Mayor Jim Kenney is kicking off his second term with a $5.2 billion budget proposal that continues the steep spending hikes that marked the first four years of his administration — including more money for education and services such as street sweeping — but holds the line on tax rates.
Overall, the proposed budget amounts to a 4.2% increase over the city’s original budget for the current year.
The largest spending increases in the mayor’s proposal, which he will deliver Thursday in his annual address to City Council, include $45 million for the School District of Philadelphia, $18.3 million for the Community College of Philadelphia, and $10.5 million for street sweeping, which Kenney has vowed to bring to every neighborhood.
Kenney’s budget plan calls for no tax rate increases, and small cuts to the wage and business tax rates. All of the city’s major taxes, however, are projected to collect more money next year thanks to economic expansion and population growth.
If approved, Kenney’s proposal would translate to a 29% jump in city spending since he took office in 2016, primarily driven by increases in the number of city workers. In response to criticism that the city could have instead used its recent fiscal success to cut taxes, such as Philadelphia’s highest-in-the-country wage tax among large cities, administration officials have said the spending increases were needed to make up for spending cuts following the 2008 financial crisis and to address deep-seated issues like poverty and gun violence.
“Any budget is looking at your priorities and making trade-offs. We thought the investments we were making would have a more positive impact on Philadelphians than a faster decrease in the wage tax,” Finance Director Rob Dubow told reporters Wednesday.
The mayor on Thursday will also propose accelerating scheduled cuts in the business tax, totaling $200 million over five years, Dubow said.
The mayor’s proposed budget includes $211 million more in spending than last year’s original budget. Because the city is projected to spend more this year than was originally approved by Council, the proposal amounts to a $118 million increase over the estimated current budget.
Administration officials have said they are preparing for a possible economic downturn, but the amount of money the city has set aside is well below what would be needed to weather a crisis on par with the last recession. The proposed budget leaves unspent about $316 million, or 6% of overall city spending. National municipal budget experts recommend cities set aside 17%.
Under Kenney, the city has also made its first-ever contributions to its rainy day fund, and set aside money for potential cuts in state and federal funding.
Given recent declines in the stock market due to the spread of the coronavirus, Dubow said the city has discussed possible strategies to protect the city’s pension fund, but no adjustments have yet been deemed necessary.
“The economy in general is clearly going to be impacted in some way by what’s going on with the virus,” Dubow said.
Council will analyze each major department’s budget in a series of hearings in the coming months. The city Home Rule Charter gives lawmakers until the end of June to approve the budget.
One sticking point in negotiations between the administration and Council is likely to be how to handle funding for a cash assistance program for impoverished Philadelphians.
Council on Tuesday unveiled an ambitious plan to pull 100,000 city residents out of poverty, headlined by a proposal to provide poor residents with a basic income. Kenney has proposed a significant expansion of the city’s rental assistance program, including pilot programs offering either monthly cash stipends or help paying rent to individuals living in poverty.
The stipend program would be similar to the concept of basic income included this week in Council’s poverty action plan and to a program in Stockton, Calif., which last year became the first city in the nation to offer basic income payments to some residents.
Kenney’s proposed budget also includes funding for all library branches in the city to open six days a week for the first time, and for the prison system to eliminate fees currently charged to inmates.
Kenney’s proposed six-year capital program for major infrastructure projects also includes $240 million for street paving, $60 million for improvements to Penn’s Landing and a proposed capping of I-95 to create a public space, a $50 million transformation of FDR Park in South Philadelphia, and $16 million for improvements to the Philadelphia Zoo.