By Mike Dunn
PHILADELPHIA (CBS) — Mayor Michael Nutter today announced a funding package that will give the School District of Philadelphia an additional $95 million in the next fiscal year, even more than the $60 million the school district had requested from the city to fill its latest budget hole (see related story).
The mayor says the package includes an increase in the liquor-by-the-drink tax from 10 percent to 15 percent, effective July 1st. That is expected to raise $22 million.
In addition, the city would add an additional tax of $2 per pack of cigarettes, over and above the city and state taxes currently placed on tobacco products. From the time it would go into effect on January 1st of next year until the end of the school district’s fiscal year in July 2014, the new cigarette tax is expected to raise $45 million for the city’s public schools.
Nutter says the cigarette tax could have a health impact if it causes some people to quit — but he is clear that the goal of the tax is revenue, not health:
“There should be no mixed message: there is a significant resource from this particular tax going directly where it should go, which is to invest in the education of our children,” he said.
Nutter said a small portion of the cigarette tax would be earmarked for Philadelphia Health Department anti-smoking efforts. Both of the tax changes require state authorization (as well as City Council approval), and members of the Philadelphia delegation of the Pennsylvania legislature are introducing enabling legislation in Harrisburg this week.
The mayor said that while he fully supports the school district’s need for more city funding, he sought this approach to avoid raising property taxes again.
“Because we have raised property taxes twice in the past two years, because we have raised U&O (the separate Use and Occupancy tax) last year, I did not want to look at those general broad-based taxes again,” Nutter said.
The remaining $28 million in the city’s package for schools is coming from an increase in revenue projections for property taxes and three other taxes that go directly to the school district. The revenue projections are based on previously announced improvements in the city’s collection efforts.
William Hite, superintendent of the Philadelphia School District (second from right in photo), says even though the city would be contributing $95 million to the schools rather than the requested $60 million, the school district will not be lowering its request to the Commonwealth of Pennsylvania for $120 million in additional school funding.