Mayor's Press Conference 5/7/20 - COVID-19 Update

The Philadelphia Department of Public Health today announced 350 additional confirmed cases of COVID-19 novel coronavirus in Philadelphia. That brings the number of confirmed cases to 17,047.

The Department of Public Health again noted clusters of positive cases in congregate settings, including nursing homes, behavioral health facilities, and the Department of Prisons. No additional inmates have tested positive. The current total of positive cases at correctional facilities is 23.

The Department of Public Health confirmed 13 additional fatalities in Philadelphia. This brings the number of residents who have succumbed to the virus in Philadelphia to 816. Of the 816 total deaths, 425 (52%) were long-term care facility residents.

The Department of Public Health reports 911 patients with COVID-19 are currently being treated in Philadelphia hospitals, with a total of 1,677 people hospitalized in the region (including Philadelphia).

Impact on Philadelphia Revenue: Mayor Jim Kenney announced today that April tax collections were only about half that of April of 2019, the first clear indicator of the local economic impact of COVID-19 on City revenues. Specifically, April collections—which for certain taxes reflect activity in March, when the shutdown began—totaled $385 million, 47 percent lower than the previous April. Some of the decline is due to the extension in the deadline for filing the City’s Business Income Receipts Tax (BIRT) from April 15 to July 15. Excluding that factor, the April 2020 drop is about 15 percent below April 2019 collections.

“Even with the BIRT factored in, this April decline certainly reflects the tremendous drop in economic activity throughout the city as a result of the COVID-19 shutdown,” said the Mayor. “Our anticipation of this level of decline is what led my administration last week to propose a belt-tightening budget for the coming fiscal year. We knew this was coming, and now we have some preliminary numbers that offer proof.”

Specific details on April collections for each major tax, and the City’s analysis, follow:

Business Income & Receipts Tax = $69.4M (last year – $355.6M) – The most precipitous of the declines can be attributed to the deadline for 2019 Business Income & Receipts Tax payments being extended from the normal April 15 due date to July 15, 2020. This matched the extension from the Internal Revenue Service. Revenue estimates anticipate most of the expected taxes will be paid by the new deadline, although the City has revised its projection for the year downward based on a lower collection rate. April’s BIRT collections were $286 million, or 80 percent lower than FY19’s April BIRT collections.
Wage, Earnings & Net Profits Taxes (less PICA) = $163M.2M (last year – $177.8M) – This decline primarily reflects a reduction in the Net Profits Tax, owing to extension for payments until July 15, rather than April 15. It may reflect early impacts of layoffs, salary reductions, furloughs, and reduced hours; although some year-to-year variation within a given month is always expected as the number of paydays can vary. April collections likely do not reflect the impact of non-residents not being subject to the tax when required to work at home by their employer. We anticipate that employer withholding may not be adjusted in the early weeks or possibly not ever, but instead refunds sought later. Wage Tax collections excluding earnings and Net Profits Tax were actually slightly higher in April FY20 than in April FY19.
Realty Transfer Tax = $14.4M (last year – $41.7M) – A volatile tax in the best of times, as the sale of one large commercial property can swing collections by millions of dollars in a given month, the decline in April 2020 compared to April 2019 is unusually dramatic, nearly 75 percent lower. April 2019 was also extraordinarily high—about 60 percent higher than in the average month). Even with the drop, the robust real estate market earlier in the year puts FY20 collections $12 million ahead of FY19 so far.
Real Estate Taxes = $15.2M (last year – $31.8M) – The deadline for Real Estate Taxes was extended to June 15, 2020. Collections in April 2020 were about half the April collections from the prior year, but year-to-date collections are up by $3 million and additional funds may be attributed to April once preliminary figures are finalized.
Philadelphia Beverage Tax = $6.29M (last year – $6.25M) – April Beverage Tax collections slightly exceed collections the same month last year. April Taxes reflect March activity; and thus, would be somewhat impacted by the shut-down and stay at home orders. A loss in distribution of sweetened beverages to out-of-home places like restaurants, bars, stadiums, and movie theaters may have been offset by increased activity at grocery stores as individuals and families stocked up.