The state budget-cut Domino Effect

THIS MORNING, Mayor Nutter delivers his annual budget address to City Council.

For the first time in three years, it won't be ugly. City tax revenues have finally stabilized, which means no tax increases or cuts to popular services are necessary to balance the $4 billion budget.

But if you get a warm, fuzzy feeling from this, expect it to last just under a week.

Because on Tuesday, Gov. Corbett will give his own budget address. And he's going to announce reductions that will mean cuts to services for the most vulnerable Philadelphians.

We don't know exactly how much will be cut. But Corbett has promised to fill a multibillion-dollar budget shortfall without raising taxes.

That means the ax will be coming out.

And city government will feel the pain.

According to a recent report from the city controller, about $1.7 billion that comes into the city from Harrisburg - spread across nearly a dozen city agencies - is threatened by state budget cuts. About $1.5 billion goes to services that benefit mostly low-income children, with the rest helping people who are mentally handicapped, people with HIV/AIDS, the homeless, those without health care and others.

IT'S OBVIOUS that a decrease in funding for services to the poor will have an impact on the 25 percent of Philadelphians who live in poverty.

What's less-well-understood is just how badly these cuts to social programs will affect other parts of the city budget, including the broad-based services that all taxpayers use.

Take the Police Department. It gets very little of its more than $520 million budget from the state. But the department is still likely to be heavily affected by state cuts.

Why? The Department of Human Services got $390 million in state funding last year to provide services like after- school programs and youth basketball.

Many of these programs help keep young people in poor neighborhoods off the corners.

If these services disappear, we can pretty much count on more kids getting into trouble.

According to a report from Fight Crime: Invest in Kids, a coalition of law-enforcement officials who support increased spending on education, every dollar cut from these types of programs winds up costing nearly twice as much spending on cops, courts, and prisons down the road.

In other words, cuts to programs for low-income children will likely mean more work for the already overtaxed police. It might also lead to a more-expensive criminal-justice system (which already eats up 25 percent of the city budget).

Other cuts would have a similar ripple effect. The Office of Supportive Housing has a relatively small budget of $13.5 million, and mostly serves a very small population: the homeless.

But this small population can have a big impact on the city as a whole. Right now, the city has teams working to get homeless people off the streets and into shelters. Under Corbett's budget, that program could be cut.

Ask a suburbanite if he'll travel downtown to buy something on Walnut Street if there is a new presence of homeless people on the streets.

If Center City starts resembling a tent city because of cuts, we'd see an impact on business- and sales-tax revenue, which together total more than $591 million. Even if revenues dropped only a few percentage points, it would create a serious hole in city's $3.9 billion budget.

Or consider what would happen if the city Health Department has to slash prevention programs and services to the uninsured. More people would go without preventive care, which would lead to more emergency situations, which would cost more and cause longer ambulance response times from Fire Department paramedics.

The pattern repeats itself over and over across $1.5 billion worth of social programs threatened by state cuts.

And as city government reacts to the consequences, fewer resources will be available to spend elsewhere - fewer dollars for libraries, recreation centers, parks and other things that make Philadelphia a great place to live.

It also means less money for tax cuts, the pension fund, and other priorities.

So enjoy the next few days of budget limbo.

But don't be fooled: When

the state cuts come, the real pain begins, and their effects

will reverberate through the entire budget.

Ben Waxman reports for "It's Our Money," a joint project between the Daily News and WHYY, funded by the William Penn Foundation. See www.ourmoneyphilly.com.