Last month, when it became apparent to those in Philadelphia government that fighting the coronavirus pandemic was going to be costly, the Mayor’s Office released a newly proposed budget, outlining cuts to be made to help make up the nearly $650 million hole in the five-year proposed plan.
That proposed budget included cuts across some departments, as well as a hiring freeze for City employees, laying off seasonal workers as of June 1 and pay cuts for those making above $35,000. That budget does not plan to make personnel cuts to public safety or health departments, but notably for Philly’s biz economy, the plan includes cuts to the Office of Workforce Development, which is housed in the Department of Commerce.
During budget hearings Tuesday, Acting Director Sylvie Gallier Howard said the department is potentially looking at a 30% decrease in staff — about 18 positions — with the current proposed budget.
The budget will not be final until July 1, as City Council must first approve it.
On Monday, the Office of the City Controller released an analysis of the proposed 2021 budget, and put forth an alternative — changes that Controller Rebecca Rhynhart says she believes could restore some of the cuts identified last month.
“While I recognize these decisions are not easy, raising taxes, employee layoffs and making significant cuts to City departments should always be a last resort,” Rhynhart said in a statement. “As City Council begins its budget process, I felt it was important to provide an alternative way forward, as some of the proposals outlined in the Mayor’s budget will have a harmful effect on our residents and businesses.”
Rhynhart says in the analysis that this plan could balance the FY21 budgets for the City and school district without raising taxes and while lessening cuts to core services.
“To do this, we need to identify additional savings totaling about $120 million,” she said. “This level of savings would fully account for the $107 million generated from the proposed tax and fee increases while still including an additional amount to offset the largest service cuts.”
We identified more than $120 million in savings that could be used to eliminate the need for any tax or fee increases and restore funding to departments that were dramatically cut in the updated budget. Read the full report here: https://t.co/6nAHtplU1f. pic.twitter.com/uT28fE9Hhc
— Controller Rhynhart (@PhilaController) May 18, 2020
In the analysis, Rhynhart suggests five main changes to the budget.
First is to remove the budgeted deposit to the finance department’s recession reserve, totaling $50 million. Next comes a citywide overtime reduction effort, which Rhynhart suggests getting back down to FY11 numbers, which she says could save the city $45 million. The third step would include lowering the proposed increase to the Department of Human Services by keeping pre-K and community schools at their fiscal year 2020 levels, which the controller says will equal $13 million in savings. Fourth is reducing the budget for the Office of Innovation and Technology by $8.3 million, the amount slated to go toward technology costs associated with the new police headquarters building.
“Given that we are navigating a financial crisis, this move could be delayed several months into FY22 to free up this $8.3 million,” Rhynhart wrote.
And lastly, she outlined, the city could remove a budgeted deposit to the labor reserve for wage increases for savings of $6.7 million.
This proposed savings of $123 million could eliminate the need for tax increases for both the City and School District, as well as reduce some of the most severe cuts in the mayor’s proposed budget, Rhynhart said in her analysis.
“This includes cuts to the Department of Commerce, Parks and Recreation, the Office of Arts, Culture and the Creative Economy and the Office of Workforce Development,” she said.
First Deputy City Controller Kellan White said in an email that each year, the controller’s office evaluates the reasonableness of the assumptions and estimates in the City’s five-year plan for the Pennsylvania Intergovernmental Cooperation Authority (which since 1992 has been something like Philadelphia’s state-ordered parental budget cop).
“Considering the severity of the cuts to the budget and the increases in taxes the Controller thought it was prudent as the financial watchdog to offer her suggestions on how the city could balance the budget without putting the burden on the tax payers,” White said.
The controller is not the only one who will get to share their thoughts on budget: Hearings started this week and will continue through June. Councilmember Isaiah Thomas has released a plan he says will create revenue without new taxes. Ultimately, though, it’s up to the full council to decide.
Today, I’m releasing my plan to generate revenue for the City in a way that won’t create new taxes. We want to continue to provide critical services but know that taxpayers cannot afford more taxes.
Read the full plan here: pic.twitter.com/8KxjRWUEg1
— Councilmember Isaiah Thomas (@CMThomasPHL) May 12, 2020
Public testimony at hearings is welcome, and remote hearings may be viewed on Xfinity channel 64, Fios channel 40 or watched here. Hearings are currently scheduled to continue many mornings and some afternoons through at least June 10. (See departments schedules’ for speaking here.)
Through a spokesperson, Mayor Jim Kenney told Technical.ly that in light of the pandemic and the resulting economic downturn, the decisions that City leaders make about the budget are among the most difficult and important of their careers as public servants.
“And I appreciate the seriousness and open-mindedness with which they are approaching this task,” Kenney said. “We must transform our priorities to best meet the needs of Philadelphians, particularly our most vulnerable residents, under this new reality. We hope that by focusing on core services and maintaining fiscal stability, we will be able to rebound as quickly as possible.”