Dept. of You're All Broke: Philly is poorer than Chicago, New York and LA; Detroit still sucks worse, says Butkovitz
This just in from Alan Butkovitz, who has yet to meet a statistic he won't press release:
PHILADELPHIA â City Controller Alan Butkovitz today released his monthly economic report that focuses on Philadelphia's new poverty rate of 25% that outpaces the poverty rates of the nation's largest cities.
Philadelphia, the sixth largest U.S. city, has a poverty rate above Chicago, 21.6%; Houston, 20.6; Los Angeles, 19.58%; and New York City, 18.7%. Detroit, the 11th largest city and about half the size of Philadelphia, has a higher rate with 36.4%.
While the current 2009 rate is below the City's 2006 rate of 25.1%, it was 18.5% in 2000. Philadelphia's poverty rate has seen steady increases the last two years.
Along with a look at poverty rates, the Controller's economic report includes City tax revenues for August totaled $177.3 million, a slight increase from last month's collections. Monthly sales tax collections were $23.4 million, making it the highest monthly collection since the 8% sales tax increase was implemented.
The Controller's economic report is compiled on a monthly basis and includes an Economic Snapshot and Forecast, as well as real estate information and other local statistics. These reports are circulated every month to assist key decision makers in understanding and anticipating local and national economic trends. Both of these documents are a useful tool for policy makers and analysts in understanding our regional and local economy.
To view the Economic Forecast and Monthly Snapshot, please visit the City Controller's Web site at www.philadelphiacontroller.org.
First thing: There is no blogger tax. Never was. This was an Internet meme that got carried away and blown the hell out of proportion (though, admittedly, some imprecise language on our part may have fanned the flames). But, as we first reported, the city does expect bloggers, freelance writers and âbusinessesâ of all stripes that report any income on their tax forms even if the amount of money is infinitesimal to shell out $300 for a lifetime business privilege license (or $50 for an annual license).
In any event, on Wednesday the city tried to make nice with area bloggers with a happy hour at National Mechanics. I didn't go; basically, I just plum forgot. But local freelance writer Laura Goldman did go, and she filed this report on her newly minted blog, Naked Philadelphian:
To quell the furor over bloggergate, the Department of Revenue and the Mayor's Office of Arts Culture and the Creative Economy walked into the lion's den and sponsored a Q&A about the city's business privilege tax on September 8, 2010 at the Old City bar/restaurant National Mechanics. Bloggers, freelancers, and small business owners were in the audience. The crowd was small. They probably scared off by the presence of the Department of Revenue. The fact that it was held at the start of the Jewish New Year did not help.
Moira Baylson, the city's deputy chief cultural officer, kicked off the evening with a brief introduction and then opened up the floor to questions. David Dorman, the revenue compliance program director, along with 10-15 officials from the departments of commerce, the managing director's office, the division of finance, and the mayor's office of the arts, culture and the creative economy, was available to answer questions.
Dorman announced, âThe city is reconsidering the tax.â When the crowd got excited about the prospect of not paying the tax, Dorman quickly clarified, âEveryone still has to pay the tax until it is actually repealed. The abolition of the tax is a long time way. It will take a vote of City Council to change the tax. â Lauren Vidas, assistant to the Finance Director, explained, âThe Pa. state constitution would have to be changed to institute a sliding scale fee because of the uniformity de minimus provisions.â
Goldman also breaks down what the BPL means for her and other small-time bloggers and freelancers:
For those that think the city is considering revision of the tax out of the goodness of their heart, I have a bridge in Brooklyn for you. The powers to be think that abolition of the fee will generate even more revenue for the city's business privilege tax. Citizens will be more inclined to start a new business sans the license fee.
Andrew Baer, a lawyer whose clients are smaller hi tech companies, asked, âHow much revenue has the fee generated for the city? The fee maybe generates $1 million in revenue. The city has received many times that in bad publicity.â Baer was not that far off.
Frank Breslin, deputy revenue commissioner, later confirmed that the fee was an insignificant part of the city's revenues (.1%) âThe business privilege license fee generated a little more than $3 million in revenue for fiscal year 2010 ending June 30. The total tax and fee receipts for the city for fiscal year 2010 were just under $3 billion.â The $3 million figure was a little higher than normal due to the city's tax amnesty program, reminded Andrea Mannino, special assistant to the revenue commissioner.
