Friday, August 29, 2014
Inquirer Daily News

Philadelphia Dodges Doomsday Budget

That loud whooshing sound you hear is the entire city of Philadelphia breathing a sigh of relief.

Philadelphia Dodges Doomsday Budget

That loud whooshing sound you hear is the entire city of Philadelphia breathing a sigh of relief.

The State Senate just gave final approval to House Bill 1828, which authorizes Philadelphia to increase the sales tax from 7 to 8 percent and defer contributions to the city pension fund. The bill will help generate nearly $700 million in revenue over five years. This means that the much dreaded “Plan C”, which Mayor Nutter has been warning about for months, will not come to pass.

Libraries and recreation centers will stay open, police officers will stay on the street, and trash collection will still happen every week. All of the health centers will stay open and the local court system won't be shut down. In short, city government will keep functioning.

Sort of. Despite approval from the State Senate, delays in Harrisburg have already cost Philadelphia at least $20 million in sales tax revenue. That will be need to be made up in cuts. It's also important to note that sales tax collection is down from last year, and the lagging economy could necessitate even more belt tightening. Mayor Nutter will have to deal with that stuff — as well as hammering out a contract with the city unions.

And, while we're looking ahead, let's not forget the city still has a host of other problems. We've got the highest poverty rate of any major city besides Detroit, a fatally flawed property tax assessment system, two potential casinos on our river-front, and about a dozen other pressing issues.

The last few months have been pretty crazy. The city has lurched from one crisis to another. In the coming days, “It's Our Money” will bring you more analysis about how we got to this point in the first place and what needs to happen next. For now, though, let's take a moment to breathe a sigh of relief and thank our lucky stars that the entire city isn't going to collapse around us.

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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