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Philadelphia Finance Director Says 1¢ Sales Tax Hike Needs To Remain

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(City of Philadelphia budget director Rebecca Rhynhart, left, listens as city finance director Rob Dubow responds to a reporter's question.  Credit: Mike Dunn)

(City of Philadelphia budget director Rebecca Rhynhart, left, listens as city finance director Rob Dubow responds to a reporter’s question. Credit: Mike Dunn)

Mike Dunn Mike Dunn
Mike Dunn is City Hall bureau chief for KYW Newsradio 1060. He covers...
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By Mike Dunn

PHILADELPHIA (CBS)  — The Nutter administration says the Philadelphia school district’s budget woes could get worse if City Council doesn’t approve a bill to make permanent the once-temporary hike in the sales tax.

Part of Governor Corbett’s solution to the Philadelphia school funding crisis is for the city to borrow $50 million from Wall Street.  But Rob Dubow, the mayor’s finance director (at right in photo), says Wall Street needs assurances from City Council that it will vote to make permanent the penny-on-the-dollar sales tax hike which will ultimately pay for the borrowing.

“(This approach) is not our first choice,” Dubow said today.  “And we understand they (councilmembers) have legitimate issues about what came out of Harrisburg.  But these were the tools that we were given (by the state).  And we need to use them to make sure that the school district gets the funding that it needs.”

City councilwoman Maria Quiñones Sanchez, though, is floating an alternate plan: to take $50 million out of the city’s surplus as a onetime grant.

Dubow, though, says that approach is not workable, as it would lower the surplus to levels that could affect the city’s bond rating, and because state law mandates that the additional cash grant would have to recur every year.

“That would mean its $250 million over our five-year plan, and it would create deficits for every year of the plan except for (fiscal year) 2014,” Dubow says.

City Council is not due to return from its summer recess until September 12th, so any formal vote on the sales tax could not come until two weeks later at the earliest — well after the schools open.

Still, Dubow indicates that the administration could proceed with the borrowing after receiving a less formal indication from Council that it supports the sales tax change.  He wouldn’t say, though, what form that message should take.

“We need to actually get them to the point where (councilmembers) are supportive, first, and then figure out what that would look like,” Dubow said.

The mayor’s preferred method of raising new school cash — imposing a new tax on cigarettes — went nowhere in Harrisburg (see related story).  In response to reporters’ questions, Dubow indicated the administration is not actively pushing that idea any longer.

“We’ll monitor what’s happening,” Dubow told reporters today, “and if there’s any possibility, it’s something we would support.”

 


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