Sunday, April 26, 2015

New report: Cities cutting services, not raising taxes

A new report from Pew Charitable Trust says that Philadelphia is dealing with the budget crunch differently from other cities. The analysis, called “Tough Decisions and Limited Options”, compared the budget gap and response of 12 different municipalities. Philadelphia ranked in the bottom half in terms of the size of our deficit and was one of the few cities raising taxes to fill the fiscal hole. Like Philadelphia, every city is seeing less tax revenue because of the tanking economy. The size of the deficit depends on two factors: how much a municipality depends on taxes to fund operations and the overall fiscal condition when the recession hit. For example, Detroit has the largest budget gap because of long-term fiscal issues such as a shrinking population and volatile revenue sources. Nearly every city is reducing services and laying off employees. In New York, Mayor Michael Bloomberg is proposing to give pink slips to more than 3,700 city workers. Boston, Chicago, and Los Angeles are all contemplating similar steps. The workforce reductions are being combined with service cuts at libraries, recreation centers, and sanitation. Philadelphia is also not alone in preserving public safety. Although police, fire, and prisons make up more than half the total budget, very few cities are looking at cutting in these areas. Only one city-- Boston-- is actually proposing layoffs for police officers. Some places, like New York and Detroit, are eliminating positions in the police department through attrition. Our city is outside the mainstream on one area: taxes. Of the 11 cities examined, only four are proposing a broad-based tax increase. New York is looking at a sales tax and property tax hike. Atlanta is relying on a property-tax hike. Finally, Columbus is hoping to increase the income tax. Several cities are increasing fees or leasing municipal assets to raise cash.

New report: Cities cutting services, not raising taxes

A new report from Pew Charitable Trust says that Philadelphia is dealing with the budget crunch differently from other cities. The analysis, called “Tough Decisions and Limited Options”, compared the budget gap and response of 12 different municipalities. Philadelphia ranked in the bottom half in terms of the size of our deficit and was one of the few cities raising taxes to fill the fiscal hole.

Like Philadelphia, every city is seeing less tax revenue because of the tanking economy. The size of the deficit depends on two factors: how much a municipality depends on taxes to fund operations and the overall fiscal condition when the recession hit. For example, Detroit has the largest budget gap because of long-term fiscal issues such as a shrinking population and volatile revenue sources.

Nearly every city is reducing services and laying off employees. In New York, Mayor Michael Bloomberg is proposing to give pink slips to more than 3,700 city workers.  Boston, Chicago, and Los Angeles are all contemplating similar steps. The workforce reductions are being combined with service cuts at libraries, recreation centers, and sanitation.

Philadelphia is also not alone in preserving public safety. Although police, fire, and prisons make up more than half the total budget, very few cities are looking at cutting in these areas. Only one city-- Boston-- is actually proposing layoffs for police officers. Some places, like New York and Detroit, are eliminating positions in the police department through attrition.

Our city is outside the mainstream on one area: taxes. Of the 11 cities examined, only four are proposing a broad-based tax increase. New York is looking at a sales tax and property tax hike. Atlanta is relying on a property-tax hike. Finally, Columbus is hoping to increase the income tax. Several cities are increasing fees or leasing municipal assets to raise cash.

To read the entire report, click here.

About this blog
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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