The renewal of a 1% temporary sales tax that was set to expire this year will help aid Philadelphia's underfunded pension fund, the city's treasurer Nancy Winkler said in a speech before the Municipal Forum of New York Wednesday.
Winkler said in remarks updating fiscal conditions in the "City of Brotherly Love" that the first $120 million collected each year from the extended sales tax will go toward the Philadelphia School District with revenue above that number dedicated to the pension fund. The Philadelphia City Council first created a temporary five-year 1% sales tax increase in 2009 to address budgetary issues during the recession that was scheduled to expire on June 30, 2014 before it was extended last year.
"If the city is able to continue to grow . that amount bodes very significantly and has over time a major positive impact on the funding ratios of the pension fund," said Winkler.
A proposed sale of Philadelphia Gas Works that would have enabled a deposit between $420 million and $630 million into the pension fund was rejected by the City Council in October. The pension system, which has more than 65,000 participants and under 30,000 active members, is now 43.9% funded on a market basis, according to Winkler.
"This continues to put pressure on us," Winkler said.
While Philadelphia still has challenges with a struggling school district and poverty rate, Winkler emphasized in her remarks that the city is on the upswing with its bond ratings now all in the A category after being rated at the B level when Mayor Michael Nutter appointed her treasurer in 2011.
"We do feel that getting all three rating agencies to see us in the A category has been a big accomplishment," she said. "The overall level of optimism in the city is at a high."