Despite the fact that Philly is the poorest large city in the United States, it’s hard to ignore the amount of money it hemorrhages in feats of fiscal malfeasance. Those losses have become so significant that the city’s own Controller has blasted its accounting practices as the worst among the top 10 largest cities. That’s clearly a designation no city would want, least of all one with such a high skyline profile as Philadelphia.
And, yet, its elected leaders have barely budged towards reform since we fully grasped the magnitude of its dire budgetary straits. The assumption is that if you’re charged with that much level of abject financial loss as a government, you’d be frantically racing towards some form of correction. Philly should be panicking, especially in the wake of a national Recession that did it no additional favors—and left the city still begging for a recovery.
It’s very likely Philly will enter a fresh election of citywide posts without the lost or wasted money being a major campaign issue. Indeed, people make more protest noise over statues, bullet-proof glass and streets named after mayors than they do over Philly’s inability to hold itself accountable for basic governing functions.
Instead, we have relative calm over at City Hall. There was much more vein-popping and political maneuvering in the reaction to Controller Rebecca Rhynhart’s finding of nearly a billion dollars in accounting errors than there was an immediate reflex to fix it. City finance jobs have oddly remained in place when there’s need for house cleaning. The absence of alarm is remarkable.
There is little remorse from either Mayor Kenney or City Council on the subject. Some blame also falls on a public that has yet to make loud demands for a reckoning. It’s very likely Philly will enter a fresh election of citywide posts without the lost or wasted money being a major campaign issue. Indeed, people make more protest noise over statues, bullet-proof glass and streets named after mayors than they do over Philly’s inability to hold itself accountable for basic governing functions.
Philly truly needs a fresh revival of this subject since there’s just so much money that’s either 1) unaccounted for; or 2) unexplained even when it’s discovered what it was spent on. A casual glimpse at city finances shows too much money burning too irresponsibly, without much public rousing. And with so many emergencies floating about as City Hall can’t decide which fire it can and should put out first, it’s probably time to get some topline, all-in-one-place grasp of just how bad the situation is.
Here’s a list to help with that exercise:
$924 million: When the city’s money hawk warns that a city finance department has made nearly a billion worth of “undetected material misstatements,” one has to wonder who will get fired for that. Attendants at grocery store cash registers get fired for much, much, much less. That’s an enormous amount of cash to lose track of. Even the Controller’s own technical spin—“material weaknesses and significant deficiencies in internal control over financial reporting”—can’t diminish the blow of that number. Let’s keep this simple: If you don’t know where money is on a ledger, you lost it. To date, no one has been fired or blamed for the missing funds.
$184 million (2016) and $172 million (2017): In back-to-back general elections, from the presidential to the citywide battle for District Attorney, City Hall snuck in stealth ballot requests for voters to approve more than $350 million in upgrades for public safety equipment and municipal buildings. The $184 million didn’t seem to bother many initially since it was first sold as fire department modernization—few will argue against that. But, then it sprouted into a general city government upgrade fund. When city kids can’t get the money needed to put an air conditioning unit in every classroom, how is it that city workers can enjoy the comforts of upgraded workspaces? Where does all that borrowed money go?
Philly should be panicking, especially in the wake of a national Recession that did it no additional favors—and left the city still begging for a recovery. Instead, we have relative calm over at City Hall.
$50 million: This probably goes down as one of the more egregious examples of near corrupt levels of fiscal mismanagement. The Mayor’s office can’t tell anyone why in the world they needed $50 million to prep a West Philly property for a police headquarters that never happened. Nor is there insight into a plan to recoup that loss. And it’s not like City Council is conducting the kind of aggressive oversight needed to get answers. But, then, get this …
$253 million: After throwing $50 million into a real estate money hole with no return on investment for citizens, City Hall still managed to negotiate City Council approval for a $253 million loan deal to finance rehabilitation of 400 North Broad Street (the old, iconic Philadelphia Inquirer) as the new police headquarters. Full circle negligence, even after wasting so much money on a fictional police HQ in West Philly. And there is a possibility that future interest on the loan will balloon to nearly double the original amount. Pouring more salt on it …
$22 million: The city even threw in expenditures for new furniture, office upgrades and other move-in costs that we’re certain won’t get itemized when it’s time for Council oversight. And don’t sleep on the additional $40 million in federal historic preservation tax credits that are slated to go to developer Bart Blatstein.
$44 million: As the Inquirer pointed out yesterday, the city is spending $44 million to “upgrade” its computer system in a way that will pay city workers more money for the same work. That will also mean higher pensions and a higher one-time DROP (Deferred Retirement Option Plan) payment that taxpayers are on the hook for down the road. This is just the latest in a string of wasted funds spent on useless or ill-planned technology.
$33.5 million: We haven’t forgotten about those missing $33 million the Controller found earlier this year (which has been whittled down to $26.5 million). But you should add in the $500,000 the city is spending on accounting firm Horsey, Buckner & Heffler LLP to locate something its own finance department should do instead.
Another $33 million: That’s how much the new Center City Aloft hotel received in various local and federal subsidies for what was supposed to create 170 local jobs. Instead it brought just 55—but still kept the subsidies.
There’s over $2 billion, combined, in funds that vanished or are being used in ways few can explain. That amounts to around 42 percent of the city’s $4.7 billion FY 2019 budget. Not all of that money is from that specific pool. But it is city money—or city-designated money—and it’s unclear what it’s been used for or whether there’s any oversight.
We are approaching the 2019 campaign season, when Mayor Kenney and City Council members are up for reelection. It’s the perfect time to demand a full accounting of the missing funds—before we agree to keep those who don’t seem to care in office.
Charles D. Ellison is Executive Producer and Host of “Reality Check,” which airs Monday-Thursday, 4-7 p.m. on WURD Radio (96.1FM/900AM). Check out The Citizen’s weekly segment on his show every Tuesday at 6 p.m. Ellison is also Principal of B|E Strategy, and the Washington Correspondent for The Philadelphia Tribune. Catch him if you can @ellisonreport on Twitter.Photo: antony_mayfield via (CC BY 2.0)