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Mayor Kenney Proposes Real Estate Tax Hikes To Fund Schools

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Philadelphia Mayor Jim Kenney, speaking at Philadelphia's Amazon HQ2 pitch reveal event in 2017

If Mayor Jim Kenney gets his way on the upcoming city budget, the city school district will get a sizable cash infusion from property owners.

Kenney announced a plan Thursday to raise property and real estate transfer taxes to cover nearly all of the city schools' $1B budget shortfall over the next five years, the Philadelphia Inquirer reports. The city took control of the school district from the state late last year, and it is projected to fall short of its 2018-19 budget by $105M, which would be covered if City Council approves Kenney's changes.

Kenney proposed increasing the property tax citywide by 6% at his address, to a response of light boos from those in attendance. The hike would add $95 per year to the average homeowner's tax bill, according to the Inquirer, which would account for $475M in revenue over the next five years.

Kenney also proposed increasing the real estate transfer tax, which is assessed on real estate sales in the city, from 4.1% to 4.45%, which would bring in an estimated $66M. Kenney also promised to include provisions in the budget to mitigate the impact on low-income homeowners.

Kenney also announced a proposal to slow down planned decreases to the city wage tax and additional funding for his Vision Zero incentive, which is meant to eliminate traffic fatalities entirely by 2030 with a series of infrastructure incentives.

Philadelphia City Council members will now take Kenney's suggestions under advisement as they debate and eventually vote on the next budget, which must be passed by the beginning of the next fiscal year in July.

Among the changes that the council could make is to the 10-year tax abatement on new construction and improvements, which Council President Darrell Clarke promised to look into, according to the Inquirer. Councilwoman Maria Quiñones-Sánchez said the council was disappointed that Kenney did not mention the tax abatement in his announcement.

The hikes are small enough that large property owners should not be unduly hurt by them, Post Brothers President and co-founder Matt Pestronk said. That they will go toward funding the struggling school district — long a reason why residents move to the suburbs to start families — only makes the trade-off more of a no-brainer.

“People are ideologically opposed to things like this,” Pestronk said. “For me to pay $10K in additional taxes on a very valuable property is not something I would complain about, in light of where the money’s going. People should be honored to pay it, honestly, if they’re making money in the city. How can anyone object to that on a practical level?”