Philadelphia City Council gambles to fund schools

By Maura Pennington | Watchdog.org

PHILADELPHIA — For a city that’s legally required to “maintain effort” to support its financially distressed school district, Philadelphia is taking a bold risk in the final weeks of legislative sessions.

The Philadelphia City Council last week announced the introduction of a bill to amend the authorization of a 1 percent sales, use and hotel occupancy tax to bolster the finances of the School District of Philadelphia.

According to the bill, which 15 of the 17 council members co-sponsored, a portion of the tax revenue will go to the school district and a portion to the municipal pension fund. It would be phased in gradually. By 2018, the split would be straight down the middle.

A cigarette tax would compensate for the money redirected away from the school district.

“These measures simply require that the state allow Philadelphia to raise local revenues for our schools. I thank our state delegation leaders in Harrisburg for their balanced, bipartisan approach toward resolving the Philadelphia School District’s funding emergency,” said City Council President Darrell L. Clarke.

This wouldn’t be so risky if the school district hadn’t already factored an anticipated $120 million from the tax revenue into its 2014-15 budget. And if the General Assembly weren’t involved.

The issue has to head to Harrisburg for a couple of reasons.

First, the General Assembly only allowed the extension of the sales tax with the provision it would go toward schools before it goes toward pensions.

Second, the city plans to make up for moving in on that money by enacting a cigarette tax, which would require approval from state legislators.

The City Council is optimistic about its chances of success in changing the sales tax split and enacting a cigarette tax, but the majority party in the General Assembly isn’t fully on board with renegotiating.

“We haven’t had any success so far in getting the General Assembly to change what they did last year,” said Mark McDonald, Mayor Michael Nutter’s press secretary.

No surprise there. It makes Philadelphia’s last-minute legislative gamble all the more risky.

“If we fail to get the General Assembly to do a four-year phase in of the 50-50 split and the cigarette tax and the council has passed this bill, we get nothing,” McDonald explained.

The bill contains no back-up language to ensure the school district will receive its $120 million.

Even with that money, Philadelphia schools are going to be operating $96 million short of providing the barest services.

Steve Miskin, spokesman for House Majority Leader Mike Turzai, R-Allegheny, has said lawmakers are at least talking with the School Reform Commission and city leaders in Philadelphia to find a funding solution for the school district.

The city has a legal obligation to sustain its support of the district at a certain level — what’s known as “maintenance of effort” — putting them in a tricky spot if they don’t come through with the money.

“We just can’t play chicken with the General Assembly on this,” McDonald said. “The future of the city is in large measure linked to how we fund the public schools and prepare the city’s children to compete in the world.”

Contact Maura Pennington at mpennington@watchdog.org and follow her on Twitter @whatsthefracas.