PICA approves city's spending plan, with conditions

The state board that oversees Philadelphia's long-term financial management conditionally approved the city's five-year spending plan today, but it warned the plan faced a "dramatic level of risk" and directed the city to come up with 25 million in additional annual spending cuts by August 20.

Chief among the risks is the city's assumption that state lawmakers will grant Philadelphia's requests for a penny per dollar increase in the city sales tax and for a restructuring of its pension payments. Harrisburg is unlikely to take up those requests before the state budget impasse is resolved, and even then the city's proposals could be denied.

The other key risks cited by the Pennsylvania Intergovernmental Cooperation Authority were the as-yet unresolved labor contracts, and increasing uncertainty over the collection of property taxes, due to spiking delinquency rates and turmoil at the Board of Revision of Taxes, which sets property values.

Although the impact of an additional $25 million in annual PICA-ordered cuts will be significant, it was likely that Mayor Nutter would have been forced into cutting at least much in the months ahead, given the remarkable level of fiscal uncertainty the city finds itself coping with.

"We're in uncharted waters," observed PICA Chairman Jim Eisenhower. "This board has never really faced this level of uncertainty."

PICA also directed the city to continue submitting monthly reports to the agency, and to have an alternative five-year spending plan ready in the event that the state legislature does not grant the city's sales tax and pension requests by August 15.

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