Lest Ye Forget the Tale of the Zombie Budget

A couple of weeks ago I got an impassioned email plea from a group called Save Our Safety Net. “The Washington city budget faces massive cuts that would do the worst damage to the poorest members of our community!” it said. “Call council and say that the city needs to raise taxes!”

The email had a laundry list of, indeed, last-ditch social service organizations that keep people from literally dying on the streets. It was horrible. So I, barely in the city a couple of months, did what I was supposed to do: went to the rally, lobbied city council. I signed the petition.

“You know, I just moved here from Philly,” I told one of the organizers. “We just went through this. Same horror movie: lost revenue, no political will to raise taxes, and so on.”

“How did it turn out?”

“Well, actually, it has been rather a miraculous thing so far. The community really came together, even altered the budget process itself. We ended up forcing the city to raise taxes with an administration that was never going to do it, through the most democratic process I’ve ever seen in a city government.”

“Wow.”

“Except that, despite the fact it started in 2008, it’s not actually done…”

The Philly budget saga has been going on three seasons now. Winter, spring, summer…and now, it threatens to stretch into the fall. There is a Republican state Senator in Pennsylvania named Dominic Pileggi whose greatest legislative achievement last year was blocking health care reform that would have insured 42,000 impoverished Pennsylvanians, and this year, starving the Philadelphia government by blocking approval of the sales tax increase that would keep the city operating. He should not be in public office at all.

I get very defensive of projects I have worked on. I am mad about this. Amnesia sets in really fast – and it’s been a busy year – but all you have to do it rewind to the chill dark of last December to remember the civic mood in Philadelphia when Mayor Nutter came out with the first pools-and-libraries cuts. I have never seen so many depressed progressives in my life. Really bad bar graphs in winter. That Obama/Phillies high wearing off reaaal fast, and those thirty seconds that Nutter had to prove to the grandmothers of West Philadelphia that he was going to be different from all the other mayors falling off the shot clock.

Remember that?

I was talking to a libraryista this week, and he was going on about Nutter pro-business grumble grumble nothing ever changes…and I realized that people are already forgetting everything that happened after that.

So I am going to sketch out a brief chronology to remind you:

- Mayor Nutter announces budget cuts
- Friends of the Free Library begin campaign
- Firefighters begin campaign
- Lawsuit filed to keep libraries open
- Mayor holds disastrous town halls where people show up, and scream at him
- Mayor holds PhillyStat, round two of town halls, where people show up again, I think these were a little more sedate.
- Coalition to Save Libraries formed, bringing together library advocates, community groups, and other endangered city services
- Bowing to pressure from Philadelphians, Mayor designs and then holds round three of town halls with facilitated process designed by the Penn civic-engagement DJs to take public input to design the city budget.
- Despite deeply ingrained and not unwarranted distrust of their elected officials, hundreds of people show up AGAIN to design the city budget in these fora
- Coalition to Save Essential Services formed, which was a different yet overlapping Venn diagram from the Coalition to Save the Libraries
- Library lawsuit successful, happy New Year!
- New branch of FFL forms in West Philly as a result of the organizing - I think there might be others. At any rate, many branches of this organization were strengthened by the fight.
- Mayor redesigns budget, including tax increases initially including sales and property tax increase.
- (here’s when I skipped town, so my knowledge of the remainder of the story is a little thin, and needs to be augmented)
- Philadelphians find out that property taxes = bad. Again, they take the time and make the effort to organize, go to city council, lobby, go to the umpteenth rally.
- City council hearings result in more participation
- City council cancels the property tax increase
- Mayor rewrites budget
- Mayor sends budget to Harrisburg. Dom Pileggi sits on it.
- Mayor calls for rallies to put pressure on Harrisburg and YET AGAIN AMAZING PEOPLE SHOW UP AND USE THEIR VOICES, including a bazillion social service organizations, taking day trips out to Media.
- …and this is the quick version.

This has all been amazing. This actually all happened. Hundreds and even thousands of people worked very hard to make all this happen. The amount of learning that has gone on by so many people who had no idea what a real estate transfer tax was has been pretty incredible. It’s the kind of thing that changes a city forever. I tell people in D.C. how proud I am of Philly, that we decided as a city what the budget should look like, that we chose to come together and make sacrifices in order to keep homeless shelters and HIV treatment clinics open.

