For Schools, “A Vortex of Political Hell”

Forget a grand bargain. Now, even the half-measure of a cigarette tax is in danger.

Every so often, when Mayor Nutter opens his mouth, a little gem tumbles out that captures matters perfectly. Yesterday, it was a five carat diamond.

“We are caught in a vortex of political hell with no way out,” Nutter told reporters. Later, he mentioned ping pong.

At issue is the cigarette tax for city schools, which is a questionable policy on its own, but also the closest thing the district has right now to a lifeline. Yesterday morning, it looked like a lock. But that was before the State Senate voted to put its growing feud with the House of Representatives and the tender concerns of the tobacco lobby ahead of the School District of Philadelphia and its 191,000 students, adding a five-year sunset provision to the tax and putting its final passage at risk.




How did this happen? Didn't the Senate approve the tax sunset-free on June 30?

Well, yes. But then the House got the bill, and while the House shocked all by accepting the cigarette tax, its version of the legislation gave an assist to city charter schools and took out a few provisions unrelated to the cigarette tax but near-and-dear to the hearts of Senate Republican leaders like Majority Leader Dominic Pileggi (see here and here).

That gave the Senate a second chance to tinker (ping pong), gave the tobacco lobbyists the entree they'd been looking for (which is definitely political hell), and now everything the district thought it had won, meager though it was, is suddenly at grave risk (a vortex of, say, potential doom).

Now it's back to the House, which has scheduled a rare summer session to take the matter up again.

Philadelphia Democrats in Harrisburg are howling about all of this, with the peculiar exception of State Senator Anthony Williams, the Democratic whip. On Monday, he claimed credit for his role in moving the cigarette tax (Williams introduced the tax authorization bill) in a joint appearance with Mayor Nutter. On Tuesday, he was the lone Democrat in the Senate to vote for the amendment sun-setting the tax after five years.

Yesterday, shortly before the votes on the bill, Williams told me that "the tobacco lobbyists are up here, not trying to kill it but inflict pain upon it." He described the five-year-sunsetting as a better option than "more egregious" alternatives the lobby was pushing.

"We basically said, look, we need to vote it out of there, we'll accept a five year sunshine," Williams said, when asked why he would support the sunset provision. "A cigarette tax is not a permanent funding solution for the schools, and if it works, it'll probably get renewed."

I suspect some version of the cigarette tax will ultimately pass. But that's obviously not a sure thing. And if the district does get a tax with a five-year lifespan, it'll be difficult for Superintendent Hite to do long-term fiscal planning. One of the Philadelphia school district's many problems is the lurching about it's been forced to do each year to find stopgap funding, instead of being able to rely on a predictable stream of revenue, like the rest of the districts in the state.

A five-year cigarette tax would also be a far, far cry from the grand bargain that seemed, fleetingly, to be in the works earlier in budget negotiations. According to sources, the proposed framework of the deal looked roughly like this:

  • A new tax on Marcellus Shale gas extraction, with annual revenue of between $200 million (which Republicans were willing to accept) to $600 million (which Democrats were angling for).
  • The issuance of pension obligation bonds, both to shore up the state's pension fund and free up short-term cash for school districts like Philadelphia's that are buckling under extreme pension payments.
  • A rollback on pension benefits for new state employees, either in the form of mandatory 401(k)-type plan, or a mandatory hybrid plan.
  • New funding of around $70 million for the "charter reimbursement" line of the state budget, which would have translated into significant new funds for school districts like Philadelphia's that have a lot of charter operators.
  • In all likelihood, the cigarette tax would have been included in a final deal as well.

If that framework had held up, the district would have been looking at more than $60 million in new state funding, plus the $80 million or so the cigarette tax is estimated to net the district in its early years.

That's the kind of investment that shuts off the sirens at district headquarters, the kind of money that returns counselors and nurses and librarians and aides to city schools. It's the sort of cash that gives Hite and his team a fighting chance to make schools better.

But the framework, which was being assembled principally by Pileggi and Williams, fell apart before it matured into a concrete proposal, and it's not hard to see why. There's a pretty vast spread between a $200 million shale tax and a $600 million one. I think it's unlikely many Republicans in the Senate or the House would have accepted $600 million in new taxes, and I doubt many Democrats in either chamber would have been willing to cross their allies in the public employee unions, certainly not on the cheap.

Perhaps, if it was not a gubernatorial election year, Philly Democrats in safe seats would have been freer to vote in the interests of the school district, and perhaps they would even have had the silent blessing of party leaders. That might have been enough to clear the Senate and give the deal a soupcon of bipartisan flavor.

But it is an election year. And it would surely take a lot of Democratic votes in a Republican House as conservative as this one to pass any budget that included hundreds of millions of dollars in new taxes.

And that's to say nothing of Gov. Corbett, who resisted the shale tax throughout (though I do think he would have had little choice but to sign off on a grand bargain if it had made it to his desk in an election year).

You get the drift. Republicans say Democrats wouldn't bend, Democrats say the same of Republicans, and in the end we have a still-unsigned, status-quo budget and the prospect of no new money for city schools.

It would be simplistic and reductive to proclaim a pox on both their houses. Republicans control state government top-to-bottom, full stop. But I don't see any profiles in courage on the Democratic side of the aisle here either.

"A vortex of political hell" indeed.

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  • markdschwartzesquire

    Weary and Wary of the Philadelphia School District Passion Play?

