PICA approves city's budget, but there's a catch

The state board that oversees Philadelphia's budget approved yesterday the city's five-year financial plan - with one major caveat.

The Pennsylvania Intergovernmental Cooperation Authority's top concern is that the city's budget plan counts on getting state approval for a temporary increase in the city sales taxes and some changes to city pension-fund payments - items that will generate about $700 million over five years.

But those measures remain in limbo because the state hasn't resolved its own budget. So, PICA said that if the state hasn't passed a budget by Aug. 15 - or if state lawmakers recess without passing a budget - then the city must submit a revised budget.

That revised budget would likely be the cost-slashing plan referred to as "Plan C," which is expected to include major layoffs and service reductions. The city has not released details of that contingency plan.

PICA also asked that the city provide a list of items that could generate an additional $25 million in annual savings or revenue.

Board members said that those cuts were important because there are so many pressures on the city's budget, the state budget and the national economy. Other concerns cited by the board were the unresolved labor contracts with the city's four municipal unions and concerns over the collection of property taxes.

"I think it's fair to say we're in uncharted waters," PICA Chairman James Eisenhower said. "The board has never really faced this level of uncertainty."

The state budget has been stalled for weeks with no conclusion in sight. On Friday the city, in an effort to conserve cash, announced plans to halt payments to most vendors until there was a state budget deal. *