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Philadelphia in Free Fall: New Debts, New Taxes, Pension Cuts
September 2, 2009 (LPAC) — Philadelphia Mayor Michael Nutter announced on Tuesday that the city will take out a $275 million loan from JP Morgan Chase, at 3% until Nov. 30, and 8% after that. The city is also preparing a plan to cut pensions, at the demand of the state government, in exchange for the state's permission to raise the city sales tax by 1%.
The city will delay about $150 million worth of pension payments this year, and current pension benefits will be frozen, while new workers' pensions will be cut by 20 percent. The average yearly pension for city workers is $17,350. The local CBS station notes that this is "not exactly a golden parachute."
Is there still a tax free day in Pennsylvania
Pennsylvania isn't scheduled to hold tax free day or weekend this year. You can head to Connecticut or Vermont for tax free days.
Newly amended legislation that could clear the state Senate as early as today would give Mayor Nutter the authority to temporarily raise the sales tax and defer pension payments, measures that would save $700 million over the next five years and prevent mass layoffs and deep cuts to basic services such as sanitation and criminal justice.
In exchange, the bill would demand that the city cut the retirement benefits of future employees 25 percent, while capping the benefits of existing workers at current levels.
The legislation, which is fiercely opposed by city labor leaders, would represent an unprecedented state intervention into Philadelphia's dealings with its municipal unions.
Labor leaders, however, said they would do all they could to defeat the changes.
The near-collapse of the stock market last fall caused a rapid drop in the value of the city's pension fund and accelerated the city's legally mandated contribution to the fund.
The city's inability to cover both the unfunded liability of our fund and the ongoing cost of providing essential city services, such as police, fire protection, and trash collection, have led to our current financial crisis.