Philly budget awaits state approval

May 21, 2009 3:51:23 PM PDT
Philadelphia City Council has approved a $3.8 billion budget that depends on state approval of two requests, including a one-cent sales tax hike in the city.Council unanimously approved the plan Thursday. Mayor Michael Nutter supports it.

MORE DETAILS: You can read the the 80-page summary of the budget.

Critics marched out of City Hall moments after council approved the budget, chanting "Where's the people's budget?"

The budget calls for deferring a portion of the city's pension payments for several years and increase the city's sales tax.

That would bring the city sales tax up to eight cents per dollar. It is now seven cents, with six going to the state and one to the city.

Both proposals require approval from the state Legislature.

Without those approvals, Mayor Michael Nutter says Philadelphia will have to make drastic service cuts.

"I'm mindful of the fact that Harisburg is dealing with a very complicated situation itself. But, to not get those two items would be tremendously negative to the City of Philadelphia," said Mayor Michael Nutter.

"If it never happens, we're in deep trouble," said City Council President Anna Verna.

Groceries, clothing and medicine will remain exempt under the sales tax. But, the hike would hit the big box stores where TVs, computers and furniture are sold. The higher tax would also impact restaurants.

The question becomes: Would a higher sales tax force people to do their shopping outside the city?

"Right now the economy, you need to save on anything you have to," said Manuel Almonte of Lawncrest.

"It falls more heavily on low-income people. Low-income people pay a higher percentage of their income on the sales tax than wealthy people do," said Sharie Cohen of West Oak Lane.

Nutter says he's optimistic that the Legislature will approve the sales tax hike. He says it will generate about $580 million and help avoid things like library and recreation center closures and police layoffs.

The deferral of the pension payments is expected to generate more than $200 million over two years.

The Associated Press contributed to this report.

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