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City Council Committee Pushes Alternative Funding Source For School Budget Gap

By Mike Dunn

PHILADELPHIA (CBS) -- Two days after Mayor Nutter proposed a new tax on cigarettes and a higher liquor tax (see related story), a City Council committee today gave initial approval a different approach that would affect many larger businesses.

City Council's finance committee approved a measure that would adjust the Use and Occupancy Tax, ("U&O") -- a type of property tax specific to business owners -- so that an extra $32 million would go to the school district.

Councilman Wilson Goode Jr. said that many businesses will see lower taxes under the new AVI property assessments.  During the hearing he told Rob Dubow, the mayor's finance director, that businesses would be able to bear an increase in the U&O tax since the mayor's long-range budget includes $320-million in other relief for them:

(Goode:)  "We believe that some of that money should go toward schools, and some of that money should go toward lowering business taxes."

(Dubow:)   "And we believe that the funding for schools should come from different sources."

Dubow argued in favor of boosting the liquor tax and imposing a city cigarette tax.   He said the U&O approach would hurt businesses.

"We just think that the liquor and cigarette taxes are preferable -- substantially preferable -- to an increase in the business tax," Dubow told the panel.

But councilmember Bill Greenlee pointed out that the mayor's approach requires Harrisburg's approval, which is uncertain, and the U&O approach does not:

"I don't think any of us, the administration or any member of Council, wants to increase taxes," Greenlee said.  "And the administration has gone on record saying they want the money for the schools.  So, in poor choices -- or at choices we'd not like to have -- at least this (U&O approach) is under our control."

School advocates spoke in support of the U&O approach, which was authored by Councilwoman Maria Quinones Sanchez.

"The ten biggest corporate property owners will realize tax savings of over 16 million dollars next year, thanks to AVI," said Leonard Stones of the school advocacy group Action United.  "Meanwhile, schoolchildren will go to schools (that are) on life support."

The head of the Greater Philadelphia Chamber of Commerce, Rob Wonderling, and other business leaders spoke in opposition during the daylong hearing.

"It once again puts on the business community the sole burden of working through the issues of adequate and appropriate funding for our public schools," Wonderling said.

Nevertheless, the U&O hike approach was approved at the committee level.  Whether it sees a final vote by the full Council, however, depends on the outcome of the entire budget negotiation, and that likely won't be settled for several weeks.

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