A $30 million booster in prepaid taxes will buy Philadelphia officials a few extra weeks to work out a budget plan, but the move will have no direct effect on the city's long-term budget deficit. Several of the city's largest employers -- including the University -- announced last week that they will join to pay a total of $30 million in taxes, mostly wage and property taxes, to help the city through its budget crisis. But Finance Professor Robert Inman said the prepayment is like a short-term loan -- it will not solve the city's structural deficit problems. "What that says is the business community in Philadelphia is not running away from the city's problems," Inman said. A long-term solution will have to include the state government, Inman said. If there is no solution by the end of the state legislature's session in November, the $30 million prepayment will not be enough to carry the city into the legislature's reopening. City Council member George Burrell said that city leaders are working in "good faith," searching for a solution to the city's budget problems. But he said that it is too early to say if a budget agreement has been reached or what such an agreement would look like. Philadelphia Electric spokesperson Bill Jones, whose company will prepay $8 million, said that the move only eases the city's cash flow for a few weeks. He added that participants still hope for a solution among city, state and federal authorities. "The end result has to be a biting of the bullet by the city and the state," Jones said. Last month the city tried and failed to sell $375 million in short-term notes to tide it over until property tax revenues flow in at the beginning of the calendar year. The city traditionally sells about $220 million in notes for that reason. But this time, the city's projected $200 million deficit scared investors away. Mayor Wilson Goode announced that the city will run out of cash on December 1. The prepayment will put that date off for a few weeks. The city will receive property tax revenues in early 1991. Property owners usually receive their tax bills in January, and must pay them by the end of March, according to Revenue Commissioner Cheryl Weiss. Weiss said that the city receives $600 million in the first five months of the year -- a "significant portion" of revenue.Comments powered by Disqus
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