Just the effort required to make this happen is beyond belief, sometimes. Civic engagement is really hard and really time-consuming. People who aren’t political weirdos actually would rather be doing anything other than showing up to a town hall and talking about L&I; this shit has been going on so long, organizers have had to tear people away from Eagles, Sixers, and Phillies games consecutively. And they did it.

Comparatively speaking, our nation’s capital is completely disempowered. Its the capital of the richest country on the planet, and here we were in the DC office building at 13th and Pennsylvania, begging them to not cut the Grandparents Caregivers program! Apparently DC has, for the last 20 years, allowed national and multinational corporations doing business in the District to get out of paying a portion of their taxes. It was like Philly for many years.

“That’s ridiculous,” I told the chief of staff to my city councilman, Councilman Graham, Ward 1. “This is D.C. It would take the Apocalypse for Starbucks to close its stores in Adams Morgan.”

“For years, we couldn’t get anyone to build anything here,” he said. “Getting a Starbucks in your neighborhood – well, that’s when you know you’ve made it.” He smiled.

I was shocked at his assessment of his own district, and its potential power. Ward 1 includes Adams Morgan, Dupont Circle, Mount Pleasant, Columbia Heights, and most of the other really expensive real estate in the district. If there had been a bad financial history for the city in the past, there had been no recalculation since. The city government of Washington, D.C. is afraid. It doesn’t even get self-determination – they face a possible APileggaclypse every year with the federal government! Cities have been beat down for a long time, and even with Mr. Urban President, there are still gonna be a lot more bad bar graphs ahead until things change.

It’s time cities stopped being afraid. Cities just need to figure out a way to own it again. And soon.

----

The DC budget fight, which really just begun as a public campaign a month ago, is so differently aligned that the comparisons almost can’t be made. I will write them down eventually though, because there is something to learn. One thing that they do have that Philly lacks is a really smart policy thinktank – the DC Fiscal Policy Institute– that is an appendage of the federal Center for Budget and Policy Priorities, whence came Peter Orzag. It’s one benefit of having the federal policy class here. There’s also a much more well developed local blogosphere here than in Philly - but with an equally bad digital divide, which still hampers organizing in both cities.

Mais…. ou sont les operatifs?

I’m going to get involved because I miss city politics. It’s the antidote to cynicism, the political space where one can best see the effects of good work – even if cities are the least financially capable, often, to accomplish their own goals. I feel terrible for all these kids on the Hill, little mites in a gigantic federal power structure that they can barely understand, let alone affect. A lot of the people who come here have no experience with local politics – they are often suburbanites, or come straight out of grad school.

There is no reason, really, that they couldn’t learn. And take it back when they go home later. That would really change things, long term.

Unfortunately too many Philly folks don't know where we are

On Friday, I asked Uri Monson via email if the schedule is being changed for Dom Pileggi's "I can't let go of the death grip on the city budget" antics. The answere was "No".

Actually it was like this.

Me: So the 15th is Sat. Are you going to alter the deadline at all for the city budget as per Sen. Pileggi's request or what is the plan for implementing the "Plan C" city budget?

Pileggi indicated recently he might allow a vote for the city budget approvals separate from the state budget negotiations which now there is a "bridge" state budget in place may go on for yet more months. But he wants to hold at least two weeks worth of hearings where he wags his finger at City Council on the pension fund even though Council passed its budget in the first week of May and Pileggi's state level of government is still not even close a month and half after the July 1 deadline in state law.

Why is this such a prick move? Because he known PICA's deadline for months and he knows that by ignoring it - before he even allows a vote to see if its even necessary - he's going to force every city department to go through the exercise of basically making city government shut down on new business and concentrate on exactly laying out every single one of 3,000 layoffs in Plan C - how the city will actually execute closing every single rec center, virtually every library, laying off 700 cops, 200 firefighters. All for a stupid political gesture on his part - unless he drags his feet so long its too late to pull out of this game of chicken in which every Philly citizen loses. And if Pileggi really sincerely wanted these hearings on the city's pension fund he's had since the first week in May to schedule them and the fact that he's waited till now to even bring up the idea is 100% absolutely nobody else's fault but Dom's. But despite now more than 4 months of advance notice, Pileggi just now sent a last minute letter to PICA asking for a reschedule on the doomsday budget roll out while he holds this series of open-ended hearings where he hopes to wring every drop of Philly-bashing he can out of the sorry state of DROP for political benefit in terms of the Harrisburg budget fight and realistically absolutely no other constructive purpose. At this point I am really thinking it is appropriate if every single city worker were to personally mail Dominic Pileggi a hot stinking turd for his warm, warm behavior through this whole mess.

