Council approves $3.8 billion budget

City Council ended weeks of negotiations with Mayor Nutter yesterday by approving a $3.8 billion spending plan that depends on an increase in the sales tax and changes in the employee pension fund to balance budgets over the next five years.

Council voted, 17-0, for each of nine bills that codify the budget and five-year plan as protesters criticized the mayor and Council over cuts in service.

Nutter is expected to sign the bill and continue lobbying the state legislature, which would have to approve key components.

"We have a big case to make," Nutter said.

Council President Anna C. Verna said Council leaders would go with Nutter to Harrisburg to try to persuade lawmakers to approve the changes to the pension plan and sales tax.

Without authorization from the General Assembly, the city would have to resort to a dire Plan B budget that calls for laying off police officers and firefighters, a permanent 6 percent property-tax increase, and massive across-the-board cuts.

The city wants permission from Harrisburg to increase the sales tax from 7 percent to 8 percent, which is expected to generate $580 million over five years. The state already takes 6 cents on the dollar; the city gets 1 cent, and the proposed spending plan would increase its share to 2 cents.

The city also needs legislative approval for a two-year delay in making $235 million in contributions to its employee pension fund, which would be paid back with the extra two years of higher sales taxes; and for a measure to extend the time the city has to pay its obligations to the fund from 20 years to 30 years; another accounting change would permit the city to spread gains or losses out over 10 years instead of five.

The pension measures combined are forecast to save the city an estimated $255 million over five years.

"We're not asking the state to give us money; we're just asking the state to give us the authority to do what we have to do," Verna said.

The city's needs will probably be negotiated as part of the larger state-budget tug-of-war, and city leaders do not expect to know their fate until late June or beyond, whenever the state budget is done.

The battle between Nutter and Council had focused on which taxes to raise. Nutter advocated a three-year increase to the sales tax coupled with a steep two-year property-tax increase to pay current bills. Council rejected raising property taxes and eventually won Nutter's approval for a five-year jump in the sales tax.

The budget leaves no room for raises for city employees with contracts set to expire June 30. In addition, Nutter's budget depends on an extra $120 million in health-care contributions from city workers, and other savings to be negotiated with the city's four municipal unions.

Union representatives and community activists, under the umbrella of the Coalition for Essential Services, assailed those choices at a news conference before the morning Council meeting. They called the sales tax plan regressive and budget cuts harmful to residents.

They advocated raising the gross-receipts portion of the city business-privilege tax.

"We are here today to say the mayor promised a 'people's budget,' but he and Council failed to deliver on that promise," said Sherrie Cohen, a coalition member.

The budget incorporates actions taken late last year to deal with a $1 billion, five-year shortfall and makes more cuts to cope with an additional projected $1.4 billion gap between now and 2014. The city has frozen further reductions in the wage and business-privilege tax until 2015; increased fees for, among other services, commercial trash pickup; ordered involuntary, unpaid furloughs for many workers; and eliminated more than 1,000 permanent positions and 2,000 part-time and seasonal jobs.

Terris Miller, who just finished his sophomore year at Elizabeth City State University, said he worked as a Recreation Department supervisor last summer at $11.38 an hour. "I no longer have that job," he said at the news conference yesterday.

Recreation Commissioner Susan Slawson said that her department hired 1,659 seasonal workers last year and that this year she expected it to hire 887. That means at least 1,000 fewer youngsters will get to go camping, she said. Last year, the camping program served 10,000 children.

Although no branch libraries will be closed, they will be open only five days a week instead of six, and funding for the popular LEAP after-school program runs out at the end of the calendar year. Mayoral spokesman Doug Oliver said private foundations had expressed interest in funding that program.

And although Nutter restored money to allow 46 of 73 outdoor pools to open this summer - with the help of nearly $430,000 in private donations - Betty Beaufort of Point Breeze said closing the Chew Playground pool would put children at risk if they tried to cross neighborhoods where territoriality reigns.

"What are the kids and what are the community to do?" she asked.

The budget calls for a $56 million spending cut this year, including the elimination of 250 positions, meaning layoffs for 74 employees. About 50 of those workers are to be offered other positions that are now vacant. Layoff notices went out last week.

The police budget was cut $4 million, mostly by reducing vehicles and overtime; the Fire Department will lose 31 positions, and seven lieutenants will be demoted. No police officers or firefighters will lose their jobs.