Council moves package to raise more than $600 million for District

The plan does not include a property tax rate increase proposed by Mayor Kenney. District says it is not enough to accelerate lead abatement efforts or other building improvements.

This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.

Updated Wednesday 8 p.m. with further District reaction and comments from the mayor.

City Council on Tuesday moved a budget plan that includes more than $600 million in additional funds for the School District over five years while avoiding a property tax hike.

Mayor Kenney had proposed a package that would raise $770 million over five years that included a 4.1 percent jump in property tax rates. His plan would close a projected $660 million shortfall while leaving about $110 million for additional education investments.

According to calculations, Council’s package, which was voted out of committee, would leave the District with a $26.5 million budget hole in fiscal 2023 and assumes the same level of spending.

The $600-plus million will come from:

  • $340 million from slowing down the planned cuts to the wage tax.
  • $100 million from doubling – from $20 million to $40 million a year – a grant from the city’s general fund.
  • $95 million from savings on prison spending
  • $69 million to $93 million from better collection of delinquent taxes

City Council President Darrell Clarke said there is “very strong potential” that the gap will be closed by increases in future property assessments and stepped-up collections and reiterated that much of the burden for adequately funding schools in Philadelphia falls on Harrisburg.

“At the end of the day, the state has a constitutional mandate to fund public schools,” said Clarke. “And this notion that we should be all by ourselves is unfortunate. We continue to ask the state to step up, reach its mandate and its requirement to fund public schools.”

That position is at odds with Kenney’s. When the mayor initiated the process last fall to take back control of the District from the state, after 17 years, he also vowed to increase the city’s financial investment.

“I explain to people who get angry about paying for public school, I say, well, you’re paying for opioid addiction treatment, you’re paying for gun violence, you’re paying for incarceration, you’re paying for prosecutions, you’re paying for lots of stuff you shouldn’t be paying for if we could put that money, theoretically, into education,” he said at the time.

As of Wednesday morning, Kenney’s office had not released a reaction to Council’s action, although he told WHYY reporter Tom McDonald that that it will will hold over the District for a few years, but questioned some of the assumptions in the package and said that more predictable, recurring revenue will be needed later. He added that next year is not likely to see a tax increase because it is an election year.

Late Wednesday the District issued a statement thanking Council for its efforts and saying that “it appears” that its proposal will provide a majority of the funding requested by the mayor and allow for expanded investments and continued progress.

“It appears, however, the Council proposal does not provide for the full amount that would allow us to borrow an additional $150 million next spring. As a result, we will not be able to expand or accelerate lead paint abatement efforts, start planned building improvements sooner, or add project to [the] five-year capital plan.”

The biggest local contribution to the District comes from the property tax, of which the District gets 55 percent and the city 45 percent. But Clarke and other Council members were resistant to increasing the burden on homeowners, especially after an update in property assessments resulted in higher taxes for many. Council members and the mayor face elections next year.

In a statement, Councilwoman Helen Gym, who was elected largely on her education activism, called the action “a major step forward to guarantee years of stability for Philadelphia school kids,” but added that it is “not sufficient.”

Gym had introduced legislation that would have eliminated the District’s portion of the 10-year tax abatement on new construction, yielding about $60 million a year. She had also proposed, in lieu of a property tax hike, giving the District a larger share of it. She had proposed changing the District’s share from 55 percent to 59 percent and the city’s share from 45 percent to 41 percent.

Neither proposal was considered yesterday. In her statement after the vote, she again proposed to “lock in” the additional contributions to the District that Council cobbled together “through a reasonable millage shift and to ensure that multiple – and equitable – options remain on the table for further school funding.”

On Wednesday morning, the proposal to end the District portion of the tax abatement was debated and tabled by Council.

The property tax is by far the largest single piece of the city’s contribution to the District, whose governing body – whether it’s the School Reform Commission or the Board of Education – has no taxing power of its own and must rely entirely on the city and the state.

Just before the committee hearing, the Our City Our Schools coalition held a demonstration where about 50 teachers, advocates, and students filed in chanting “Fund our schools! Tax the rich!” Many of them wore biohazard suits and gas masks to reflect the unhealthy conditions of some of the District’s schools.

“The kids and staff of the school are working with lead paint and asbestos and rodents on a daily basis,” said Thomas Quinn, a teacher in the District, “so we wanted to bring some to City Council so they can see what kind of materials we’re dealing with every day.”

Some of the changes the coalition is pushing for include getting rid of the city’s 10-year tax abatement and imposing PILOTs (Payments-in-Lieu-of-Taxes) on large nonprofit institutions, such as universities, to collect revenue that would go toward city schools.

A proposed funding report released by the coalition estimates that its proposed changes would bring in $191 million to $301 million to city schools.

The new budget still has to go through two more readings on the floor on June 7 and June 14 before final approval and has until June 21 to pass, unless more sessions are added. However, it could pass as soon as June 14.