Archive: July, 2009
The Pennsylvania Intergovernmental Cooperation Authority, the state agency charged with overseeing Philadelphia's finances, has given tentative approval to the city budget. You can read the entire report from the PICA website by clicking here. The vote was unanimous, but came with several caveats.
First, if the city fails to get approval from Harrisburg for two key components-- raising the sales tax from 7 percent to 8 percent and changes in pension contributions-- they will be required to submit a new spending plan within 15 days. That plan is likely to contain about $700 million in cuts over five years, since that is the amount of money raised by the proposals.
Another big unknown is labor contracts. Right now, the city is counting on saving $125 million over five years as a result of union negotiations. To make that work, the new agreements will have to include no wage increases and reductions in benefits. If these aren't the terms of the new contracts, the city will have to make up the difference in other parts of the budget.
Here is something that jumped out at me: PICA is requiring the city to cut an additional $25 million per year. That's exactly the same amount that the city would save from successful labor negotiations. Is PICA assuming that contract talks might not go Nutter's way? If so, requiring another $25 million in cuts would provide the city with some breathing room to keep benefit levels the same and maybe even bump salaries slightly.
What do you think? Should PICA have approved or rejected the plan?
Here is today's budget news from across the country....
First, big news from the West Coast: California has a budget deal! Gov. Arnold Schwarzenegger and legislative leaders have struck an agreement that must now be sold to rank-and-file lawmakers. The plan include no broad based tax increases and relies on deep cuts in spending to erase the deficit. Sounds a little bit like the plan being offered by Senate Republicans in Pennsylvania.....
Meanwhile, another state budget impasse has been settled in Ohio. The deal-- which includes a controversial plan to expanding gambling, cuts in services, and heavy reliance on stimulus dollars-- is not particularly popular with anyone in the state. Is it just me or is the same scenario playing out across the country?
Officials in Kentucky are using the stimulus funding to plug holes in the state budget. The state would have been in the red for this year, but a federal loan for Medicare helped put the books into the black. Some are questioning moving state dollars earmarked for Medicare into the general fund, but the move allowed Kentucky to avoid drastically reducing services or raising any major taxes.
The Mayor and City Council in Detroit is taking the lead on cutting costs to deal with the $300 million deficit in city finances. Action is expected this week on a proposal that would cut salaries and hours for non-union employees and legislative salaries. That would include people at the top of the food chain...Something our own City Council is still struggling to figure out.
Finally, my favorite budget item comes from Pulaski County in Missouri. Local officials are considering a proposal to deploy...wait for it...carp to deal with a lake that is overflowing with algae. The fish are a cost effective way to clean up the lake without requiring a lot of manpower. Awesome.
Today, “It's Our Money” bring you a new feature: Budget news from around the country. Below are links to some of the most interesting stories about budget-related matters. Check them out and tell us what you think!
In conservative-leaning North Carolina, lawmakers are set to raise taxes to fill the budget gap. The legislature is looking to fill a $700 million hole this year and $1.3 billion next year. Unlike Pennsylvania, both the state House and Senate are controlled by Democrats, which is why a compromise seems likely.
Meanwhile, the ongoing budget problems in California have already started to filtered down to the municipal level and could have serious political fallout. The local police chief in Gilroy has sent out mailers slamming the local City Council for cuts in public safety spending. A prelude to a similar backlash around the nation?
Here is a novel idea: lawmakers ought to reject campaign contributions during budget negotiations. That's the law in Wisconsin and it looks like a few state legislators might be in violation. What do you think? Is this a good idea for Pennsylvania? Makes sense to me.
Finally, lawmakers in Oklahoma are debating if make sense to to tap into the state's rainy day fund. The fund, which has about $600 million in cash, can only be used if revenue projects fall to a certain level. Personally, I'm not sure what is left to debate. We're in the middle of the worst economic downturn since the Great Depression. Look pretty cloudy.
Link: The state budget wrecking ball [Daily News]
ON Friday, Mayor Nutter made a dramatic annoucement: The city can't afford to pay its bills.
Philadelphia will be delaying payment to thousands of vendors and suppliers. Those vendors range from firms that outfit City Hall with pencils and staplers to nonprofits that run summer programs and camps. Some exceptions will be made for what the mayor defines as emergencies. For now, the city will continue to pay city workers and its debt service.
