State Senate Approves Bill to Raise Local Sales Tax and Reform Pension

The Pennsylvania State Senate recently passed an amended version of House Bill 1828, which would allow the city of Philadelphia to alleviate the fiscal burden on its municipal pension plans and increase its local sales tax by 1% to close its $700 million budget gap.

The GPCC applauds the State Senate’s action, and we remain committed to the final passage of House Bill 1828 as it returns to the House for concurrence on amendments approved by the State Senate.

Mayor Nutter and the Philadelphia City Council had requested the introduction of HB 1828 as the city’s financial burden continued to worsen. Beginning last fall and continuing through the spring, the City was faced with declining tax revenues, dramatic losses on earnings in their pension fund, and higher interest rates on debt.

These burdens drove city officials to cut $2.4 billion from its five-year plan through belt tightening measures, enhanced efficiencies and additional fees on residents and businesses.

While Philadelphia lawmakers have been able to fill $1.7 billion of that budget hole, the sales tax increase and deferred pension payments as contained in House Bill 1828 would cover the remaining $700 million and help the city avoid thousands of layoffs and closures.

Failure to secure passage of House Bill 1828 would trigger a series of drastic steps including the elimination of over 700 police and 200 firefighter positions, and closure of all libraries and recreation centers in the City of Philadelphia. These and other reductions would result in an unacceptable level of service and the long term deterioration of the City’s tax base.

The Chamber is committed to a public policy agenda that will generate jobs, strengthen the tax base, and fortify our economy. We commend members of the Pennsylvania State Senate for passage of the state enabling legislation, and we will work closely with Mayor Nutter and the City to gain swift and favorable House consideration of H.B. 1828, a necessary tool for the solvency of Philadelphia.