City Council reaches a budget deal with more violence prevention funding and smaller tax cuts

After weeks of protracted budget negotiations, Philadelphia City Council advanced a budget deal late Thursday night that includes $68 million for anti-violence initiatives and a smaller version of Mayor Jim Kenney’s proposed wage tax cuts.

The compromise over funding for violence prevention programs helped break a logjam that left lawmakers with little time before the July 1 start of the fiscal year to finalize spending and tax policies that will guide the city’s economic recovery in the year ahead as the pandemic wanes.

While lawmakers touted $68 million in new spending compared to the current budget, Kenney spokesperson Deana Gamble said Friday that only $25.6 million of that amount had been added as a result of negotiations. The rest, she said, was already in Kenney’s April budget proposal.

Council voted 16-1 to advance the legislation, capping a day of private negotiations. Republican Councilmember David Oh voted against it. Kenney expressed support for the deal, which is expected to go to a final vote next week. Council added $89 million in spending over Kenney’s original proposal, for a total of $5.27 billion in the next fiscal year.

Council President Darrell L. Clarke said lawmakers were focused on “investing in the people of Philadelphia and dealing with the significant racial and economic disparities revealed by the pandemic.”

“We have much more work to do but this budget agreement keeps that promise,” he said.

Kenney blessed the deal in a statement late Thursday.

“This budget makes meaningful investments to ensure the long-term safety, health, and well-being of Philadelphia and our residents,” he said.

» READ MORE: What’s holding up Philly budget talks? Everyone wants a slice of stimulus money — or to be mayor.

The availability of $1.4 billion in federal pandemic relief funds slowed down talks as lawmakers pushed for spending in favored areas — a far cry from the austerity budget that was quickly approved last year while the economy was in free fall.

Budget hearings and negotiations focused on efforts to reduce violence, reform police, address racial inequities, and increase employment opportunities, among other issues. The negotiations were also influenced by political considerations, with several members seen as possible candidates for mayor in 2023 and jockeying for position.

Funding for violence prevention programs other than policing, as the city faces soaring homicides and shootings, was a significant point of contention. Thirteen Council members late last month called for $100 million in new spending on items such as community-based violence intervention, job training, trauma and healing services, and safe havens for youth.

In the compromise orchestrated by Clarke, lawmakers instead added just over $68 million in new spending, according to an administration document outlining the funding.

Much of that $68 million was already in Kenney’s budget proposal, but was grouped together to fit in the categories Council proposed last month. The $25.6 million added as a result of negotiations includes $20 million in community grants and $5.6 million in economic development initiatives, which could include workforce development or a recovery plan for Black and brown-owned businesses, according to a Council document obtained by The Inquirer.

But Councilmember Kenyatta Johnson called the new spending “a paradigm shift” in how the city addresses violence, by significantly increasing funding for prevention programs, rather than pouring more money into policing. He said better programming would begin this summer.

Some of the funding would go to nonprofits and other groups that already work with youth or communities affected by violence.

“We want to make sure during this upcoming summer after this budget is passed you will see an infusion of support,” Johnson said.

» READ MORE: Philly leaders negotiate anti-violence funding, federal aid, and tax cuts as budget deadline nears

The budget also has funding for police reforms, including changes to how the city responds to mental health crises. While Kenney proposed keeping funding for the Police Department flat compared to the current fiscal year, the budget amendment circulated Thursday included a police funding increase of $2.3 million to purchase tasers.

Kenney in April proposed a $5.18 billion budget that would use the federal stimulus aid to help return the city to pre-pandemic spending levels, restore some but not all service cuts made last year, and resume a schedule of small annual cuts to the wage and business taxes that were paused last year.

Lawmakers had their own priorities, and members varied widely on whether or not to cut taxes.

Kenney’s administration proposed spending only $575 million of the federal aid in next year’s budget, preserving a majority of it for future years, when tax collections are projected to remain depressed due to the lingering effects of the pandemic.

Many Council members, however, pushed for a more aggressive spending plan, citing pressing needs after a year of heightened unemployment and soaring homicide rates.

Clarke pitched members on the final plan in a series of one-on-one phone calls throughout the afternoon Thursday. It was the last day Council, if following its usual rules, could advance the budget in time for the start of the fiscal year.

While Council agreed to a smaller wage tax cut than Kenney wanted, it rejected his proposed business tax cuts, as well as other tax cuts pushed by members Cherelle Parker and Allan Domb.

Clarke said the city should focus on addressing poverty and racial inequity instead of an across-the-board tax cut.

“I think the way you do that is investing in our people,” he said.

Council amended the mayor’s tax proposal this week by reducing the size of the cut for suburban commuters who work in the city, while accepting his proposed tax cut for Philadelphia residents. The tax bill would reduce the wage tax on city residents from 3.8712% to 3.8398%. For nonresidents, the bill would lower the rate from 3.5019% to 3.4481%.

Together, they will cost the city an estimated $23 million in diminished tax revenues next year.

Activists who opposed tax cuts during the process denounced the wage tax deal but celebrated the failure of other tax cuts.

“We are very glad that City Council responded to the pressure of Philadelphians who pushed back against further tax breaks for corporate CEOs and parking millionaires who are already profiting off the pandemic,” Erme Maula, of Tax the Rich PHL, said in a statement.

Other changes to Kenney’s budget proposal include $3 million in new spending for eviction prevention, $6.5 million for the Philadelphia Land Bank, $15 million for Council’s Poverty Action Fund, and a total of $7 million across various line items for programs that support the arts, culture, and hospitality sectors.