Anyway back to my email with Uri.

Uri: The PICA Board has not yet formally responded to Senator Pileggi 's letter. The City will have 15 days to submit their revised Plan, and then the PICA Board has another 15 days to review the proposed Plan. If it is ultimately necessary, Plan C would be fully implemented around September 15.

Uri Monson
Executive Director
PICA

Me: Thank you for your response.

This all seems to be cutting it a bit close and a political game of unnecessary risk to me.

Uri: I don't disagree with your assessment. I can only say that PICA is trying to focus on the City's fiscal health and keep all of the other "moving parts" focused.

Uri Monson

So where are those "moving parts" on City Council? And in terms of that "moving part" named Dominic Pileggi a smack upside the head might be the only appropriate response, I increasingly suspect.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Is this an inappropriate question?

As between raising property taxes (or some other tax we can raise without Harrisburg permission) and Plan C, isn't the former a bit better?

To be clear, I would hate to raise the property tax because it would be unfair, regressive, etc. But we hate Plan C even more, right?

I hope this is not an inappropriate question.

Raising property taxes was better back in May

because thats when Council passed the Plan A budget. The first week of May. But state law and court case law says that the city can't raise new taxes for the current fiscal year after the fiscal year starts on July 1. So the city's hands are tied now because of inaction at a state level. They can't redo Plan A after July 1 and thus are locked into Plan C if the State Senate does not act in time and in time is right now. Libraries are already stopping lending so that they can actually all shut down on time on Sept. 15.

Since I've been arguing with a bunch of Republicans some of which are not so secretly cheering for Plan C as a chance to "teach all those stupid Democrats in the city" lately, I've been getting this question a lot. Basically the reason the State Senate says they can't just approve the city's ability to run its own business is because the have to tinker with the city of Philadlephia's ability to run its own pension plan first. But if that were a legit argument, the State Senate could have scheduled hearings starting in early May and easily finished with the issue before July 1 - by which time Council could have revised Plan A if necessary.

There are some real issues with pension fund health but there was no reason to force Plan C related to them. Essentially because the city is refi-ing its pension fund stretching out the timeline that it takes to get back to what most financial experts would call an adequate level of funding it does relate to the question. Also other cities around the state are also in similar boat and also underfunded for their liabilities to municipal workers. Pension funds invest in the stock market and if you had not noticed in the last year and half the stock market has taken a pretty rough ride. Some sort of "worst recession in several generations" or something. Anyway thats part of why in New Jersey Gov. Corzine took a lot of political risk last year, opting for tougher state budget choices in order to float NJ municipalities a helping hand on their pension funds. But we didn't do that here in PA. Here in PA, municipal pension fund woes have nothing to do with the state budget. And if its an issue the state of PA must deal with, its an issue they could dealt with either before july 1 simply put of and deal with next year.

Basically what the state would do at its most drastic if it did intervene with muncipal pension funds would be to set targets for funding levels for not just Philly's but say York's and Reading's pension funds. And those targets would likely phase in. Like by 2015 everybody has to get to 65% funding, 2020 80%, etc. And there is no logical reason the State Senate could not have dealt with this in May or June or even deal with this just as effectively in February.

So even if I am conservative State Senator from NW PA gravely concerned about the health of Philly's pension fund for some reason - realistically - #1) I blew my chance for FY'09 because I didn't do anything between when the city budget passed in the beginning of May and July 1 and #2) there is no reason I could not take my time and set the targets for pension fund health to kick in for FY'10 -11 - especially considering FY'09-10 is already 1/6 over. It might make the city's budget for FY'10-11 a little tougher but it won't lay off 700 police officers and close every library and rec center just so I can make a show of wagging my finger at the city. If I actually cared about results in terms of pension fund health, there is no logical reason to force the city to Plan C.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Gotcha, thanks

Thanks for the reminder. I forgot about the July 1st deadline.

