Katz, Street battle on city economic issues

The mayoral candidates do not see eye-to-eye on wage taxes, development. The mayoral candidates do not see eye-to-eye on wage taxes, development.Second in any ongoing series analyzing the critical issues of the 1999 Philadelphia majoral campaign. One candidate is a former business executive. The other has worked with city finances for the last 19 years. Now with less than two weeks left in the action-packed mayoral race, voters will have to decide which candidate can best manage the city's $2.7 billion budget. Republican Sam Katz and Democrat John Street have been angrily battling over who is qualified to handle the Philadelphia economy -- each trying to convince voters he has the fiscal skills to pay the city's bills. Street keeps stressing that his experience in city government and his work with Mayor Ed Rendell are the keys to effectively handling city finances. "Street has the experience and the knowledge," said his spokesperson, Ken Snyder. Meanwhile, Katz insists that his business know-how and innovative "outside of the box" financial ideas will fiscally enhance Philadelphia. Economic skill is crucial for the next mayor, who will become the leader of a city that was financially insolvent seven years ago when Rendell took the reins. But just as the candidates both have different backgrounds in financial wheelings and dealings, they also have very different ideas on how to handle the city's pocketbook. Cutting the city wage taxes has been an overriding theme of Katz's campaign. Katz has repeatedly blamed the Philadelphia wage taxes for the city's business and population loss, saying that only with lower taxes will Philadelphia thrive. Katz has released a wordy 83-page plan outlining his goal to slash the wage tax from 4.6 percent to 4 percent over the next four years, which he says will cost the city about $226 million. But Street and his supporters have branded Katz's plan -- which does not say where that $226 million will come from -- "fiscally irresponsible." Street has pledged to stick to Rendell's five-year financial plan for the city, which would reduce the wage tax to 4.4 percent. Snyder said the five year plan is "cautious and conservative." And there may be reason to take a cautious approach to city finances. After all, Philadelphia has only recently emerged from a dark economic period. When Rendell inherited Philadelphia eight years ago the city had hit rock bottom -- with an annual $200 million deficit, ongoing battles with the city's municipal unions, failing city services and a falling population. "We had a patient that had cancer and at the same time had just been wheeled in with a gunshot wound to the chest," Rendell spokesperson Kevin Feeley said of the state of Philadelphia's economy in 1991. Rendell has since dragged Philadelphia up by its boot straps -- he presented six years of balanced budgets, generated increases in city jobs and supported a vast range of urban development projects -- and Philadelphia has made a healthy recovery from its financial woes. But while the city is currently on an upswing, any financial decisions must be made carefully because a recession could cripple the city's economy. "Although the downtown has made a recovery, the first recession will show just how fragile the recovery is," Penn History and Public Policy Professor Ted Hershberg said. While Philly's recovery may currently be fragile, the city's economy is at least headed in the right direction. And Street wants everyone to know that he helped Rendell put the city on the right track -- he has referred to their partnership endlessly throughout the campaign. "I will tell you over and over that Philadelphia's recovery does not happen without John Street," Feeley said. But according to Katz, there is still much room for improvement. Katz maintains that the city can be more effectively and aggressively managed -- generating more jobs and business opportunities -- through skilled management and greater government efficiency. That, he says, will save money while actually improving the quality of service. Hershberg, who also serves as the director of the Center for Greater Philadelphia, agrees that the city can be managed better. "Anybody who believed that Philadelphia has achieved an efficient government is kidding themselves," he said. "Rendell's done some good things," Hershberg noted, but added "Katz is correct? there are lots of things still to do." Street responded to Katz's criticism of government inefficiency by citing the city's accomplishments over the past seven years. "We've increased the quality of services, hired police, have longer library hours. I think that it is inaccurate and unfair to suggest that this is a government that is sitting on its hands," Street said after Sunday's debate. "That's astounding to me." On Monday the differences between the two campaigns were highlighted when Katz released an economic plan entitled "Philadelphia is Open for Business." The plan broadly outlined tax policies, job-oriented education initiatives and neighborhood development goals, which according to Katz will boost the Philadelphia economy. Street's campaign criticized this plan -- like the tax plan -- for its lack of details. "We've seen it in how-to-govern books," Snyder said, adding that "there's not one original thought [in the plan]." Katz spokesperson Bob Barnett said that the criticisms of the campaign's economic plans show the negative nature of Street's campaign.

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