A four-year effort by Center City District and a coalition of business groups to restructure Philadelphia’s tax code is now being officially opposed by the city’s largest business association.
The Chamber of Commerce for Greater Philadelphia’s executive committee voted last month to oppose legislation in Harrisburg that would pave the way for the so-called “Levy-Sweeney plan,” which would decrease wage and business taxes by jacking up property tax rates on commercial properties.
Liz Ferry, the Chamber’s vice president of state legislative affairs, said her association prefers an alternative plan that would reduce taxes now instead of the incremental change in the highly anticipated Levy-Sweeney proposal, named for Center City District President and CEO Paul Levy and Brandywine Realty Trust President and CEO Gerard Sweeney.
Pennsylvania Senate Bill 41 and its companion joint resolution in the state House would modify the state’s tax uniformity clause to allow the city to tax residential and commercial properties at different rates in order to implement the Levy-Sweeney plan. House sponsor and Republican state Rep. John Taylor said the Chamber’s competing proposal was a charade – and that their opposition stemmed from a fear of crossing Philadelphia City Council President Darrell Clarke, one of the Levy-Sweeney plan’s most outspoken critics.
“My sense in general is that Darrell is opposed and they don’t want to oppose Darrell,” Taylor said. “You know why Darrell’s opposed? He wants the bifurcation of the uniformity clause, too. He just wants to keep the money and do what he wants with it.”
The Chamber’s March statement lays out its alternative solution, which essentially calls for the city to cut expenses by five percent over five years and reform the pension system while still lowering or freezing the city’s various business taxes. To cover these costs, the group proposes a slightly different regimen of real estate tax increases with vouchers to blunt the impact on low-income residents.
The statement also calls on Harrisburg to delay a vote on the pending legislation in the meantime. Identical legislation already passed both chambers last year with wide majorities, but requires additional authorization and a constitutional amendment to become law.
Taylor said the quest for more immediate tax reductions was empty, as no competing cuts or tweaks were being considered in the immediate future. He added that the group’s opposition was of little importance.
“They’ve never been for it. They said they were but they weren’t,” Taylor said. “But I don’t see it being stopped no matter who's against it at this point. We’re looking at getting support from the statewide Chamber of Commerce. And our members will be reluctant to change their votes this season.”
Levy said the Chamber was isolating itself by turning on a plan he said would stimulate the local economy.
“The Chamber is in a funny outlier position right now,” he said. “This plan is supported by the Building Owners and Managers Association, the African-American Chamber of Commerce, the Philadelphia building trades, SEIU and others. It's a broad coalition.”
Levy said the joint resolution had been misinterpreted by the City Council as mandating tax increases or decreases.
“This simply gives the city another tool to set tax rates,” he said. “It’s an option, not a requirement.”
Clarke’s office declined to comment. But in the past, he has signaled that he opposed committing the city budget to multi-year tax increases or cuts through state legislation.
“This wholly unnecessary modification could jeopardize the fiscal well-being of our municipal government; if implemented, Council simply could not risk moving forward with dual rates,” Clarke wrote in a 2015 letter to Taylor.
Taylor said that Philadelphia Mayor Jim Kenney had also expressed concerns to him about moving forward with the state legislation.
“He’s apprehensive about the opposition. From Darrell, mainly,” Taylor said.
Kenney’s office reiterated their support for the measure.
“The Kenney administration remains supportive of the plan,” said mayoral spokesman Mike Dunn. “We don't want to foreclose on any opportunities to make Philadelphia's tax structure more competitive.”