Everyone in the state legislature deserves blame on July 1

Because they percieve the deadline for the state budget as a mere suggestion, not as a binding deadline, they forget that they have set state laws to enforce that deadline for municipalities mercilessly. So Pileggi may have wanted for political reasons to hold onto the threat of the city budget too long in part out of stupidity rather than callousness. Like the letter to PICA saying "can't you just push back the rules while we stage a little show over pension fund health" last week. No, you might be Dominic Freakin' Pileggi but the laws binding PICA and the city do not get rewritten because you forget to cover your mouth when you sneeze. They are responsible to the July 1 deadline you have yourself failed to keep, whether they want it or not.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

missing timeline pieces

A few missing pieces of the timeline:

-The Mayor meets with Rendell, Neil Bluhm and others at a hotel in Denver to figure out how Bluhm can get his casino built on our riverfront.

-The Mayor flips on casinos due to pressure from Harrisburg politicians, most people suspect he flipped to support casinos in order to get support from Harrisburg politicians for budget needs. That worked out great.

-Rob Dubow comes up just 0.06% short of the 2.0% revenue reduction in revenue that would enable the City to raise the wage tax to close the budget gap (where does that stand now, seems like we may be way over 2.0% or is the sky not falling?). It was suspicious that the City was so short of the mark then, seems even fishier now.

Excellent! And you should add more.

The only thing I really regret is not going more after the vampiric force that is the Eagles. They were bad enough but now... mauled dogs AND a city going broke!!

As I understand the law

Since the legal deadline for the budget is July 1, the deadline for the 2% drop off in the wage tax provision in Act 71 was set for July 1. For FY 09-10 it doesn't matter if we go over the 2% after the budget was legally required to be passed. And we didn't clear the 2% on time.

If thats legally incorrect, anyone, please holler. Thats based on news accounts, not a careful read of the applicable statutes.

The worst, most ironic part is that if the State Senate botches it and we do go to Plan C the city is a large enough employer that the wage tax loss from the 3,000 city workers who will be laid off - as well as various other city contractors - will likely easily put us over the top - but too late for the requirements of state law.

Good point on how little cooperation was bought from State Senate Republicans by playing ball with Rendell on casinos, however. But of course, its basically a fight between Rendell (who supports casinos) and State Senate Majority Leader Dominic Pileggi (who supports casinos) so I'm not sure its fair to say there is an anti-casino dog in that fight, if thats the only issue you care about.

And then you have Philadelphia state reps like Mike O'Brien who are so eager to show they are even more pro-casino than Nutter, they push bogus scenarios saying the city shouldn't get the sales tax till the casino gets built - even though the numbers and the timeline don't add up in terms of the city budget. Basically from a strictly anti-casino perspective, the majority of Philadelphia's own delegation to Harrisburg sucks and the majority of the rest of the state is worse. And the courts have basically said in terms of gaming state law trumps the city.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Plan D

Since the distinguished gentleman from Chester seems intent on ensuring Philadelphia starves to death...

I think it's only fitting if the City returned the favor by filing for Chapter 9 bankruptcy, which would generate a constitutional crisis in Harrisburg. The knee-jerk reaction from HBG would be to try to get the petition filed by the City of Philadelphia dismissed with the argument that the City does not possess the soverignty to do so and showing EVIDENCE to a Federal BK judge that HBG is solely responsible for the City's re-payment obligations.

That would immediately throw ALL of PA's state bond issues (in every single county) into junk status by the credit rating agencies... because Harrisburg would be demonstrating its clear resolve not to exercise fiduciary responsibility before the investing public.

Can't wait for that drama.

Or Pileggi could let go of the death grip on the city

and he and Rendell go back to bashing out the state budget pissing match they should have settled months ago without putting the lives of Philadelphia citizens at risk. Seems like a reasonable thing to ask if Pileggi is currently receiving $47 million in state aid straight to his hometown for a subsidy to a pro sports franchise called "The Philadlephia Union". A pro sports franchise, BTW, that the last guy Pillegi had appointed to run Philadelphia's school district (and who also of course is a big Chester GOP fundraiser) just so happens to be a co-owner of. Quite a coincidence, no?
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

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