Mayor Nutter and City Council: Before your budget destroys so much, I have a few questions

First, the sad, sad news:

Mayor Nutter will announce drastic new steps today to close a $1 billion gap in the city's five-year budget, including the closure of 11 of 54 branch libraries and dozens of city pools, a freeze on tax reductions, reduced hours or programs at more than a dozen recreation centers, and fewer engines at some firehouses, according to sources familiar with his plans.

Until now, Nutter had estimated the budget gap at up to $850 million. "At $850 million, it continues to grow," he said last night.

To address the even bigger figure, scheduled city-funded cuts in the business and wage taxes will be frozen until fiscal 2015, although wage-tax relief from state casino revenue will be unaffected, said sources who spoke on condition of anonymity because Nutter "embargoed" the information until today. Layoffs are anticipated.

All city departments will be hit, and some, including the Free Library, the Department of Recreation, and the Fairmount Park Commission, are in line for 20 percent budget reductions, the sources said. Mechanical pickup of leaves will end, forcing homeowners to bag leaves, but that change is not expected immediately. Free bulk-trash pickup, including refrigerators and other appliances, will end. Many side streets will go unplowed unless at least 12 inches of snow is on the ground.

Less libraries. Less places for kids to stay off the streets. Huge reductions for Fairmount Park.

Welcome to Philadelphia.

So, before City Council and the Mayor gut these programs, there are some questions I would like to know about the budget. (If the media gets through the security guards, maybe they can ask him?)

1) How realistic are the economic projections for the five years the budget is based on? Bill Green and others asked, when we passed a sugary sweet budget just months ago, why we weren't taking into account the slowing economy. Well, is the reverse happening now? In our budget, are we assuming that the economy will not recover in the next five years?

2) Does the budget take into effect the likely aid that is coming from our President-elect? Reports indicate that- even potentially before Obama takes office- there will be an economic stimulus plan that includes direct aid to states and to cities. Before we shutter all these libraries, shouldn't we make sure that the aid we will get will not significantly reduce these deficits?

3) Why is patronage taking precedence over libraries? How much money can we save, for example, by eliminating row offices like the City Commissioners? We will have more soon on the failure of the City Commissioners office in this election, but can someone honestly tell me, as we look for 'fat' in City Government, why we still pay three elected officials to do a job they are ill-suited to do?

I am not suggesting laying off Commissioner Office staff, but, how much money can we save, right away, by replacing the top levels of that office with a single administrator, who is an expert and who answers directly to the Mayor? If it takes a charter change to do it, why not ask Philadelphians what they think? (I am pretty sure if the choice was a better run office, with less budget cuts, versus the current system which screwed countless people on Tuesday, the answer would be clear.)

Or, why do we need an elected Sheriff, who has chronically mismanaged the funds of his office?

4) I know taxes are evil and all that, so I will not ask about them.

5) How does this effect upcoming union contracts? If the unions were made to take one-year contracts when times were OK, should they be able to get one-year contracts when the budget is at an all-time low? What does this budget assume about their contracts?

6) How much money would be saved by folding the Redevelopment Authority into the Office of Housing and Community Development? Mayor Street started a housing agency consolidation to save the City some money. How is that working out? How come we don't take the final step, and put the RDA back into City government, too?

Those are just a few questions that, before the City destroys libraries and rec centers, might be worth asking.

Taxes aren't evil

Taxes are necessary but they should be fair and much, much smarter in how they are leveraged to encourage population and job growth so they attract more revenue over time, not less. I tend to think lots of people, including lots and lots of homeowners I know, would pay more taxes if they knew they were getting better schools, better public safety out of the deal and if small businesses weren't paying taxes on profits they never made but only paying if they actually made money, rather than lost it. Taxes should make it less profitable for real estate speculators to sit on empty buildings for decades waiting for someone else to fix up the neighborhood.

Figuring out how to consolidate the housing agencies and reduce legal costs is a great idea, Dan. Reducing the amount of property the city and particularly the RDA is carrying in its substantial portfolio of unused buildings and land not slated for any project in particular is another. My impression is that the RDA is a bigger fiscal mess than any of us know and that getting it back on sound accounting practices is a challenge at this point, much less completing the merger with OHCD. And of course when one asks "why?" you have to give the real answer, which in part is that the RDA exists in its present form to give district council seats power they were never given in the City Charter and many of them would prefer if that power were not transfered to the mayor.

I'm not sure how much the city can budget for shortfall right now on financial help from an Obama administration that isn't even sworn in till January 21 and would still have to make it through Congress. no doubt with substantial changes along the way. Plus there is that little business of not just fleshing out the bail out but the design of a brand new regulatory scheme for the financial derivatives market - you know not just stopping the damage but actually changing the piss-poor regulatory scheme that was the root cause of the damage in the first place. For better or worse cities are in it on their own largely till 2010 as I see it.

Another huge, huge hole in the city's budget is the cost of holding so many people in city jails while they await trial. I'd point to that as an area where being smarter about prioritizing who we hold onto and who we track into day reporting/drug court/ GPS anklets etc. could make a huge difference in terms of the budget, while hey just coincidentally being more effective at turning the tide on recidivism.

Maybe it really is time to finally sell off PGW, while we are at it.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

humor

My humor defender self is absolutely insisting that I point out here, Sean, that point 4 was a joke (and a pretty sweet one at that, Dan). Hopefully you got that. I just gotta say it in case anyone else didn't get it.

I don't like the idea of selling PGW either, for the record. In fact, I'm with Lance Haver: we should start a new electricity generating authority and create some sort of competition for PECO to help us leverage against them in the coming deregulation.

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This Too Will Pass, for the guts in your cerebrum.