I, a freelancer, complained that the tax also hits âthe grunts of the editorial world.â I continued. âI do not own my own blog. I am not a freelancer by choice but because of the dire economics of the media industry right now. No one can afford to hire me full time. I am already levied a higher tax rate (6.46% vs. 4.9%) on my income because I pay the business privilege tax not the wage tax. I receive no healthcare benefits and also pay double social security tax. (Self employed freelancers pay both the employees and employer's portion of social security). Dorman conceded, âFreelancers were in a tough position but they still receive 1099 income so they have to pay the business privilege license fee.â
Gloria Bell of Red Stapler Consulting asked, âI take in $10 in ads on my blog that pay for my hosting. It is a wash income tax wise. Do I have to pay the business privilege tax?â Dorman said, âUnfortunately, according to the city, you are generating revenue so you have to pay the tax.â The crowd was surprised that the city is insisting that $10 in income would generate $300 bill.
City officials, Goldman writes, say Nutter is mulling some tax reforms over:
While no one wants to pay taxes, the crowd agreed that a $50 lifetime tax would be more reasonable. Vidas sounded promising, âOne of Nutter's main issues is tax reform so he is thinking about this tax.â Gary Steuer, the city's chief cultural officer, reminded, âThe abolition of the tax still has to be revenue neutral. It is hard times for the city.â Due to those hard times, the city did not pick up the tab for the cocktail hour, it was BYOB (Buy your own Booze).
I've e-mailed city officials to get their take on the meeting and to see if I can get confirmation on tax reform proposals. If/when they get back to me next week, I'll update.
The city, as you might imagine, was none too thrilled by our piece on its requirement that even small-time bloggers (and freelance writers) pay $300 for a business privilege license and even more so after a bunch of far-right sites picked this thing up and sprinted away with it as some sort of "blogger tax" on free speech or whatever. The city's complaint, from spokeswoman Katie Martin, is presented below:
First, from the original story, Valerie writes:
"It would be one thing if Bess' website were, well, an actual business, or if the amount of money the city wanted didn't outpace her earnings six-fold. Sure, the city has its rules; and yes, cash-strapped cities can't very well ignore potential sources of income. But at the same time, there must be some room for discretion and common sense. "
"This is my bad. In the course of cutting the story to fit the page, I removed a line that had the answer: Basically, as I understand it, the city is sent letters to people who reported their earnings, no matter how meager, as income to the IRS, which the people mentioned in the story did."
The reason this individual (or any individual who) received a letter was because on her federal income taxes she claimed that these earnings not as a hobby but as a business. Therefore, for federal income taxes, an individual who claims these earnings as a business can receive deductions for their computer or web hosting as a business expense. However, these have implications for one's local taxes. That point is not stressed. These individuals claimed their blogs as businesses. There are consequences (such as receiving tax deductions as well as paying additional taxes) for making that claim.
Everyone needs to pay their taxes, and it is important for Philadelphia residents to understand when their hobbies become businesses. If you generate revenue ($1 or $1 billion) then you are a business and need to file (whether you take a loss or make a profit doesn't matter in determining if you file, just the fact that you had revenue). If whatever you are doing does not bring in any money, you are not in business.
Secondly, from the original story, Valerie writes:
"The city disagrees. Even though small-time bloggers aren't exactly raking in the dough, the city requires privilege licenses for any business engaged in any "activity for profit," says tax attorney Michael Mandale of Center City law firm Mandale Kaufmann. This applies "whether or not they earned a profit during the preceding year," he adds. So even if your blog collects a handful of hits a day, as long as there's the potential for it to be lucrative and, as Mandale points out, most hosting sites set aside space for bloggers to sell advertising the city thinks you should cut it a check. According to Andrea Mannino of the Philadelphia Department of Revenue, in fact, simply choosing the option to make money from ads regardless of how much or little money is actually generated qualifies a blog as a business. "
Your response on Monday wrote:
2.) The city does not tax all blogs; rather, just the ones make some money or, at least, have the potential to make some money. So, in that sense, it's not really an attack on speech, per se. "
The "potential to be lucrative" phrase is misleading. If I own a blog that has the potential to include ads, but I don't have any, I am not required to register for a business license or the business privilege tax. I believe a lot of the misunderstanding is because individuals blogging without ads on the sites believe they must pay a tax on it.
