Cuts, temporary tax hike to highlight Philadelphia mayor's 2009-2010 budget

Hoping to tamp down a public outcry, Mayor Michael Nutter unveiled a $3.8 billion budget proposal Thursday that relies on property and sales tax increases to preserve libraries once slated for closure, protect health centers and maintain core city services.

The first-term Democrat presented the spending plan to his former City Council colleagues, who now must decide whether to approve the budget with the nation's sixth-largest city facing a projected deficit of nearly $1.4 billion over the next five years.

Nutter's proposal calls for a temporary 19 percent increase in the property tax for the budget year that begins in July, followed by a 14.5 percent increase the next year. It also proposes raising the sales tax from 7 percent to 8 percent for three years - a move that requires state approval - as well as cutting about 250 jobs and making changes to the city's pension plan.

"Philadelphians do want our government to tighten its belt," Nutter told a packed City Council chamber. "As they say, nothing in life is free."

The mayor's budget address was met with a mixture of boos and cheers from union workers, activists and others, many of them waving signs. He wants members of the city's four major unions to take voluntary furloughs to prevent additional layoffs and contribute more money to their health care and pensions. Union members chanted "No! No! No!" at the suggestion of furloughs.

If he does not get state approval for the sales tax hike, Nutter said, a contingency plan would include laying off 256 police recruits; deactivating three engine companies, two ladder companies and three emergency medical services units; reducing library and recreation center hours; closing a health center; and reducing trash collection to three times a month.

Pete Matthews, president of the city's largest municipal union, rejected Nutter's call for workers to contribute more to their pensions and health care.

"That's just something we don't do," he said.

Philadelphia District Attorney Lynne Abraham said in a statement that her office's budget had been cut 22 percent - or more than $7 million - a reduction she called "stunning."

In November, Nutter inspired citizen protests when he announced plans to close 11 libraries and 68 of 81 swimming pools because of declining tax revenue and skyrocketing pension costs. A judge later ruled the mayor could not close libraries without City Council approval.

In his budget address Thursday, Nutter said that, with the help of private funding, 46 public swimming pools will now be open this summer. Programs for abused and neglected children and homeless assistance programs also will be preserved.

In other cost-cutting measures, Nutter said the city has removed 243 vehicles from its fleet of 5,800 and plans to cut hundreds more. He said the city also collected $2.5 million in back taxes.

Nutter has said he opposes raising the city's wage tax as a means to create more revenue, as some have suggested. He also this year scrapped a plan to generate more money by charging residents $5 weekly or $1- to $2-per-bag fees for trash collection.

Council members' initial reaction to Nutter's proposal was lukewarm.

Councilman W. Wilson Goode Jr. said he wants to take a closer look at Nutter's tax proposals. But he added that if he had to vote on the budget now he would support it.

Councilman Frank Rizzo was more direct, saying he couldn't support the proposed tax hikes.

"I don't trust that word 'temporary,'" he said. "At this point, I cannot be supportive of near that kind of an increase."

(This version CORRECTS UPDATES with quotes from address, reax from district attorney, council members, union leader. corrects number of pools to be open, 46 sted 36. CLARIFIES that projected five-year deficit has been updated from $1 billion to nearly $1.4 million. ADDS photo link.)