    Another
    Approach

    Every
    year with the coming of the summer solstice, Philadelphia School District
    honchos put up a hue and cry for money to put a band-aid on a total debacle. Every year we hear of cuts beyond the bone
    and the prospect of school not opening the Fall. I wonder if it would matter
    given the level of education currently being delivered.

    As in life, repeatedly crying wolf is tiring,
    has diminishing returns, and ultimately results in collective tone-deafness. The
    latest “rescue “got Philadelphia the power to levy a $2 a pack cigarette tax;
    hardly a growing or dependable revenue source, which yields a veritable drop in
    the ocean compared to the state budget. What’s more everyone agrees that this
    does not cover the deficit.

    This
    past week Philadelphia’s Mayor went “on location” to the State Capitol for the
    play by play. He proclaimed that Philadelphia school children were being held
    hostage, the victims of nefarious political dealing, and literally tied to the
    tracks with a locomotive fast approaching.
    Philadelphia state senators and state reps chimed in. Heroes all against villains comprised of many
    Republicans and that insensitive Philadelphia basher, Governor Corbett.

    The
    problem is that both the heroes and villains have championed the charter school. Studies indicate that charter schools have
    drained as much as thirty percent of the School District Budget. At the same
    time they had made grateful multi-millionaires of some charter school founders.
    This translates into lots of political contributions all around. Indeed the
    circle has been is unbroken.

    As
    always the media ramped up the dramatic. One columnist waxes nostalgic for
    Vince Fumo and his brand of deal-making. Now there’s a role model for Philadelphia children!
    Clearly the principal beneficiary of Vince’s deal-making was Vince. Witness the
    array of toys: mansion, beach places, a farm, cars and tools, not to mention vacuum
    cleaners. But then, not to worry, he’ll return consistent with Pennsylvania
    tradition, where politicians turned felons returned to the scene of the crime
    as lobbyists, further enriching themselves and their clients all from the
    public till.

    Unfortunately,
    the problem with the School District is hardly new. Furthermore it’s not simply about money. Back
    in the 1970s it was top-heavy with administrators (a/k/a political hacks). Leading Philadelphia politicians like Ed
    Rendell wouldn’t hazard their kids to the public schools. All along the underlying finances of the
    School District were prey to financial gamesmanship headed towards
    decline. In 2001 the School District had
    a deficit of $216.7 million on a $1.7 budget. Branding it “distressed”, the Commonwealth
    came to the rescue with legislation creating the “School Reform Commission” The
    effect was to add state appointed political cronies to the mix. We all know how “reformed” the Convention
    Center, SEPTA, and the DRPA are thanks to appointees from Harrisburg. We’ve had more than ten years of reform,
    characterized by one embarrassment after another at the board level. All the
    while, no one can claim that the education actually delivered has improved. The most telling information I’ve had comes
    from a family friend; a thirty year teacher regretfully surrendering to
    retirement as chaos has triumphed over any semblance of educating children.

    While
    money doesn’t solve woes, at the individual school level there isn’t much left
    to cut. The problem is that our heroes
    and villains in Harrisburg have the School District in a box. The deficit isn’t
    being funded and they’ve barred the School District from being able to go
    bankrupt, unlike the rest of us. In
    reality, all of this sanctimony was about chump change compared to the money routinely
    wasted by the state and City on special interest boondoggles. Every year, billions of “economic
    development” grants are made across the state to companies run by politically
    connected fat cats who could get their own financing. For example, time and again the State and City
    have spent millions to subsidize the multi-millionaires running COMCAST, guys
    who can well afford to pay for their own buildings. And who can forget the tens of millions of
    dollars in the State budget for the Barnes art collection of all things? These
    are anything but lapses in judgment. Time and again our elected officials
    demonstrate their real priorities which are not Philadelphia children. The fact is that government has turned into a
    transfer mechanism to take money from what is left of a middle class and give
    it to the rich. Last week’s heroes and villains know it all
    too well. These priorities are what keeps them in office.

    We
    are told that we get the elected officials we deserve. I’m sorry. The families and
    children dependent upon the Philadelphia School District don’t deserve the
    present class of pols. It is time to
    forget thinking about them as our advocates and instead characterize them as civil
    defendants who need to pony up money. There
    is a body of law alive and well that “disabled “or “special education” students
    are entitled to a “free and appropriate public education at public expense.” As a lawyer and uncle, I succeeded in having a
    suburban school district pay for private schooling of a nephew. That school
    district paid what was then a multiple of the cost of this country’s most elite
    prep schools.

    Public education, not public warehousing of
    kids, is a fundamental obligation of government. Philadelphia School children have a right to open
    schools that actually can function as opposed to simply warehouse, not
    necessarily protect, kids. Perhaps it is
    time for the Courts to recognize the equal protection argument that all Philadelphia
    school children are “special”.

    Mark D. Schwartz is a Bryn Mawr based lawyer
    who worked in the 1970s as legislative assistant to then House Majority Leader
    and later Speaker K. Leroy Irvis.

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  • anonymous

    Why doesn’t philadelphia raise property taxes just like everyone else in the state has to do.

    • Allison Kelsey

      It just did. Mine in Grad Hosp increased 1000% (not a typo). But the powers that be made it revenue-neutral, so none of that went to support anything new. The increase would have been more palatable if it were.

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  • Richard Colton

    “five year cigarette tax” – please.
    when is any tax temporary? I think we would be OK with paying more for public education in Philly if we got a quality product in return.

  • Ewock

    How about across the board pay cuts for all school district employees, top to bottom? What a novel concept.