CP and I, personally regret any misunderstanding. That said, it strikes me that the city's problem isn't with the facts as presented, but rather, with issues of tone, and also what we chose to emphasize vs. what they wished we would have emphasized. And you'll note that in part two of Martin's complaint, we were referencing an, um, actual city employee.
We have no disagreement with the idea that everyone has to pay taxes. The point of the piece, and often overlooked in the surrounding hullabaloo, was to question the propriety of making people who earn practically no money have to pay a $300 fee just because they chose to report those earnings to the IRS.
Perhaps to thoughtfully alert media outlets perhaps to keep us chewing our fingernails to pieces in anticipation all weekend (who wouldn't?) the office of Philadelphia City Controller Alan Butkovitz informed the media today that Mr. Butkovitz will unveil this Monday his "investigation" of the city's BigBelly Solar Compactors.
You've seen these in 2009, the city replaced 700 Center City trash cans with 500 BigBelly Solar compactors. The idea, simply, is that the machines use solar-powered motors to compact the trash, requiring fewer pickups (and reducing trash overflow), saving the city money and keeping it cleaner. The machines are the result of a $2.1M contract awarded by the city to BigBelly Solar.
We don't know yet, of course, what Butkovitz will have to say about the machines.
The Office of Controller, though, tends to release these special reports when something is not working, and not vice-versa.
And there's this: when I hear people grumble about the new compactors, which I do now and then, I hear the machines described derisively as "solar-powered trash cans" a phrase that carries the implication that a "trash can" doesn't usually need power in the first place (calling them "compactors," on the other hand, emphasizes the reason for solar).
Taking all that into consideration, check out this excerpt from Butkovitz's press release:
Controller Butkovitz will release his report that investigated the circumstances a BigBelly distributor was awarded a $2.1 million sole-source contract for the Citys new solar powered trash cans.
We'll see what the report says on Monday (and we'll post it here, of course) but if I were BigBelly, I wouldn't order a cake just yet.
Yesterday, the Inky's "Heard in the Hall" blog posted a letter from (purportedly, I guess) a New Yorker who happened to be on the same ill-fated flight as Mayor Nutter and his entourage as they made their way to the U.S. Conference of Mayors in Oklahoma City this past weekend.
The letter is a fascinating and highly flattering peek into the mayor and his staff on the road. Apparently the mayor, along with other passengers like the letter's author, got tied up in one of those hellish flights, first getting delayed for hours, then missing a connection and having to stay in Memphis overnight. According to the author, Mayor Nutter and his staff took it all in gracious stride (I love the part about waiting to sit at the bar):
"I am not from Philadelphia (I am from New York) but it was so notable just how cool, gracious and modest Mayor Nutter and his entourage were. Not once did they ever try and pull rank always waiting patiently in-line behind everyone else. ... never raising their voices, never asking for favors ... just acting like everyone else, but classier. Not even his staffers tried to pull the do you know who this is? routine. They all just waited patiently in line with the rest of us seething passengers.
"While I and other business colleagues, were so fed up that we chose to not wait for the free shuttle to the hotel, choosing instead to take a $25 cab ride ... we were shocked to see Mayor Nutter and his entourage walking towards the shuttle stop and waiting patiently with all of the others (including the screaming babies).
"But the real kicker was when we got to the hotel and tried to cash in our $12 meal vouchers. ... the restaurant had an open dining room, and a bar area. The dining room closed at 10. And food was only available at the bar until 11. Mayor Nutter and his folks finally had checked in and were just trying to grab a bite to eat just after 10 pm, but they refused to seat him in the empty restaurant, and instead insisted that they wait until spaces opened up in the bar (which was completely full and overwhelmed by the sudden influx of passengers/guests) ... Again, Mayor Nutter and his people just quietly waited for any seats to open up at the bar
And I'll say this: As a reporter, I've found the mayor himself and his staff, particularly the mayor's press office, with which I interact fairly often, to be remarkably accessible and down-to-earth even when my writing is, as is often the case, critical.
