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Who Wins and Who Loses?

A view of City Hall and surrounding buildings in Philadelphia through a glass commuter tunnel.

Header photo courtesy Dyana Wing So / Unsplash

Mayor Kenney released a revised budget proposal last week to reflect the reality of cratering city revenues resulting from the pandemic response and associated business closings.

The budget gap, currently sitting at around $650 million, is five times greater than the one the city faced during the Great Recession, and the administration will need to cut around $341 million from its prior spending plan that debuted in March.

It’s possible that the cuts proposed could become less dramatic if more federal money comes in, or the administration takes advantage of the new Federal Reserve municipal bond-buying program, but for now, this is the budget we’re debating, and it’s real ugly.

Like with all budgets, this is a statement about the administration’s views on what is most important right now, and who should shoulder more of the sacrifices. We used Controller Rebecca Rhynhart’s new visualization tool to highlight some of the broad themes and points of interest.

Three winners from Kenney’s new budget proposal

Fire and Police Departments

Municipal unions’ contracts were due to expire on June 20, and at the end of March, Mayor Kenney and the Fraternal Order of Police agreed to do a one-year contract extension rather than let contract negotiations distract from the health emergency response.

One upshot of the contract extension was that the city’s 6,300 police officers received a 2.5-percent pay increase starting May 1, followed by a $750 signing bonus on July 1. A smaller group of deputies in the Sheriff’s Office represented by the FOP will see a smaller bump, with 2.25% pay increase and $400 bonus.

In late April, the Metro reported that Kenney reached a similar contract extension agreement with the firefighters’ union IAFF Local 22, which also included a 2.5-pay increase, and earlier this week the mayor announced he had reached extension deals with all four municipal worker unions.

In the FY20 revised budget, the Police Department sees a $7.68 million increase in the personal services category, and the Fire Department sees a $1.2 million increase. That goes up again year-to-year with a 1.5 percent increase for police to $760 million, and a 1.9 percent increase for fire to $321 million.

Between the March FY21 budget proposal and the revised version, the Fire Department’s budget increases by 5 percent, or $14.2 million, to $321 million, and the Police Department’s budget increases by 2 percent, or $14 million, to $760 million. Personal services were the only budget categories to see increases in both departments.

911

One of the only proposed increases in the budget, and the largest in both percentage terms and net increase is for the 911 program under the Office of Innovation and Technology. OIT has been facilitating the shift to online operations for all the different departments and processes—no small feat in a city where some processes are still fully or partially paper-based. There’s a net increase for OIT driven by a combined $30 million increase for the 911 system, both for materials and equipment, and purchase of services.

The Streets Department

The Streets Department would still see budget cuts under Mayor Kenney’s proposal, but the transportation side of the house will only be 8 percent smaller than in FY20, and the sanitation side will actually see a small increase of $3.1 million according to the Bicycle Coalition’s analysis.

The glass-half-full take on this is that it’s not nearly as bad as it could have been, remembering the huge cuts to Streets during the Great Recession that the city took years and years to restore as the roads crumbled into a craggy moonscape.

This is an important reminder that for all the talk of an “infrastructure stimulus” at the federal level, state and local aid is really the most effective infrastructure program the federal government could pass at this point.

This is an important reminder that for all the talk of an “infrastructure stimulus” at the federal level, state and local aid is really the most effective infrastructure program the federal government could pass at this point.

Having the federal government and the Fed fill in Philadelphia’s budget gap to avoid a bunch of unnecessary cuts to our existing infrastructure program—or even sending us more money to hire a bunch of laid-off people to repave streets and sidewalks—would be a great way of putting construction workers to work, and it doesn’t require anybody to come up with a big list of new projects in short order.

The Losers

Commerce

One of the hardest-hit departments where the mayor’s proposed cuts appear oddly outsized in proportion to the importance of its role in economic recovery is the Commerce Department.

In the revised FY20 budget, Commerce is funded at around $10.3 million, and in the revised FY21 budget, they see around an 85-percent cut to just $1.45 million.

Commerce is a key partner and resource to small businesses across the city in over 200 commercial corridors, and also to the city’s business improvement districts and community development corporations. They’ve played a critical role in helping small business owners apply for the federal loans and other grants that are available. A massive staff cut to Commerce will undoubtedly have downstream consequences for small businesses’ ability to hang on until the fall.

Clean Streets

The long-delayed citywide street sweeping program the mayor announced in this year’s budget address is being delayed once again, and has been completely cut in the revised budget. PlanPhilly also reported that the Zero Waste initiative will be fully wound down.

On one level it’s understandable why a new program that hasn’t yet started would be on the chopping block, but from another perspective, the point that street sweeping advocates have been making all along is that not only should we have a citywide street sweeping program, but it should be viewed as a core municipal responsibility on the same level of importance as garbage collection and recycling.

Photo via Roxanne Patel Shepelavy

Given the relatively low price tag, too, and its relation to the number one priority that surfaced in the City’s recent resident survey, it deserves to move up the priority list—especially since neighborhood cleanups are out of the question this spring, and things are looking mighty filthy out there.

Regarding the Zero Waste initiative, it’s been hard to see how many of the strategies they settled on really moved the needle very much in any focus area, and at times the office seemed like more of an obstacle to a more effective municipal solution to the litter problem than an ally.

The office would often serve as the administration’s primary mouthpiece opposing street sweeping, most recently likening the calls for basic sanitation to demands for a “24/7 concierge service” before eventually pivoting to support once the mayor moved to include it in this year’s budget proposal.

Non-Residents

Pennsylvania’s Sterling Act allows Philadelphia to levy a wage tax on non-residents who work in the city, and among other revenue increases proposed in the revised budget, the mayor is proposing a tax hike only on the rate for non-residents.

This was one of the more curious moves in the new budget since there had already been reports about the impact of so many suburban residents working from home on that part of the wage tax base.

Like with all budgets, this one is a statement of the administration’s priorities about what is most important right now, and who should shoulder more of the sacrifices.

City officials said Thursday they anticipate that employer withholdings may not be adjusted in the early weeks, and possibly not ever, and instead suburban workers would seek refunds later. So essentially, the non-resident wage tax increase is really a loan from those employees that will have to be paid back in a year. Any liquidity now helps the City balance the books, which counts for a lot, but there’s a predictable downside.

Anything Not Nailed Down in the City Charter

One theme in the revised budget is that some of the offices established in the City Charter, such as the Office of Immigrant Affairs and the Office of LGBT Affairs saw fewer cuts than ones that weren’t.

Among the bigger stories about program cuts that have sparked some public reaction is the proposal to zero out the Office of Arts, Culture, and the Creative Economy, which is charged with administering a range of city arts programming, events, exhibitions and taking care of the city’s collection of public art.

The City Representative’s office, which promotes and organizes special events across the city, also was fully cut, and so was the Zero Waste initiative, at least as a standalone program.

In the future, this trend could push advocates and elected officials even further toward strategies of trying to lock their favorite programs into the Charter as a way of protecting them in future recessions.

Jon Geeting is the director of engagement at Philadelphia 3.0, a political action committee that supports efforts to reform and modernize City Hall. This is part of a series of articles running on both The Citizen and 3.0’s blog.

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