A joke of course

But jokes are always a good way to sneak in a jab so I thought I would respond substantively with this - maybe then the typical back-and-forth over incremental cuts on certain taxes that both sides basically agree are badly implemented, maybe its time to make that (*gasp*) bold step of talking about the whole package. Aiming biz taxes at profits not gross receipts, talk about really fixing the loopholes. Talk about how much is fair to expect real estate taxes to carry and why the system works against encouraging people to put units of more affordable housing back (once rehabbed) on the market instead of holding onto them in pertpetuity till the city gets to condemn them and tear them down at taxpayer expense.

Jokes aside. Now might be the time to get past the bickering over an old flawed approach and to talk about about really get down to business about brand new, more fair one.

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

Oh and that 10 year tax abatement

How about we scale that back and aim it planned development with definite community devleopment goals, like say along transit corridors, instead of to every developer in town.

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

All good, but how much?

Dan,

I don't know that your ideas for saving money would save all that much money but they are worth doing anyway. There's a lot of excess salaries in the City. I couldn't believe that we're paying city council staffers $90K (what I learned from the Wilson Goode drama).
Still, I probably doesn't add up to much in light of the whole government.

The Sheriff really, really, really needs to go. He's just awful on every level. Go, go, go. Whatever it takes. Just go.

Your other questions, though, about economic stimulus and assumptions about the economy are really good ones, though.

Could it be that Nutter is using excessively low projections so that the cuts will already be made and when revenues improve he can use THAT as an argument to do the Business Privilege Tax Cut he's been dreaming of? That could be his plan, and it would really, really infuriate me if that's what he did.

It is a really smart strategy and the Mayor is a really smart guy.

1) Take advantage of a bad economy so people will believe you have to really shutter a bunch of stuff.
2) Shutter a bunch of stuff. Cut costs.
3) When Revenue improves say, "See, we have too much money; let's cut taxes."

It's much easier to cut taxes in the face of surpluses than it is with deficits. You can't cut taxes and cut services, but you can cut taxes if you're taking "too much" in. Of course, we'd only be taking "too much" in if we ended a bunch of programs now while times are bad.

Yes, this is pretty disconcerting, but how do we figure out how much we really do need to cut and then where do we do it?

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This Too Will Pass, for the guts in your cerebrum.

Part of the Sherrif's department is OK

Somebody needs to transport people around the criminal justice system but the attachment of that function to the auctioning of foreclosed properties always seemed bizarre.

And the bulk of traffic for that transport function is a direct result of major problems in the criminal justice system. We spend tremendous amounts of money housing and feeding people at $100 a head per day for 6 months or more while they await trial for non-violent offenses because they can't afford to make bail. This is a case where the wrong policy costs us millions and doesn't make us a lick safer.

Local jail reform for pre-trial detainment is the smartest single thing the city could do to save money tomorrow.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Looking for numbers

where costs cuts are not tied into service cuts. One would think, somehow, that there are ways to cut costs without cutting direct services to the community. Are we to assume that other components of city government are running at 100% efficiency? I'm not going to get into salary cuts, as I don't begrudge anyone their salaries. But where are the gains made from efficiencies - that can offset the budget deficit - delineated?

No just savings but revenues as well

The City is counting on a projected $70 million from casino revenues over 5 years, and has allocated $0 in costs. No one, including PICA which says the city incurs a "financial risk" by not including casino costs, thinks that's realistic or smart, esp. considering they're pushing it at Market East, an area that will cost the city the most because of its maximum exposure to residents, transit riders, youth and neighborhoods as well as ripple impact on a small business corridor.

Um, can elected offices be "cut"

I understand your anger at these austerity measures, and you arguably rightfully have an ax to grind with the City Commissioners. But can a city chief executive just "eliminate" offices held by elected officials?

Regarding sheriffs, yes there budget is mismanaged, but sheriffs do traditionally do important work re: criminal transport. Many other places have them with greater control over county jails as well, but I guess the city's guard program may be more cost effective. Lastly, I can only guess it's historical precedent, but sheriffs traditionally are involved in property seizures either through mortgage foreclosure or tax reasons. Now the rise in foreclosures stinks, but is that office buget getting an increase because of that arguable increased workload (which to also include homeowner education programs to prevent foreclosure/seizure)? Who else should be doing that job? Higher paid police taken off real crime investigation duty?

It's upsetting, but a "worst case scenario" budget may be in order here. If these projections are too pessimistic, and the city begins to operate at a surplus, I don't think we need to fear a perpetuation of a meatless skeleton of city services and tax cuts. These are obviously emergency measures, presumably Nutter, who seemed to always argue the city should "do more," if given the opportunity would restore or most optimistically expand city services.

Whose to say "evil taxes" aren't on the table. We do after all have apparently a "business responsiblity" oriented chamber of commerce leadership. Given that political fortune, I'd certainly be working with that leadership to float and negotiate a tax plan to increase business/corporate tax revenue. I would not make a bold announcement of raising taxes initially, basically setting fire to the negotiation table.

For the record, I always thought progressive politics was not reactionary. I'm learning that in Philly, things are a bit different, at least at the "youth" level.

No

Nutter cannot just do it. But he can ask Council to put in on the ballot for May.

PILOTS and a ditto on those 10 year tax abatements

I think it's time to also take a look at some serious PILOTS for a lot of the larger non-profits. Of course, I mean those non-profits that are massive corporations - UPenn, Blue Cross, for example.

I want to add my weight behind Sean's pitch for restrictions on the 10 year tax abatements. The Mayor has included no real new money for the schools over the next five years. In the meantime, the abatements have drained millions, tens of millions in fact, from potential property tax revenue for the schools - which is the only legally entitled funding the schools get.

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