Parker’s ‘One Philly 2.0’ budget pushes campaign promises – and tax cuts

Building on a relatively modest first-year budget, Philadelphia Mayor Cherelle Parker's “One Philly 2.0” spending plan – delivered to City Council on Thursday – is a $6.7 billion budget proposal that calls for reforming taxes and investments in housing, addiction services and more. 

Parker’s second budget proposal comes one year after her $6.37 billion budget, which was more focused than ambitious, with no tax increases that focused on the mayor’s pitch to create the “cleanest, greenest” big city in the country.

This year’s $6.7 billion spending plan – a bigger swing at many of the issues Parker campaigned on – doubles down on public safety, housing and quality-of-life investments. It pitches a 6% boost in spending compared to last year and allocates for year-round school expansion, $5 million for the street safety program Vision Zero, $800 million toward housing and $300 million for the drug treatment facility Riverview Wellness Village in Northeast Philly. Parker also wants to expand the year-round schooling program to include 40 schools and increase hourly parking rates near Center City from $3 to $4 per hour. 

The spending plans are tied to tax changes in the coming years, meaning the ambitious investments – on top of the restructuring of the city’s revenue streams – will hinge on City Council’s approval and what compromises the mayor may have to make on her priorities. 

Axing taxes

Parker pitched tax reforms that would impact the Business Income and Receipts Tax, wage tax, real estate tax, construction impact tax and real estate transfer tax. Following the recommendation of the Tax Reform Commission, which proposed eliminating BIRT entirely, Parker proposed lowering BIRT’s net income tax from 5.81% to 5.5% and the gross receipts tax from 0.142% to 0.138% by 2030, which would eliminate about $9.8 million for the city. 

“If you were a business in this city, we’re taxing the whole amount you earn and your net (income) – what you have left after paying your bills and daily expenses,” Parker said during her budget address last week. “That’s like a double tax, and our administration is finally going to address it.”

Meanwhile, the wage tax would be lowered from 3.75% to 3.7% for residents and from 3.44% to 3.39% for non-residents by 2030, which would cost the city about $7.8 million in revenues. 

Construction and real estate taxes could also be on the chopping block. Parker suggested repealing the Construction Impact tax altogether. The 1% tax on the cost of new construction or improvement projects over $15,000 brought in about $3.5 million annually. 

Parker also pitched increasing the percentage of property taxes that go to the School District of Philadelphia from 56% to 56.5%, which would bring in about $12 million to be earmarked for teacher salaries. 

The Real Estate Transfer tax is also in Parker’s sights. She proposed increasing the transfer tax during home sales from 3.27% to 3.57% starting in 2026. These new funds would partially offset the $166 million in debt service needed to borrow $800 million for Parker's housing initiative. 

Parker said she’s already gotten complaints that the business tax cuts aren’t deep enough and that any business tax relief must be done with fiscal responsibility.

“This is what we can afford to do and I shall not be moved,” Parker said during the budget address. 

Speaking to reporters after the address, Council President Kenyatta Johnson said he sees tax cuts as an “investment” in the city’s growth and potential business partners. 

“In order for us to move forward, we have to focus on job growth and development. In order to focus on job growth and development, we need to make sure that not only small businesses – and businesses in general – (stay here) but also come here,” Johnson said. 

Housing and a ‘humanitarian crisis’

Parker is pressed to meet one of her early promises as mayor: build or preserve 30,000 homes. Without going into too much detail, Parker said her housing policies and programs – which come with an estimated $800 million price tag – would be outlined in the coming weeks.

Parker wants to utilize two batches of general obligation bonds worth $400 million each, with the first coming in 2025, to invest about $800 million in housing initiatives. The general obligation bonds are paid back from the city budget, rather than from a specific revenue stream.

“We plan on spending that money as quickly as possible,” Parker said. “I want shovels in the ground.”

The plan also doubles down on addiction services. Calling the opioid issues in Kensington a “humanitarian crisis,” Parker proposed nearly $300 million in new funding over the next five years to continue construction and operations at the Riverview Wellness Village, her administration’s new city-run rehabilitation housing for people recovering from drug addiction – a focal point of efforts to combat addiction and homelessness in Kensington. 

