Nutter's budget: More spending, same taxes

With the city slowly stepping out of the shackles of the recession, Mayor Nutter on Thursday proposed spending $6 million to put 120 new police officers on the street, and more than $4 million to launch a long-awaited update of property assessments - but no new taxes or fees for the first time in his administration.

But by the end of his 37-minute address to City Council, the mayor himself had acknowledged that the real numbers that will drive Philadelphia's $3.46 billion budget next year had yet to emerge.

That will happen in the coming days, after Gov. Corbett on Tuesday outlines his plan for closing Pennsylvania's $4 billion deficit. It is sure to result in a big financial blow to Philadelphia, which two years ago received more than $1.8 billion from the state to pay for community and behavioral programs, social services, and a variety of other spending that goes far beyond the city's general-fund budget.

Moreover, the $1.8 billion at stake does not include hundreds of millions of education dollars also considered at risk of being lost or greatly reduced by the state.

Combined with looming federal spending cuts, Nutter in his speech predicted a possibly "devastating impact" on the city in fiscal 2012 - but not one that would keep Philadelphia at a standstill.

"Though I am fully aware of further challenges in the near future, we will not compromise on our goals, we will not adjust our vision, and we will not relent for one second in our pursuit of the 21st century Philadelphia that we all know we can be," Nutter said.

Unlike his last two budget proposals, this one was short on drama, containing $34 million in new spending and less than $3 million in cuts - and drawing so few spectators that one of the Council chamber's two balconies was nearly empty.

The mayor's speech was briefly disrupted when 10 members of the AIDS-awareness organization ACT UP Philadelphia broke into a chant: "Homes, not graves, for people with AIDS."

Nutter noted free-speech protections and went on with his address.

The budget he proposed would spend more taxpayer dollars than in fiscal 2011, but is actually about $500 million smaller than that $3.8 billion plan.

That is because of an accounting change in which $500 million in grant money received by the Department of Human Services has been shifted out of the general fund and into what is known as the grants-revenue fund. City officials said the switch, which would leave DHS with a $111 million general-fund budget, should lessen problems the city has when it receives late reimbursement payments from the state.

But if the change, which was recommended by Wall Street rating firms, was not made, Nutter's fiscal 2012 budget would come to $3.95 billion - slightly higher than the fiscal 2011 plan - because of increased debt service and employee benefits' costs.

Of Nutter's $34 million in proposed new spending, the money for police will put new officers on the street by the year's end; two previous police classes were canceled to save money.

Nutter did not similarly set aside dollars to boost the Fire Department, which is currently down about 60 firefighters - and will likely be down an additional 60 or so before new firefighters are added to the payroll.

But that won't happen for at least 18 months, because, Nutter said, city officials must first spend $250,000 to write "a more racially sensitive" hiring exam to comply with a recent U.S. Supreme Court decision that found a Connecticut test violated the civil rights of white firefighters.

In the interim, the mayor allotted the Fire Department $2.6 million more in overtime. Rolling brownouts of certain fire companies are expected to continue, with Nutter's finance officials saying that without the brownouts, overtime costs would be $3.5 million higher.

Among other new spending is $1 million for the mayor's Commission on Literacy; $573,000 for a new neighborhood-cleanup program called Philly Rising; and $500,000 for a reward program to help the city apprehend criminals.

The bulk of dollars cut come from the prisons budget, which Nutter proposed shrinking by $2 million since reforms have led to a drop in the number of inmates who must be sent to facilities outside Philadelphia.

Nutter's budget also for the first time includes separate spending for snow removal - setting aside $4 million to deal with winter storms that cost the city an unexpected $18 million last fiscal year, and so far $12 million this fiscal year. The $4 million represents a five-year average of snow-removal costs.

"It's a reelection budget, that's what it is, and there's no bad news in it," said former Mayor John F. Street, who attended the mayor's speech for the second straight year, along with his Temple University political science class. "It's the typical kind of message a mayor gives in an election year."

But there are no solutions offered in the budget for the pension fund, which has less than 50 percent of the cash it will need to pay out its pension obligations, or for new contracts with two of the city's four unions, AFSCME District Council 33, with 9,400 members, and District Council 47, with 3,400 members. They have been working without contracts since June 2009.

"The mayor gave a real warm and fuzzy budget message, but that won't make those problems go away," Street said.

The consensus among Council members, who must vote on the mayor's proposal by May 31, is that it lacks true meaning until Corbett makes his intentions known.

"The reality is that within a week, we're going to have to make significant changes," Majority Whip Darrell L. Clarke said. "While it's nice to be here today talking about the stabilization of the budget, it's probably going to be really short-lived."

Councilman Bill Green said: "This budget is essentially not making choices when we know we will have less resources. . . . We cannot pass this budget."

Nutter rejected the notion that his proposal was anything other than genuine. "We must continue to invest - where we can - in our core priorities if we are to remain an attractive choice for citizens, businesses and jobs."

He also said whatever the governor proposes may very well be changed by House and Senate legislators who may have a "different reality" from Corbett. "With all due respect to the governor, we don't know what the General Assembly will do," said Nutter, who expects to travel to Harrisburg next week.

West Philadelphia Sen. Vincent Hughes, the ranking Democrat on the Senate Appropriations Committee, noted the mayor had built good relationships in the Capitol, and that he himself was "making sure there is a direct line of communication going on in order to protect the city." Hughes was in Council chambers to hear Nutter's speech but had to leave when it was delayed.

Overall, Nutter expects to end fiscal 2012 with $51 million in reserves - far less than the amount of money than the city's fiscal overseer recommends be set aside for emergency use. That's nothing new, since the Pennsylvania Intergovernmental Cooperation Authority similarly warned the administration last year that it left too little in reserves then as well, resulting in "negative end-of-year fund balances, due in part to the lack of sufficient emergency resources."

This year, however, the city is expected to end the year with its first positive fund balance in three years, at $13.5 million.

Mayor Nutter's 2011-12 budget includes $34 million in new spending. Here are the highlights for fiscal year 2012:

$6.4 million for a new class of 120 police officers.

$4.4 million to fund 80 new assessors and new technology for the Office of Property Assessment's evaluation of properties for Actual Value Initiative.

$4.4 million to purchase new firefighter safety equipment and to fund Fire Department overtime.

$4 million for snow removal.

$2.4 million to restore First Judicial District probation positions whose stimulus funding has run out.

$1 million for adult literacy programs.

$1.9 million for the District Attorney's Office.

$573,000 to fund the Philly Rising Program, a pilot program that leverages volunteers with city resources to restore neighborhoods.

$500,000 for a reward program to apprehend criminal suspects.

  EndText