The grim news about public finances just keeps coming. Yesterday, the Daily News reported that the city is projecting a $31 million deficit by the end of the fiscal year. Philadelphians have already suffered service cuts and tax increases this year; the shortfall means more will be coming.
What should taxpayers make of this development?
First, don't panic. It might sound like a lot of money, but $31 million is less than 1 percent of the $3.8 billion city budget. It's also not completely unexpected. The budget passed by City Council in March was based on projections of tax revenue. As we've found over and over, forecasts in the current economic climate are, shall we say, less than completely reliable. So it's worth noting that the deficit could easily increase over the coming months. It could also shrink, if tax revenue comes in better than expected.
Still, the issue needs to be dealt with. And there are already a number of things Mayor Nutter can't do. He can't raise taxes (again), for instance, because the city can only increase taxes before the start of the fiscal year. He also can't close libraries, recreation centers, or any other city facilities without approval from City Council. That's thanks to a lawsuit filed by Councilman Bill Green last year.
He does have several options, however. The mayor has almost complete control over the spending levels of city departments, and has already ordered them to cut their budgets by 7.5 percent. (That means some kind of reduction in services.) He can also increase fees for city services, like the co-pays for checkups at health centers. Finally, he could lay off city employees, or require them to take unpaid furloughs to help close the deficit.
Some of the more drastic measures probably won't come to pass. The deficit is a problem, but it's probably not big enough to justify a major fee increase. The hole also isn't big enough to require major reductions in services, like ending weekly trash collection or reducing police patrols. The city can probably find enough savings by eating around the edges of departmental spending.
That said, layoffs remain a possibility. The mayor's budget depends on getting $25 million in savings through concessions in new contracts with city workers. If things turn sour at the bargaining table, the mayor could raise the specter of layoffs to close the gap. The city can deal with a $31 deficit without major cuts, but $56 million is a much larger number.
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Comment removed.- Comment removed.
My wife asked me last night why Nutter seems to be failing to live up to expectations. I didn't have much of an answer. She also asked what he should have done already. I seriously think that with the "political capital" he had, he should have just taken 1 thing and used that first six months to make it happen. My vote - completely tear down a tax system that has been built in an ad hoc way, piece by piece, over decades and replace it with a system based more logically on connecting what we pay for with what we get. Remove the wage and business taxes. Replace them with more direct fees for use that go directly to the departments providing the services and make property taxes more uniform, logical, easily payable and easily collectible. (To lay out some generalities). Unfortunately, that train has sailed.— Dixon- Comment removed.
- Dixon I agree with you and your wife: Nutter should have handled the City Union contracts in his first year when he had a mandate. By deferring them he has made it that much harder. But that was squandered as well as the surplus that the city had. The tax structure as well. Now I think where he could have coasted in to a second term he may now have a serious fight. Some folks say Ed Rendell may run again, some say Councilman Green, who knows who else may be out there. One thing for sure it will be very interesting to see what happens next.— ruserious
- Nickawampus Leroy: Please believe me when I say it was a copy edit mistake on my part, not terrible math skills. $31M is indeed less than 10% of $3.8B.— benwaxman
MONEY AND JUSTICE DON'T MIX
WILL THE NEW COUNCIL GIVE YOU A SAY?
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