Testimony of the Greater Philadelphia Chamber of Commerce
Before the City Council Committee of the Whole
May 13, 2010

Good afternoon, President Verna and members of the Committee of the Whole.  My name is Rob Wonderling, and I am President and CEO of the Greater Philadelphia Chamber of Commerce.  I am pleased to join you today to offer comments on the City’s FY 11 Budget.

This is a too-familiar position for all of us. Once again, Council and the Administration face a very difficult challenge in crafting an annual budget.

The economic outlook for FY11, while not as dire as last year, still shows sluggish job growth as businesses of all sizes proceed with great caution in adding to their workforce.  Businesses have made painful decisions to create real efficiencies in their operations, have enhanced their technology to improve employee output, and generally have become leaner in order to remain competitive. This is the new normal and we all must recognize it and adjust to it.

This year’s municipal budget requires a shared sacrifice approach.  It must be a budget that takes a scalpel to spending and imposes realistic goals for revenue. If we are truly to address the challenges of the future, it must produce real efficiencies on the spending side, and shared responsibility on the revenue side by both businesses and residents.

While we applaud the Mayor and Council for identifying expense reductions in this budget, we foresee circumstances beyond the City’s control which could dash the assumptions on which these cuts were crafted.

Just as business has been forced to make difficult, substantive and definitive spending reductions, the City too must accept this fiscal reality and seek to deliver its services in a more efficient manner.

The business community is justifiably proud of the work done by The Mayor’s Private Sector Outreach Board in conjunction with the Administration. However, the fruits of its labor are longer-term efficiencies. We pledge to continue that work in the hope of helping the City to balance future budgets and to restore the City’s tax cut program as quickly as possible. But these identified efficiencies cannot be counted as spending cuts for FY11.

Of course, reducing expenses is not the sole solution to balancing the budget. We understand that this budget requires shared sacrifice. While revenue enhancements must be a part of the overall solution, we point out that no tax increase is popular, particularly during an economic slowdown such as we are experiencing.  Still, the Chamber has supported the work of the mayor’s tax task forces in both 2009 and 2003.  Both panels have recommended the need to move from mobile taxes such as the wage and business privilege tax (BPT) to non-mobile sources such as the real estate tax.  Let there be no mistake:  a hike in the real estate tax affects the business community just as it affects residents of this great city.  Some 45% of the revenue raised by the real estate tax comes from levies on commercial property.  Even those commercial establishments who do not own their space will see this hike passed through to them in their CAM’s.  Nonetheless, this temporary increase in the real estate tax is preferable to the continued reliance on wage and BPT.

While we recognize that real estate valuations are not perfect, we believe this non-mobile tax correctly addresses the broader principle of the task forces’ recommendations.

And a non-mobile tax reflects the Chamber’s fundamental support for macro tax policy and free enterprise throughout the city.    

While we understand that the fee on trash collection has little if any support, and that the sugar tax has been greatly reduced, we feel compelled to express our concern with the impact that the sugar tax will have on jobs in the beverage industry and on small retailers in the City.  In this case, the targeti