Controller Raises Questions About Plan C

City Controller Alan Butkovitz is today sending a letter to the Pennsylvania Intergovernmental Cooperation Authority, which raises two issues he says the oversight agency should consider as they review the city’s “Plan C” budget.

Butkovitz argues that the city can't zero out funding for the court system in the plan and that the cuts to public safetey are irresponsible. You can read his letter here.

The city’s original budget plan relied on a temporary sales tax increase and some changes to pension payments -- worth $700 million over five years. But both those moves require state approval, which has not been granted. Due to the delay, PICA required the city to submit a backup plan that eliminated those funds.

PICA will vote Friday on what is known as “Plan C,” a budget that would lay off 3,000 city workers -- including police and firefighters -- and slash services. The city is already moving ahead with many of the Plan C actions and is set to send out layoff notices on Sept. 18. Most Plan C cuts would take effect Oct. 2, if the state has not approved the city’s budget relief legislation.

The plan also eliminates funding for the First Judicial District, the District Attorney, and the Public Defender's Office. A 25-year-old state Supreme Court ruling states that the Commonwealth is responsible for local court costs. But the state has consistently refused to pick up that bill.

It's not exactly clear what will happen if PICA rejects the plan, because there is no precedent for this situation. But PICA could withhold state funds provided to the city and halt $30 million in wage tax revenue that goes to the city each month.

The state may still provide the city with the budget aid it needs. The state House of Representatives had been scheduled to vote on House Bill 1828 -- which would allow the city to raise the sales tax temporarily and to defer some pension payments -- last Tuesday. But that vote has been delayed due to widespread union complaints over pension amendments tacked on to the bill by the state Senate. It is now set for Thursday as the state House of Representatives tries to work out a compromise on the pension changes.

You can read Plan C here.

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