Rendell announces balanced budget, lower taxes in next fiscal year

Proposed reduction in city wage tax first in 50 years Mayor Ed Rendell officially announced his plans to lower the infamous Philadelphia wage tax for the first time in 50 years at his annual budget address to City Council yesterday morning. In the upcoming fiscal year, Rendell's proposal would drop the wage tax from 4.96 percent to 4.86 for city residents and from 4.31 percent to 4.22 percent for non-residents. In addition, the tax would continue to decrease every year for the next six years. By the year 2000, Rendell hopes to lower the wage tax a total of seven percent for city residents and suburban residents who work in the city. The rate for city residents would decrease to 4.61 percent and for suburban residents to 4.01 percent. Rendell also proposed decreasing the business privilege tax over the same period from .3250 percent to .2650 percent. The announcement of the tax reductions was met with applause from Council and the standing room only audience. For the third year in a row, the city is planning to have a balanced budget, Rendell said. The proposed budget for this coming fiscal year is $2.31 billion. In addition, the Economic Stimulus program will increase from $2.3 billion to $2.7 billion. The news of a balanced budget and tax decreases has been welcomed by most Philadelphians. Only three years ago, the city faced an enormous debt of almost $250 million. The Rendell administration, however, has managed to turn that into a budget surplus for the last two fiscal years. "Things are a little different this year," Rendell said. "I am actually happy to present this budget and Five Year Plan to City Council today. Thanks to the hard work that all of you have put in over the past three years, Philadelphia is now poised to enter the next century as one of America's greatest urban success stories." As for the tax decrease, Rendell said that although it "may not sound like a lot, to the thousands of Philadelphians who are struggling to make ends meet, this is a beginning -- and it is a crucial beginning." He also said that he hoped the business privilege tax reductions would spur businesses to relocate in Philadelphia. And throughout the speech Rendell stressed that he balanced the budget without increasing taxes, layoffs of city workers, or cuts in city services. "Last June, for the first time in 68 years, Philadelphia actually gained more jobs than it lost," Rendell boasted. On the issue of crime, Rendell said that although Philadelphia has the most police per capita of any major American city, 753 new police would be hired by 1998. He said much of the funding for this increase would come from the federal Crime Bill passed this summer. The mayor said he planned start adding officers this year, and said there are currently 200 recruits in the police academy. The city will also get a new prison, the Curran-Fromhold Correctional Facility, which will add 1,200 beds to improve prison capacity, and the "long-awaited" criminal justice center will be completed. "We will continue to vigorously contest the prison cap, which allows repeat offenders to prey on our citizens without fear of going to jail," Rendell said as raucous applause from the audience erupted. Councilwoman Jannie Blackwell, whose district includes the University, said she is pleased by Rendell's budget proposal. "I think it was a good budget," she said. "I think it was positive. I think it made people feel encouraged. They don't feel that there's no light at the end of the tunnel." Blackwell said she was particularly happy with Rendell's proposed improvements for the Fire Department and the EMS service, especially in West Philadelphia.

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