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Legislative bills

Philadelphia City Council Approves $6.8 Billion Budget

Strategic Insights

— 2 min read

The Philadelphia City Council has approved a $6.8 billion budget, with a mix of tax cuts and housing initiatives. The budget includes small tax cuts for individuals, but small businesses will face a significant increase in tax burden due to the elimination of a popular tax break. The city's housing initiative, which includes programs to provide affordable housing and home ownership opportunities, will be funded through a $800 million bond initiative. The money for the housing initiative will not be available until this fall, and the programs will take time to implement.

Key Takeaways:

  • The wage tax will be reduced from 3.75% to 3.74% for Philadelphia residents and from 3.44% to 3.43% for commuters, with a five-year schedule for further reductions.
  • The property tax rate will remain flat at 1.3998% of a property's assessed value, with most homeowners paying the same amount in property taxes.
  • The real estate transfer tax will increase from 3.278% to 3.578% to help fund the housing initiative.
  • Small businesses will face a significant increase in tax burden due to the elimination of a popular tax break, but the business tax burden will soften over time due to a 13-year schedule for cutting the BIRT.
  • The BIRT rate will be cut from 5.81% to 5.71% next year, with a schedule of annual reductions to eventually fall to 2.8% in 2039.
  • The city's housing initiative, funded through an $800 million bond initiative, will provide funding for dozens of housing policies over the next few years.
  • The biggest priorities for the housing initiative include Turn the Key, a program that offers cheap city-owned land to developers for affordable housing; Basic Systems Repair Program, which provides grants for home repairs; and One Philly Mortgage and Philly First Home programs, which provide assistance to first-time homebuyers.

Statistics:

  • The $6.8 billion budget approved by the City Council includes $800 million for the housing initiative.
  • The wage tax will be reduced by 0.01% for Philadelphia residents and 0.01% for commuters.
  • The real estate transfer tax will increase by 0.3% to 3.578%.
  • The BIRT rate will be cut by 0.1% next year.
  • The city's housing initiative aims to allocate $112 million to Turn the Key, $84 million to Basic Systems Repair Program, $50.7 million to One Philly Mortgage, and $50 million to Philly First Home.
  • The administration expects to issue the first tranche of the bonds in the fall, with the funds for the housing initiative becoming available in October.

Sources:

  • "Philadelphia City Council Approves $6.8 Billion Budget" by Sean Collins Walsh, The Philadelphia Inquirer, Jun. 12
  • "Parker's $800 million bond initiative for housing initiatives" by Sean Collins Walsh, The Philadelphia Inquirer, Jun. 12
  • "BIRT changes and relief for businesses" by Sean Collins Walsh, The Philadelphia Inquirer, Jun. 12

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