Parker also called for $100 million for a new drug recovery center in Holmesburg, as well as continued investments in organizations seeking to combat violence and addiction, among other initiatives. 

Community members, while welcoming more investment in housing, questioned both the proposal and the lack of parallel investment in affordable mental health care. 

“There is a housing crisis in Philadelphia, particularly for low-income residents. It’s incredibly challenging to find a truly affordable place to live, especially one that is safe to live in,” Shawmar Pitts, co-managing director of Philly Thrive, said in a statement. “While more low-income housing is welcome, we are not going to be able to build our way out of the housing safety crisis. The city needs to invest in programs that make needed repairs to keep low-income residents in their homes – not give handouts to corporate developers.”

SEPTA and street safety

Another priority in the mayor’s proposal is helping ameliorate SEPTA’s dire financial situation. 

Parker proposed investing $716 million over the course of five years to help SEPTA overcome its financial woes. Along with the increased investment, the city would support a $76 million capital match program.

“Philadelphia, this is important: Don’t let anyone tell you we’re not contributing our fair share to help SEPTA while we await the commonwealth’s support to put the system on solid ground," Parker said.

According to the Philadelphia Tribune, a spokesperson for SEPTA said the agency will have its operating and capital budget plans prepared when they appear before council during budget hearings. 

“We expect much of the focus this year is going to be on the structural budget shortfall on the operating budget,” the spokesperson said. “At some point before April 16, we will be announcing our full plan to deal with what is now a $213 million annual structural deficit, including major fare cuts of approximately 20% and fare increases averaging 21.5%. The City Council hearing will be an opportunity for SEPTA to continue to discuss this and answer questions from Council members.”

And in an effort to make travel safer for everyone in the city, Parker pitched investing $5 million for a slate of Vision Zero projects aimed at preventing traffic fatalities. The investment would also include $30 million over six years for speed cushions, line striping, and other traffic safety measures, Parker said.

What’s best for Market East

Following the 76ers arena saga, eyes are still on East Market Street and what can be done to revitalize the commercial corridor. 

Parker announced that her administration plans to convene a task force focused on the Market East area and what can be done to bring businesses and consumers back to the community. 

The task force, led by Councilmember Mark Squilla, who represents the area, would publish development recommendations with input from community members and stakeholders. 

When asked if the community needs more immediate action after the arena process, Council President Kenyatta Johnson said the task force is focused on making future investments as effective as they can be. 

“If we had come out with our proposal without any community input, people would say, ‘You’re just doing this and not involving the neighborhood,’” Johnson said. “The fact that the mayor was going to work in partnership with not only Council but, most importantly, Councilmember Squilla…(is a) step in the right direction, because it’s inclusive.”

2026 Preparedness

Part of the forward-looking budget involves intentional investments in the major events coming to the city in 2026. 

Focusing on beautification and marketing as well as street and public transit efforts, Parker called for more than $30 million for 2026 partners and event preparations. This figure, alongside a $28 million investment in public safety efforts ahead of the major events, brings funding for community events and programming for 2026 to about $100 million. 

What’s next

Many councilmembers praised Parker following the budget remarks, saying that the investments in housing are exciting for the city. 

“At our current pace, it will take more than 200 years to build enough affordable housing. This is time we do not have, which is why I have been calling on the city to more aggressively fight this crisis," Councilmember Jamie Gauthier said in a statement. 

Councilmember Rue Landau, one of the more progressive members of Council, applauded Parker for her investments in housing and addiction services, but questioned the fiscal feasibility of the city’s services, given uncertainty at the federal level. 

“Her proposal raises hopes for a significant investment in housing, increased funding for initiatives and programs like PAIFUP & Vision Zero, a focus on investments in technology in government to make us more efficient for the public, and a continued commitment to Clean and Green,” Landau said in a statement. “But it also raises questions – namely, how is the City going to balance proposed revenue cuts at this time as we face down pending federal funding cuts that will lead to a loss of services?”

City Council will hold a series of budget hearings through early May to examine Parker’s proposal, along with agency and office needs, based on in-hearing testimony. The spending plan must be approved by lawmakers before the start of the fiscal year beginning on July 1.