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How Phila. will cut its budget
When you need to save $1 billion fast, no expense, it seems, is too small to be noticed.
Contact staff writer Patrick Kerkstra at 215-854-2827 or pkerkstra@phillynews.com.
Like the lawn-mowing budget for Fairmount Park. Or the water bill for the zoo. Or the $355,000 city subsidy for the Mummers Parade.
Judging from a plan released yesterday, Nutter administration officials looked for loose change in every nook and cranny of the city's budget as they sought to preserve the mayor's priorities while slashing spending across government.
The Streets Department, for instance, thinks it can save $1 million a year with more efficient bulbs in streetlamps. To cut garbage-collection costs, the city is reducing the number of trash cans residents may set out for pickup, and killing special trash collections for the Salvation Army and other nonprofits.
The remarkably granular nature of such spending cuts speaks to the depth and breadth of the city's analysis of its spending over the last two months.
"We looked at everything we do, and looked for things that were least aligned with our core principles, or that we weren't doing well, or that we should no longer be doing," said Finance Director Rob Dubow.
It was, by all accounts, an exhausting and painful process.
Philadelphia's municipal budget has been put on so many diets over the last 16 years that cutting the remaining fat is not as easy as many residents might think.
"City spending ebbs and flows with the economy, but underneath those flows there's certainly been this push towards productivity that's been going along for some time," said Michael Nadol, finance director for the Rendell administration and a managing director of Public Financial Management, a municipal-finance consulting firm.
Administration officials acknowledged there were still efficiencies to be found in the city budget. After all, they identified plenty of unnecessary and ineffective programs in this latest spending review.
But there was nowhere near enough low-hanging fruit to close the $1 billion gap, Dubow said.
In large part, that is because only about 43 percent of the city's spending is discretionary, and virtually every spending cut Nutter made had to come out of that share.
The rest of the city's $4 billion budget - about $2.3 billion - is locked up in largely non-discretionary expenses, including pension payments, employee benefits, federally mandated programs, debt service on bonds, and other fixed costs.
Theoretically, some of those costs can be reduced over the long term by renegotiating union contracts, finding more favorable bond terms, and other methods. But that can take years. Nutter had only two months.
The non-discretionary burdens are particularly high in Philadelphia, Nadol said, because the city is also responsible for costs commonly borne by county governments, such as prisons, courts, and certain social services.
"A mayor's choices are much more constrained than people typically know," Nadol said.
Eventually, when the economy and city budget picture finally improve, the cuts and fee increases Nutter made yesterday are expected to leave the city in a stronger fiscal position than it was before Wall Street tanked and tax collections dried up.
"A crisis creates the urgency to increase revenue and cut costs in the short term," said Uri Monson, executive director of the Pennsylvania Intergovernmental Cooperation Authority, a state entity with oversight authority over the city's five-year spending plan. "The bright side is, those things will help the city in the long term as well."
Contact staff writer Patrick Kerkstra at 215-854-2827 or pkerkstra@phillynews.com.
