On the whole, who wouldn’t rather be in Philadelphia? This is especially true if you fall into the camp of progressive local government reform. Philadelphia has a consolidated City-County government with no pesky independent municipalities or school districts to worry about and a commuter tax that falls on everyone who works within the consolidated City borders and is not a flat-dollar amount but a percentage of income.
Here’s what else the City has: massive budget problems that are driving the Mayor to ask the General Assembly to tack another point onto its 7 percent sales tax and seek more “tax reform” in the fall. At 8 percent, Philadelphia would still have a lower sales tax than other large cities (more than 1 million residents) but, when considering all taxes, Philadelphia is “is the highest-taxed city in the country” according to the City’s own finance director. Its pensions have nearly $4 billion in unfunded liabilities and only are slightly better than Pittsburgh’s on funded ratio (which is not saying much). Remember too that Philadelphia has been under state oversight since the early 1990s.
If there is a lesson here it is “be careful what you wish for”. Because despite the consolidated government, the commuter tax, and numerous economic development attractions (stadiums, convention center, not one but two casinos in the works) the City cannot restrict its spending and is constantly in need of new revenue. All the while residents and businesses have been leaving Philadelphia. The City has lost 30 percent of its population since 1950 with the biggest decade of loss (on a percentage basis) between 1970 and 1980 (13%). That’s damning evidence that streamlined government and far-reaching taxes cannot solve the problems of unbridled government spending.
