Mayor Cherelle Parker's $6.7 billion budget proposal calls for reforming taxes, increased spending for housing and expanding the city's year-round school program by 15 schools, among other priorities.
Her "One Philly 2.0" spending plan includes cuts to the wage and business income and receipts taxes, but also a hike in the real estate transfer tax. She also wants to make street parking in Center City more expensive.
MORE: Car-free streets return to Center City on Sundays in April
Other highlights include restoring Vision Zero funding to $5 million in 2026 and $30 million through 2030, borrowing $800 million to create or preserve 30,000 housing units, and allocating $100 million (including the $45 million from City Council) to prepare for the semiquincentennial celebrations and other major events in 2026. Additionally, Parker noted that $67 million was set aside for a police forensics lab at 4101 Market St. in University City. All city police officers will be outfitted with body cameras by the end of 2025 and dashboard cams will be installed in all police cars. The city's twice-weekly trash collection program will be extended to neighborhoods in North Philadelphia, as well.
Another $550 million is allocated for collective bargaining agreements with the city's labor unions and $75 million is set to fund the new Riverview Wellness Village recovery housing in Northeast Philadelphia. The budget also commits $216 million to the city's "wellness ecosystem" efforts, which include various opioid outreach and homeless services.
There will be 13 hearings and three public comment sessions on the 2026 budget. City Council must approve the budget before the fiscal year begins in July.
Here's a closer look at some of the major items in the budget:
Tax changes
• Business Income and Receipts Tax: Also known as BIRT, Parker wants to lower its net income tax from 5.81% to 5.5% in 2030 and the gross receipts tax from 0.142% to 0.138% in 2030, eliminating about $9.8 million for the city. Cuts would continue on the net income portion, dropping it to 2.8% by 2039. Last month, the Philadelphia Tax Reform Commission proposed eliminating BIRT entirely, WHYY reported.
• Wage Tax: Starting in 2026, Parker's budget calls for lowering the wage tax from 3.75% to 3.7% for residents and from 3.44% to 3.39% for non-residents by 2030. People making $50,000 would save $25. The tax cuts would cost the city about $7.8 million. The commission recommended reducing the wage tax to below 3%.
• Real Estate Tax: Starting in 2030, Parker's budget increases the percent of property taxes that go to the School District of Philadelphia from 56% to 56.5%. After going into effect, it would bring in about $12 million to the district that's earmarked for teacher salaries.
• Construction Impact Tax: Parker wants to repeal the Construction Impact Tax, which was put in place in 2020 and applies to residential homeowners and developers. It puts a 1% tax on the costs of new construction or improvement projects over $15,000. The tax brought in about $3.5 million annually.
• Real Estate Transfer Tax: The transfer tax during home sales would increase from 3.27% to 3.57% beginning in 2026. This would partially offset the $166 million in debt service needed to borrow $800 million for Parker's housing initiative. In fiscal year 2024, revenue from transfer taxes was down by about 26%, meaning the city was expected to generate approximately $110 million less by June 2024 than projected, the Inquirer reported. However, Parker said the increase will generate $173 million over the next five years.
A parking meter rate hike
The budget proposal calls for a $1 increase to the hourly parking rate at street meters in Center City and nearby areas, raising it from $3 to $4 per hour. The additional revenue mostly would go to the School District of Philadelphia, adding an estimated $4 million to the district's coffers each year. It would be the first rate increase since 2014, Parker said.
Expansion to the year-round school program
Last June, Parker rolled out an "extended day, extended year program" for 25 schools — 20 from the district and five charter schools. The schools generally stay open from 7:30 a.m. to 6:30 p.m. every weekday, including during the winter and spring breaks and when the district schedule calls for half days. They also are open during a six-week program in the summer. The extended hours are optional for parents and teachers; they are designed to accommodate parents who need extra childcare and students who need additional help with their school work.
The budget proposal seeks to expand that experimental program to include 40 schools, adding 10 more district schools and five more charter schools. Doing so would benefit another 5,000 students, expanding the program's capacity to 12,000 students. City officials did not say how much the expansion would cost, or which schools would be included, during a press briefing Wednesday night.
Increased spending on housing and 'wellness' initiatives
Parker proposed adding $166 million in debt service to fund two $400 loans for her Housing Opportunities Made Easy initiative, which calls for adding and preserving 30,000 housing units. The budget also allocates $11 million over five years to fund 32 new jobs and consulting support to implement the plant. The cost of the debt would be partially offset by the Real Estate Transfer Tax increase.
Additionally, $216 million from the city's general fund and opioid settlement funds would be allocated for the "wellness ecosystem." This includes $2.7 million to expand the new wellness court in Kensington and $65 million to add at building at the Riverview Wellness Village. Opioid settlement funds would be used to spend $500,000 on outreach to address overdose disparities, $855,000 for wound care, $4.3 million for medication assisted treatment in the city's prison system and $2.8 million to continue 175 homeless services beds.