Nutter: Tax hike gets risky

March 5, 2009

Solomon D. Leach, Metro


PHILADELPHIA. Mayor Michael Nutter warned proponents of raising the city's wage tax to stop service cuts that such a move could provoke a war with lawmakers in Harrisburg.

Nearly two-thirds of the 1,700 participants of four budget workshops hosted earlier this month to get input from citizens said they would stomach an increase in the wage tax if it meant protecting services like police, libraries and recreation centers.

"I'm concerned because the General Assembly, through the gaming legislation, sends money to Philadelphia to lower the wage tax - that's what it was for," Nutter said. "I'm told by any number of members of the General Assembly that there is a great concern about any effort by the city to use those funds for any purpose other than what they were sent to us for."

Nutter's statement came during a discussion with administration officials and members of City Council about the results of the workshops.

Legally, Nutter said, the city could defer a wage-tax reduction because of decline in other revenues. He would not rule out a tax hike in the budget he'll present to Council March 19.

Steven Wray, executive director of the Economy League of Greater Philadelphia, said the tax already gives the city a negative perception and could scare off potential residents.

"You again go back down a slippery slope of creating a bigger gap between city and suburbs on wage taxes," Wray said.