Monday, December 29, 2014

Next stop on the budget train: Harrisburg

Mayor Nutter needs budget help from Gov. Rendell Link: Pa. lawmakers hold key to city budget hopes [Daily News]

Next stop on the budget train: Harrisburg

Mayor Nutter needs budget help from Gov. Rendell

The budget deal struck by Mayor Nutter and City Council spares residents from temporarily paying extra property taxes.

But if Harrisburg lawmakers don't approve several key proposals in the plan, the city could be forced to make devastating cuts beyond those already threatened in the backup "Plan B."

"Obviously it would be pretty dire," said Finance Director Rob Dubow. "Plan B is beyond anything we want to do - a Plan C would be worse."

The compromise budget extends a proposed temporary 1-cent sales-tax increase from three to five years. That tax is now 7 cents on the dollar, with 6 cents going to the state and one to the city.

And to ease immediate financial pressures, officials plan to defer some payments into the city pension fund for two years and pay back the fund later.

Those two moves require state approval, as does a third money-saving measure - stretching out payments into the city pension fund over 30 years instead of 20.

"The real issue now is that they don't control any of this," said Uri Monson, executive director of the Pennsylvania Intergovernmental Cooperation Authority, which oversees the city budget.

The city budget is supposed to be approved by the end of May, but the state's budget deadline is the end of June and negotiations often drag into July. So city officials will likely pass their budget without knowing if they will get approval for plans they need to close a $1.4 billion five-year hole.

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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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