MAYORAL RACE 1999: Katz unveils long-awaited plan to lower wage taxes

Some criticized the plan for not specifying where budget cuts would come from. Throughout his mayoral campaign, Republican Sam Katz has maintained that slashing the city wage tax is one of his key goals -- and yesterday he released a document designed to show just how he will do it. Katz debuted his highly anticipated wage tax plan -- outlining his goals to cut the tax from 4.6 to 4 percent over the next four years -- which he said will cost the city $226 million. Katz has maintained that cutting the city's wage tax is the only way to attract people to Philadelphia, which has lost almost 150,000 residents this decade. "Becoming fiscally competitive is the Mount Everest of Philadelphia's problems," Katz said. But Katz refused to say how he would pay for such a cut, which only reinforced criticism of the plan from the opposing Democratic candidate, John Street. Street has repeatedly attacked Katz's tax goals, saying the reductions will cost the city more than twice what Katz claims. "His plan will jeopardize the fiscal stability of the city," Street spokesperson Ken Snyder said . Katz presented the 100-page document -- entitled "Reducing the Cost of Living and Doing Business in Philadelphia" -- at a press conference yesterday in the Park Hyatt hotel at Broad and Walnut streets. He cited a range of economic authorities within his plan, including the Pennsylvania Authority League, the Pew Charitable Trusts and Penn professors Robert Inman and Gary Ritter. The plan describes outcome-based budgeting, a process that rewards departments based on performance. And it calls for better accounting techniques, stricter inventory controls and increased labor-management cooperation. Katz has consistently bemoaned the city's population loss of recent years, placing the blame on high wage and business taxes. Katz compared his plan to outgoing Democratic Mayor Ed Rendell's five-year plan for the city, to which Street said he will adhere. The five-year plan will reduce residential taxes from 4.6 percent to 4.46 percent by 2004. "Staying the course simply won't work," said Katz, who said the city should pursue a more ambitious course of action. But despite his broad research and lengthy document, critics say the plan fails to address the issue at stake: How will Katz pay for the cuts? Former Rendell chief of Staff David L. Cohen called the plan a "collection of consultants' jargon." "I think it exposes the fact that Sam Katz has no experience managing a government," he said. Cohen added that Katz's tax cutting goals may negatively affect the city. "The Katz proposal is a reckless plan that literally threatens the financial stability of the city," he said. Street has warned that such a large cut in the wage tax will return Philadelphia to its dark fiscal days before Rendell took over in 1992. Rendell arrived to a city on the brink of collapse, with annual budget deficits of more than $250 million. Rendell has repeatedly refused to make deep cuts in the wage tax during his tenure and has endorsed Street, the former City Council president, partly because they share that same fiscally conservative philosophy.

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