Watchdog: Tweaked spending plan still has ways to go

The city's fiscal watchdog said yesterday that Mayor Street's revised five-year plan will still need some work to get its stamp of approval.

"It's a lot closer than the initial plan, but it's not there yet," said Rob Dubow, executive director of the Pennsylvania Intergovernmental Cooperation Authority.

The big problem with the plan, Dubow said, is that it doesn't deal with the city's fastest-growing costs: health care, pensions and prisons.

"They're going to crowd out everything else," he said.

There will be a 30-day review period to discuss the plan, which covers fiscal years 2008 through 2012.

Dubow said the new version made progress in balancing likely sources of revenue with expenses:

Missing from the revised plan is $70 million in state and federal money the city had planned to use to expand after-school and anti-violence programs. Since the money wasn't in the state's budget proposal, the city now says it will spend that money only if it gets additional funding.

Also removed was projected savings of $10 million through health-insurance changes over three years.

And the city has scaled back its projections of growth in wage-tax revenue.

In the first plan, the city "had more aggressive wage-tax assumptions than ever before," Dubow said.

To help balance the plan, the city proposed freezing reductions in the gross-receipts portion of the business-privilege tax at the end of fiscal year 2009, which Dubow noted "doesn't send a great message about doing business in the city."

The mayor's chief of staff, Joyce Wilkerson, said the plan still had millions in tax reductions.

The authority's other concerns include a $10 million one-time payment to the school district. Dubow questioned whether the city could make a single payment under the rules governing school funding.

Wilkerson said the payment would not go directly to the district. "We would provide support to an education [organization] supporting the mission of the school district," she said.

Dubow also questioned the estimated savings in employee benefits.

"They have some savings in health and benefits that we're not sure they'll get," he said.

Wilkerson said that the city will save through things such as mail-order prescription drugs and higher emergency-room co-pays.

The plan could change when the next mayor takes office. If Democratic primary winner Michael Nutter wins in November, he would have 90 days after taking office to create a new plan.

"You can tell from his budget plan that some of the things in here don't reflect his priorities," Dubow noted. *