers were focused on “investing in the people of Philadelphia and dealing with the significant racial and economic disparities revealed by the pandemic.”

“We still have a lot of work to do, but this budget deal delivers on that promise,” he said.

Kenney blessed the deal in a statement Thursday night.

“This budget makes significant investments to ensure the long-term safety, health and well-being of Philadelphia and our residents,” he said.

READ MORE: What’s holding up Philly’s budget talks? Everyone wants a slice of stimulus money – or to be a mayor.

The availability of $ 1.4 billion in federal pandemic relief funds slowed talks as lawmakers pushed to spend in favored areas – a far cry from the austerity budget that was quickly approved last year then that the economy was in free fall.

Hearings and budget negotiations focused on efforts to reduce violence, reform the police, tackle racial inequalities and increase employment opportunities, among other issues. Negotiations were also influenced by political considerations, with several members seen as potential mayoral candidates in 2023 and seeking to position themselves.

Funding for violence prevention programs other than police services, as the city faces an increase in homicides and shootings, was a major point of contention. At the end of last month, thirteen council members called for $ 100 million in new spending for things like community violence response, job training, trauma and healing services, and youth shelters. .

In the compromise orchestrated by Clarke, lawmakers instead added just over $ 68 million in new spending, according to an administration document outlining the funding. Some of that spending includes initiatives already included in Kenney’s proposed budget, and it wasn’t clear Thursday night how much that was really new money freed up during negotiations.

But council member Kenyatta Johnson called the new spending a “paradigm shift” in the way the city deals with violence, dramatically increasing funding for prevention programs, rather than spending more money on policing. . He said better programming would start this summer.

Part of the funding will go to nonprofits and other groups that already work with young people or communities affected by violence.

“We want to make sure that over the coming summer, after this budget is passed, you will see an infusion of support,” Johnson said.

READ MORE: Philly Executives Negotiate Anti-Violence Funding, Federal Aid, Tax Cuts As Budget Deadlines Approach

The budget also provides funding for police reforms, including changes in how the city responds to mental health crises. While Kenney has offered to keep police department funding flat from the current fiscal year, the budget amendment released on Thursday included an increase in police funding of $ 2.3 million.

Kenney proposed a $ 5.18 billion budget in April that would use federal stimulus assistance to help bring the city back to pre-pandemic spending levels, roll back some but not all of the service cuts it made. last year and resume a schedule of small annual wage cuts to business taxes that were suspended last year.

Lawmakers had their own priorities, and members varied widely on whether or not to cut taxes.

Kenney’s administration has proposed spending just $ 575 million in federal aid in next year’s budget, preserving the majority for years to come, when tax revenues are expected to remain depressed due to the effects persistent pandemic.

Many council members, however, pushed for a more aggressive spending plan, citing urgent needs after a year of increased unemployment and rising homicide rates.

Clarke presented the final plan to members in a series of one-on-one phone calls throughout Thursday afternoon. It was the last day on which Council, if following its usual rules, could advance the budget in time for the start of the fiscal year.

While the Board agreed to a payroll tax cut smaller than Kenney’s desired, it rejected his proposals for corporate tax cuts, as well as other tax cuts advocated by members Cherelle Parker and Allan Domb.

Clarke said the city should focus on tackling poverty and racial inequality instead of a blanket tax cut.

“I think the way you do it is to invest in our people,” he said.

The council amended the mayor’s tax proposal this week by reducing the size of the cut for suburban commuters who work in the city, while agreeing to his proposed tax cut for Philadelphia residents. The tax bill would reduce the payroll tax for city residents from 3.8712% to 3.8398%. For non-residents, the bill would lower the rate from 3.5019% to 3.4481%.

Together, they will cost the city about $ 23 million in diminished tax revenue next year.

Activists who opposed the tax cuts during the process denounced the payroll tax deal but celebrated the failure of other tax cuts.

“We are very pleased that city council has responded to pressure from Philadelphians who have opposed further tax breaks for business CEOs and parking millionaires who are already benefiting from the pandemic,” said Erme Maula, of Tax the Rich PHL, in a statement.

Other changes to Kenney’s budget proposal include $ 3 million in new spending for eviction prevention, $ 6.5 million for the Philadelphia Land Bank, $ 15 million for the Poverty Action Fund Council and a total of $ 7 million for various budget items for programs that support the arts, culture, and hospitality sectors.

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