They deserve some credit for being accessible not only out on the road, as this letter suggests, but here at home, too.
It seems so long ago seasons when you consider the current chill that Phillys independent promoters, party throwers and house concert presenters were rocked by Bill No. 100267. Like the numerical sequence from Lost, mystery surrounded Councilmen Darrell Clarke and Bill Greenlees promoter bill and its proposed ideas for controlling not only the renegade promoters responsible for over-crowded/under-policed events, but also those that were conscious and law abiding.
Having to announce each date to the Philadelphia police and the possibility of having your event denied a permit within a mere 10 day window of the event without warning or reason sent promoters in to a tailspin. Yet thanks to several weeks of meetings between promoters (namely Patrick Rodgers of Dancing Ferret, the most ardent of collaborators) and Greenlees office, a happier and more agreeable set of amendments will be introduced on Wed., June 9, before the License & Inspection Committee.
After the first major set of time and date stamped changes made by Greenlee that we revealed exclusively, under this amended version of the bill, special assembly occupancies will be responsible for notifying police two weeks in advance only when and if an event occurs beyond a venues regular and recurring business operations whereby an 'outside operator' will take 'operational control' of the special assembly occupancy meaning, maintaining legal occupancy capacity and deployment and supervision of security detail if any exists.
While promoters will now be required to register with the City and have a current business privilege license, the amendments also offer police the tools to redeploy manpower if necessary to accommodate for promoted events beyond a venues regular and recurring business operations. It will also allow police to contact promoters if necessary when a crime occurs.
For now, Rodgers seems satisfied. I am feeling VERY good now, says Rodgers via his Blackberry. Looks like my work here is done.
PREVIOUSLY >> "In the words of one promoter, 'It's chilling'."
PREVIOUSLY >> The Promoter Bill: No longer as insane
Ive been reporting about City Councilmen Darrell Clarke and Bill Greenlee's Bill No. 100267 since it was lobbed at promoters on April 22. You know the one where promoters would have to apply for a permit from the Philadelphia Police Department (PPD) 30 days before every single event (52 permit applications per year if you run a weekly event) that would cut last-minute shows or pickup parties to say nothing of house party gigs at places like Carriage House and Danger Danger Gallery. Applications would have to include detailed security plans, the promoter's business-privilege-license number, the venue's capacity and the expected crowd. The bill would hold promoters liable for the actions of the crowds at the events they promote, would requires that every permit application include the contract between the venue and the promoter making rental prices and rates for each individual promoter public record . Plus the PPD could deny a permit for any reason and without explanation up to 10 days before the event no one wins. City promoters lose cred.
Its already started.
I spoke to one food catering operator and two independent sound organizations that rent equipment. Theyre afraid to take jobs that could canceled with 10 days notice if the bill passes as is. Another promoter told me that the union workers were talking about sound and light men possibly being cut from gigs with 10 days notice. Chamber of Commerce and Tourism Marketing peeps are rumored to have expressed concerns over the bill.
Enter Patrick Rodgers he of Draculas Ball and Dancing Ferret booking and management fame. He offered to help Councilman Greenlee's staff work on specific language for a bill that would address the concerns of the police department without crippling the city's music and entertainment industries. They accepted the offer and scheduled a meeting for Wednesday to try hashing out some preliminary language.
My hope is that we wind up with essentially a new bill, Rodgers says. The first good news was that initial hearing for the bill has been moved. The June 1 L&I Committee meeting was canceled due to scheduling conflict, and, Rodgers says, No new hearing date has been set, but they have to have a meeting so I'm sure it will be soon-ish.
Even better, as of last night, Rodgers meeting with Greenlees people led officially to the 30-day permit rule and the 10-day cancellation rule being taken off the table.
It's dead, no longer part of the legislation, says Rodgers. We are making significant progress on other areas of concern. I go back tomorrow to work at it some more. I am optimistic that we will wind up with a bill that empowers police to go after unsafe events while not disturbing the commerce or culture of legitimate events. Anything can happen in politics, of course, but for right now, I feel that our concerns are being heard and addressed.
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