Mayor Nutter is expected to unveil his plan Thursday to plug a projected $650 million to $850 million gap in the city budget over the next five years. He says all options are on the table, including spending cuts, layoffs, and delaying scheduled tax cuts.
Granted, the budget crisis is serious. The housing collapse and looming recession are having a major impact on the city's finances. But before putting off the tax cuts, Nutter should follow the example of three new City Council members - Bill Green, Curtis Jones and Maria Quinones Sanchez - who last week proposed a number of ways to cut spending and improve efficiency.
The Council members highlighted 15 simple proposals they say could save the city as much as $73 million a year - or $365 million over the five-year budget plan. A day later, the Council members added 15 more ideas to the list.
Some of the measures are so basic it's embarrassing that previous mayors and Councils never implemented them before. They include:
Electronic check transfers. The city loses $1 million in interest due to the time wasted in opening and depositing checks. Another $1 million in checks never get cashed or are somehow "lost."
Uncollected bail funds. The city is owed $1 billion from bail jumpers who failed to appear in court. Just collecting 1 percent of that money could generate $10 million a year.
Overtime pay. The city is expected to spend almost $200 million on employee overtime in fiscal 2009 - more than 10 percent of the city payroll. Other cities spend about 5 percent of payroll on overtime. A 5 percent reduction in overtime could save $10 million a year.
No single measure is a magic bullet. But the proposals add up to real money. If three Council members who have been in office less than a year can find $73 million in annual savings, just imagine how much more fat exists in the city's $4 billion budget.
Nutter is getting a lot of pressure from some Council members, community groups and even business leaders to reduce or delay scheduled tax cuts. That step should be avoided at all costs.
A decade of tax trims have made the city more competitive: The gap between national and city job growth has been almost cut in half over the last decade. But Philadelphia still remains one of the most highly taxed places in the country.
It's hard to make the case for slowing or ending tax cuts until real steps are taken to slash wasteful spending and boost efficiency.
The decision last week by 12 Council members to forgo the new cars they were scheduled to get - saving taxpayers $367,000 - shows there is a ways to go before the heavy lifting begins.
Nutter should re-read the policy paper he wrote last year as a mayoral candidate, in which he touted the virtue of tax cuts. "We have been steadily cutting taxes for a decade, and in each year, the revenues generated by lower rates has exceeded the preceding tax year," he wrote.
Nutter went on to identify $591 million in added revenue that could be brought in over five years, as well as tens of millions of dollars in savings through increased efficiency.
Sure, the economic climate has weakened since last year, but the added revenue and savings opportunities haven't gone anywhere. And while the budget gap is real, let's maintain some perspective.
A shortfall of $900 million over five years is 4.5 percent of the projected spending. Surely, any government bureaucracy can find cuts of 5 percent or more. Keep in mind, Nutter just pushed through a budget in May that increased spending 2.4 percent, slowed the scheduled tax cuts, and ate up two-thirds of the $182 million surplus left by former Mayor John F. Street.
Nutter distinguished himself when he was on Council as a smart policy wonk who understood city finances and challenged wasteful spending.
As a popular and respected mayor, Nutter has the public goodwill and political capital to dramatically remake the way the city operates and implement needed reforms and efficiencies. Rather than become timid in the face of the budget crisis, he should seize the opportunity to bring about real change.