Mayor Tom Murphy yesterday proposed whopping 11th-hour increases to 2004 wage, property and parking taxes that he hopes will not be necessary with the state relief possible under Act 47.

Darrell Sapp, Post-Gazette Pittsburgh Mayor Tom Murphy -- His revised budget drops his previous call for $15 million in concessions from the city firefighters union. Click photo for larger image. Related articles City finally wins 'distressed' status Act 47 doesn't fit city needs, experts say Information about Act 47

On the same day the state granted Murphy's petition for distressed status under the act, the mayor submitted a revised version of the $398.6 million operating budget he proposed in November, a budget he had left underfunded by $42 million.

The new amendments would raise an additional $50 million next year to keep the new, $407 million budget balanced. Most of the taxes would kick in June 1, if the city has not received either commuter taxes via Act 47 or state tax reform by then.

Starting June 1, Murphy's plan would increase: property taxes 2 mills to 12.8 mills, raising $19.5 million; wage taxes from 1 to 1.5 percent, raising $12 million; parking taxes from 31 percent to 50 percent, raising nearly $8.2 million; and deed transfer taxes from 1.5 percent to 2 percent, raising $1.4 million. Other changes that would take place Jan. 1 would provide the rest of the money.

But in a letter to council, Murphy said he hoped those increases do not happen. The mayor repeated what he has been saying for a year --- city taxpayers already are overburdened by an out-of-date tax structure and it needs to be reformed through the Act 47 process or by help from the Legislature.

"This is simply not a budget that any of us expects to be the city's final budget for 2004. Now that Pittsburgh is in the Act 47 process, it is my fervent hope that the budget proposals that I submit to you today, particularly the painful tax increases on the narrow base of payers, will never have to be enacted," Murphy wrote.

City Council has two preliminary votes on the 2004 budget set for today with a final vote scheduled for tomorrow. City law says the budget has to be approved by tomorrow, though council can reopen it the first five weeks of the year.

Murphy's plan is close to one floated last week by council's budget chairman, Sala Udin, and follows bargaining involving the administration, Udin and other council members, much of it last week.

Council was supposed to hold its first budget vote yesterday, but on Friday decided to delay it one day, in advance of yesterday's Act 47 announcement by Department of Community and Economic Development Secretary Dennis Yablonsky.

Udin said he was confident the plan would receive five of the nine council votes needed. That means it would supplant plans drawn up by Councilmen Jim Motznik, William Peduto and Alan Hertzberg to reject Murphy's budget.

Their plan -- which could still be proposed -- would rely on spending cuts, including some 159 new layoffs and increases to deed transfer and parking taxes only. The cuts and tax increases would be effective Thursday and would not count on state action via Act 47 or new legislation to keep the 2004 budget balanced.

Besides the tax increases, Murphy's latest plan budgets $9.2 million in additional revenues, including $5.5 million in payments from city authorities; $2 million from better Emergency Medical Services billing; almost $1 million by adopting Allegheny County's Act 77 senior citizen property tax relief formula; and other funds from cable television and building inspection fees.

On the expenditure side, Murphy dropped his previous call for $15 million in concessions from the city firefighters union.

While that increases spending, he also proposed $6.6 million in spending reductions, making the new overall budget total $407 million.

The spending cuts include the kind of budgeting tricks the city has used for years to keep its books balanced: $3.2 million in increased savings projections from short-term job vacancies; $1.2 million in liquidated bank accounts; shifting $700,000 in spending to capital budgets; reducing equipment and miscellaneous costs by $700,000; merging a $420,000 police squad with the county; and decreasing projected lawsuit payouts by $500,000.

That savings was offset slightly when Murphy increased City Council's grants for projects in individual council districts by $225,000.

Whatever happens, the city is still in for months of continued fights and uncertainty about what exactly its taxes will be next year, and how, or if, Act 47 will affect city life.

"There is so much uncertainty, this [declaration] doesn't change anything," Councilman Alan Hertzberg said. "One thing seems clear -- that the fight is going to continue. It's not over. This is the latest round."