Mayor Cherelle Parker is proposing new taxes on Uber rides and Amazon deliveries to raise revenue for Philadelphia’s public schools and hire new pothole crews.
Those measures were part of the nearly $7 billion operating budget Parker presented Thursday to City Council, which will spend the next several months holding hearings and negotiating with the mayor’s team.
She suggested implementing a retail delivery tax, levying 25 cents an order, excluding food, baby products, prescriptions and medical equipment. Companies with fewer than 1,000 transactions a year in city limits would not be subject to the tax, administration finance officials told reporters.
Parker’s office projects that the toll would generate about $15 million, which would be sent into the city’s transportation fund. It would pay for six geographically-based squads dedicated solely to remedying potholes. Workers repaired more than 60,000 last year; however, more need to be addressed, the mayor said.
The reasoning, Parker’s Office explained, is that the influx of delivery trucks in recent years has strained road infrastructure.
Rideshare companies, under the mayor’s proposal, would need to fork over 20 cents for each trip originating in Philadelphia. Combined with updates to a levy involving cell towers, the change would net an additional $12 million a year for the School District of Philadelphia, Parker’s team estimates.
Both the retail delivery and rideshare fees would be assessed to companies; however, there appears to be little stopping them from passing those costs onto consumers.
The largest tax hike, in terms of added revenue, would come from a 2% recommended increase in the hotel tax. It would result in an extra $20 million annually — money Parker wants to use to add 1,000 shelter beds with support serv ices as part of her bid to end street homelessness. Raising the hotel fee requires authorization from Harrisburg, officials said.
In addition, the Parker administration wants businesses outside of Philadelphia to pay the city’s 2% sales tax. Currently, they are only subject to Pennsylvania’s 6%. She has also offered a bevy of city fee increases to account for the rising costs of providing those services, officials said.
“I don’t take lightly any proposal to raise any tax or fee,” Parker said. “We’ve taken very few such actions during my first two years in office. And these proposed taxes, they will be paid by companies that benefit from doing business in the city of Philadelphia.”
Looming over the budget is a forthcoming property reassessment. Valuations are expected to be released in the coming months, and City Council President Kenyatta Johnson said lawmakers could again consider bolstering tax relief programs, such as the Homestead Exemption, if bills rise significantly.
Johnson, whose office will take the lead in budget talks with the mayor, commented positively on Parker’s proposal, calling it a “step in the right direction.”
“I think the mayor was very savvy in making sure that her fees and taxes proposed are in line with actual investments, where people can actually see an actual return on specifically why she’s proposing to raise certain fees and taxes,” he told reporters.
The mayor’s financial plan incorporates planned gradual decreases to wage and business taxes, keeping in line with a long-term plan adopted last year to significantly curtail booth rates.
Parker’s budget address to Council lasted more than two hours, and she crafted the speech – and her budget – around the concept of economic mobility, highlighting investments in education, housing and other areas.
“If we get this right, by making value-driven, data-informed investments, Philadelphia can become the national model for economic mobility across the country,” she said, later adding: “Upward economic mobility, it shouldn't be the exception. It must be the expectation.”
City Hall will soon issue the first $400 million Housing Opportunities Made Easy, or H.O.M.E., bond, part of an $800 million borrowing to fund the creation or preservation of 30,000 units of affordable housing.
Parker’s budget separately sets aside $10 million to support a factory constructing modular homes. Her office issued a request for information, or RFI, in January, and there has been “real interest,” she said.
The administration has proposed doubling the current 10-year tax abatement for residential conversions of former offices, schools, factories and government buildings. The measure is expected to face opposition from progressive organizers.
“Every tax break that drains resources from our public systems makes it harder for students and communities to thrive," Madison Nardy, executive director of 215 People’s Alliance, said in a statement.
Councilmember Jamie Gauthier, chair of the housing committee, said she would want an affordability requirement attached if lawmakers approve the new abatement.
The plan devotes an additional $6.5 million to pay for 100 new slots in the city’s free pre-kindergarten initiative, bringing the total number of seats to 5,350.
Over the next five years, the administration proposes spending $15 million to create 1,000 summer jobs for students, raising the number of positions to 9,000. Parker, in her speech, challenged the private sector to provide another 1,000 to reach 10,000 jobs.
Parker wants to allocate $850,000 to set up a student loan help center for the more than 230,000 city residents with college debt.
She spoke about growing economic opportunities in what she referred to as the “Lower South,” an area that includes the Navy Yard, port, stadium complex and Bellwether District (on the site of the former PES refinery).
Her team has proposed devoting $211 million in opioid settlement money to the administration’s “Wellness Ecosystem.” A majority of the funds would go toward two city-owned addiction recovery centers, Riverview Wellness Village and Philly Homes at Girard.
HVAC problems have long plagued many Free Library of Philadelphia branches, and Parker has suggested spending $33 million over several years to revamp those systems.
Gun violence has dropped precipitously in recent years, and the Parker administration wants to continue contributing to anti-violence groups that she believes have contributed to that decline. A $25 million grant fund is contemplated for the coming fiscal year.
Parker is proposing $25 million to continue operating the city’s Zero Fare program, which provides free transit passes to low-income residents, and $10 million for SEPTA cards for municipal employees.
While Philadelphia may not get a new bridge or museum to commemorate America’s 250th birthday, the mayor said she wants to create a “legacy experience” for the city that is similar to the 1985 Live Aid concert.
Council will hold hearings on various aspects of the budget proposal, beginning March 24 and running through early May. Lawmakers and the mayor’s office must reach an agreement on a finalized plan before the new fiscal year begins July 1.