Over the past few days, I’ve been thinking about how to stop the next Vince Fumo. We know this won’t be the last time a public official flagrantly misuses tax dollars. There has been a lot of debate about Fumo’s relatively short sentence. I don’t know if it was fair. But I do know that fraud and corruption are rarely crimes committed alone. Fumo was able to use public money for enriching himself because far too few people were willing to tell him it was wrong.
Think about it. How does a bully on the playground get operate in immunity? No one stands up to him. Now, Fumo didn’t bully people with physical violence—at least that we know of. Instead, he bullied people with power. One of the reasons that he had so much power was because he controlled vast sums of tax dollars. He was able to deploy that money—which is OUR money—to achieve his desired political ends.
And no one was willing to tell him it was wrong. You only have to look at the names of the more than 250 people who wrote to the judge asking for lenience. It’s a who’s who of local politics. I count a governor, several senators, former judges, and a city councilman among the power brokers willing to go to bat for a convicted felon.
The argument goes like this: Yes, Vince Fumo often misbehaved. He regarded tax dollars and the levers of government as his own personal piggybanks. But he was also incredibly effective. He managed to bring billions of dollars to Philadelphia from Harrisburg and championed many worthy causes. And in South Philadelphia, ordinary citizens were happy the streets were clean. So, we should forgive the sins of Fumo and mourn the loss of the financial windfall that accompanied his time in power.
Of course, many of the people who wrote to the judge had a selfish reason to back Fumo. He wasn’t the only one who benefited from the corruption. He generated millions of dollars in fees for lobbyists, lawyers, and steered countless grants to favored non-profits. No, Fumo did not get rich alone. He was able to manipulate the political process because he had allies. And those allies were rewarded handsomely—with our tax dollars. Why blow a whistle on the process if it’s benefiting you?
So, how do we stop the next Fumo? People have to start saying no. Of course, that can be a dangerous thing. If you're a business and a lawmaker threatens your livelihood unless you play ball-- which is
exactly what Fumo did to Peco when he got them to write a checkfor $17 million-- how do you say no?
It's important to keep in mind that saying "no" is possible. Verizon did it. As detailed here (link to Sunday piece?) the head of Verizon managed to push back on Fumo's demands. It's not easy, especially in the real world.
Employees who are ordered to pick up dry cleaning or do political work on state time might have a hard time confronting their boss about ethical lapses.
So how do we stop the next Fumo? Have you confronted ethics conflicts or had to deal with politicians who offer quid pro quos? How can this culture be stopped? Send your stories or ideas.
I tend to admire politicians who stick to their principals, but the state budget impasse in Harrisburg shows the danger of clinging to closely to ideology, no matter the circumstances. Republicans are threatening the well-being of all Pennsylvanians by refusing to consider raising taxes to fill the $3.2 billion deficit in the state budget.
The worst economic crisis since the Great Depression has wrecked havoc with government finances across the country. Consumers are spending less, investment is down, and companies are laying off workers by the thousands. That means less tax revenue to fund government programs-- like education, workforce training, and unemployment benefits-- that only become more important as the economy deteriorates.
The sheer speed and depth of the recession has caught even the most experienced elected officials off guard. In Pennsylvania, Gov. Ed Rendell first predicted the budget deficit would only reach $1.6 billion. A few months later, he was forced to change that estimate to $2.3 billion. Now, the total hole appears to be closer to $3.2 billion.
Link: A sentence -- and a question [Daily News]
THE GOOD WORKS of former state Sen. Vince Fumo in his 30 years of public service means his time in prison will be far less than what sentencing guidelines suggested and what many taxpayers expected for his crimes: four years and seven months.
From the time Fumo's indictment was announced in 2007 to his March conviction and to yesterday's sentencing, the debate has focused on "how bad was this behavior, anyway?"
In the House Appropriations Committee, the House Democrats amended Gov. Ed Rendell's budget to set the level of spending for 2009-10 at $27.8 billion. But it carves out funding for higher education and proposes finding a separate revenue source to fill that $1.3 million need.
Among the ideas that Committee Chairman Dwight Evans, D-Philadelphia proposed include an increase in the state's 3.07 personal income tax, an increase in the state's 6 percent sales tax, an expansion of the items subject to sales tax, video poker or some other revenue source yet to be determined.