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June 15, 2004
TO THE PRESIDENT AND MEMBERS OF THE
COUNCIL OF THE CITY OF PHILADELPHIA:
I am returning herewith as disapproved Bill No. 040767, passed by the Council on June 2nd, 2005. This Bill would impose annual reductions in both the gross receipts and net income portions of the Business Privilege tax through 2017, in addition to the wage tax and gross receipts tax rate reductions and low-income wage tax credits already scheduled by law to take effect.
The Administration projects that this Bill would result in the loss of $22 million in revenue currently assumed over the FY06-FY10 Five-Year Plan, and the loss of an additional $570 million over the course of the following five-year period. The total revenue loss to the City from the Bill by the end of its effective date, assuming current revenue growth rates and tax reduction plans, is projected to be over $1 billion. The City can not afford these revenue losses. These would leave the City with fund balances below the levels requested by the Pennsylvania Intergovernmental Cooperation Authority (PICA) to offset the possibility that the Philadelphia Gas Works would not repay $81 million in FY09 and FY10.
The revised Five-Year Plan submitted to Council on May 24th reflects the layoffs imposed this fiscal year and the elimination of over 2,000 budgeted positions in a two-year period. In order to offset funding restorations requested by Council members without further painful position eliminations and service impacts, City Council and the Administration worked together to pass legislation providing expanded revenue sources. Enactment of this Bill would promptly undo that effort and leave the City with few options for balancing the Plan, short of workforce reductions beyond what are already historically low levels, at a time when we are attempting to address numerous concerns about the Plan raised by PICA and mentioned in my May 24th letter.
Finally, let me remin...
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