Wednesday, November 25, 2015

Katz DROPs bomb

The other day we mentioned Sam Katz's questions at this week's PICA hearing. Today we weigh in with an IOM editorial elaborating on our objection:

Katz DROPs bomb


The other day we mentioned Sam Katz's questions at this week's PICA hearing. Today we weigh in with an IOM editorial elaborating on our objection:

Yesterday, after an ugly journey that included a dramatic school-funding crisis and ended in yet another property-tax hike, Philadelphia's second in two years, the city finally passed a budget.

Two days earlier, Sam Katz had threatened to blow it all up.

Back in March, Gov. Corbett appointed Philly's most famous Republican to head the Pennsylvania Intergovernmental Cooperation Authority, Philly's least-famous important watchdog.

PICA's power is narrow, but considerable: It tells the city whether it has enough money to cover the spending proposed in its budget and five-year plan. If the board rejects the plan, it can withhold state funds from the city. The idea is to prevent the mayor and City Council from projecting unrealistic revenues, spending more than the city has and leaving us more broke than we already are.

It's important that PICA's role not be politicized. PICA needs to be trusted to do the math and to make a fair call, regardless of what board members think of the city's policy choices.

Which brings us back to Katz, who, along with board member Joseph DiAngelo, said at Tuesday's meeting that he might vote against the city's five-year plan because it funds DROP. More specifically, because of what DROP says about the city's direction.

The city has a giant unfunded pension liability, Katz observed. By 2016, pension costs will consume 17 percent of the city budget. And voters just sent Council an angry message about DROP, a pension-related program. By keeping it, he asks, is the city showing that it's not capable of dealing with the pension problem? And might it be fair for a fiscal-oversight board to reject the budget on those grounds?

We don't think Katz would actually scuttle the city budget. He's using his platform to make a point. And it's a good one. But it's the wrong platform.

We're as angry as anyone that DROP is sticking around. Though the mayor vetoed Council's DROP-reform bill yesterday, that just means either Council will override the veto, or the original, more expensive DROP will remain. At this point, DROP is the law, the city has to fund it - and PICA shouldn't be singling out any policy choice.

Katz says DROP points the city in the wrong direction, but if PICA starts down that road, where do those judgments end? Maybe Katz thinks the mandatory sick-pay bill is bad for business and poses a threat to the city's fiscal health. Should he put a budgetary gun to the city's head over it?

If Katz feels a need to weigh in, PICA can always issue position papers, as it has done in the past. But using PICA's certification power this way takes the agency out of the role of neutral watchdog and makes it a sort of super-mayor, with the ultimate veto.

A more interesting question is whether PICA can put more pressure on the city about its unfunded pension obligations, which actually do pose a threat to the city's long-term fiscal health. But that's not what Katz did. He just inserted PICA into the political muck of the never-ending DROP fight (which, by the way, is beginning to look a lot like an argument about the arrangement of deck chairs).

With the recent noise about PICA's getting oversight of school district finances, it's all the more important that it remain an apolitical fiscal referee. We're glad to see Katz taking the job seriously, but we don't like this bluff: Killing DROP is a very small pot in the grand scheme of things, and he's gambling with PICA's credibility.

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Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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