In Mayor Kenney's second year in office, the city is introducing a spending plan that is $200 million more than the one introduced last year, for a total $4.4 billion budget.
While rising fixed costs such as pensions and health care are contributing to the increased spending, the mayor is also proposing funding new programs to combat poverty, lead poisoning, and opioid addiction, and increase public safety.
City Finance Director Rob Dubow, in briefing reporters, said officials prioritized funding for “urgent and crucial” programs.
“These are really necessities we were funding,” he said of the spending plan that would start July 1 and go through June 30, 2018.
- $5.2 million to hire and train 30 firefighters and 42 paramedics, with the goal of responding to calls more quickly and reducing overtime costs. Currently, the city has about 2,000 firefighters and 430 paramedics.
More than $1 million in rental subsidies and supportive housing to assist homeless families and people with substance-abuse or mental-health issues.
Nearly $2 million to address the city’s opioid and heroin epidemic through an education campaign, a database to track treatment facilities, and distribution of an opioid overdose reversal medication.
$900,000 for remediation, enforcement, and education on lead poisoning.
An additional $700,000 annually for the Office of Property Assessment so that property reassessments can be done annually, starting in fiscal year 2019.
Dubow said the current spending plan is $142 million more than what the city is expected to ultimately spend this year, per estimates done this week.
The six-year capital budget that accompanies the operating budget also includes $50 million for new fire trucks, $90 million toward a park that would cover a portion of I-95 in Center City, and $125 million in new technology.
All of that will be covered in Kenney's budget address to City Council on Thursday.
This year’s budget address should not generate the controversy of last year's, which was dominated by Kenney’s sweetened-beverage tax proposal.
In a year when Kenney will not ask Council to approve any new major initiatives, the most contentious issue is likely to be the implementation of an initiative he put forth last year, a $500 million investment in the city’s parks, recreation centers, and libraries.
The administration is pegging $8 million in this year’s budget to start that project, known as Rebuild. But the lion’s share of the money -- $300 million -- will come from bonds yet to be approved by Council. The administration will introduce the bond ordinance to Council on Thursday, though officials said the bonds would not be issued until a lawsuit seeking to strike down the tax is settled.
Another battle Kenney will face this coming year is bargaining new contracts with three of the city’s four major unions: AFSCME District Council 47, the Fraternal Order of Police, and the firefighters. All three contracts expire June 30.
The city has reserved $20 million for fiscal year 2018 and a total of $200 million in the five-year plan for new labor contracts. However, given the city’s most recent contract negotiations, that amount likely won’t be enough to cover three new contracts.
In July, Kenney signed a $170 million, four-year deal with the city's blue-collar union, AFSCME District Council 33. The contract includes wage raises of 11.5 percent over four years. It also increased pension contributions by members, among other reforms.
Dubow said the city wants to get the same pension reforms from every union and nonunion city employee.
Pensions continue to be a big fiscal burden for the city. In fiscal year 2018, the city will have to pay a minimum of $656 million toward the city’s pension fund, which has only 45 percent of its total $11 billion liability. The 2018 payment will eat up nearly 16 percent of the city’s entire general fund.
The city’s health-care costs are also quickly rising and almost as much as pension costs. In 2018, the city expects to pay $627 million for health care, an increase of $20 million from the year before.
City officials said that revenues are expected to come in at $4.3 billion, leaving a $33 million operating deficit to be filled, in part, through the city’s low fund balance.
The fund balance, which is expected to be $100.7 million by the end of the current fiscal year, is estimated to be reduced to $87.5 million in fiscal year 2018.