Mayor Jim Kenney on Thursday delivered Philadelphia’s first-ever virtual budget address, offering an optimistic view of the path forward for a city jolted by the pandemic and torn by gun violence, and outlining his proposal for how to navigate recovery over the next year with the help of millions in federal aid.
“The combination of a global pandemic, a tumultuous presidential election, a worsening gun-violence epidemic, and long-overdue demands for racial justice have tested the resolve and resilience of every single Philadelphian,” Kenney said. “We’ve experienced a great deal of loss. We lost loved ones, many lost their jobs, and others lost businesses they worked years to build. But I, for one, have never lost hope — hope for our city’s ability to rebound, hope for our capacity to overcome, and hope for an eventual return to all that makes Philadelphia great.”
Last year, Kenney gave his fifth budget address — Philadelphia’s version of a presidential State of the Union — in City Council chambers in March, just before the pandemic took hold. That $5.2 billion proposal hit the trash bin weeks later, as the administration revised its plan to fill a $750 million budget hole ripped open by the pandemic.
Council, meanwhile, began meeting virtually last spring. In the end, lawmakers agreed to a $4.8 billion spending plan that included layoffs, service cuts, and some tax hikes.
Kenney’s $5.2 billion budget proposal for the fiscal year beginning July 1, which became public Wednesday, uses $575 million from the federal coronavirus relief package to begin the process of returning Philadelphia to normal. It would restore some spending cuts made last year and resume scheduled reductions to the wage and business taxes that were paused for the pandemic.
The mayor prerecorded his address from his office Wednesday, and it was played for Council on Thursday morning. The speech marked the beginning of budget season in City Hall. Lawmakers and the administration must come to an agreement on next year’s budget, as well as a five-year financial plan for the city, before the end of June.
Although Kenney aimed to lay out a course for the city in the post-coronavirus era, Thursday’s meeting offered plenty of reminders of the pandemic’s continued grip on the city. Councilmember Kendra Brooks, who recently tested positive for the coronavirus and said she was experiencing moderate symptoms, was absent from Thursday’s meeting. She is the second Council member to become infected with the virus, after Mark Squilla, who recovered from an infection in December.
Kenney’s budget proposal would allow city pools to reopen this summer, and it would return the Free Library system to five-day-a-week service. The plan calls for $1.4 billion in city funding for the School District over the next five years.
It also restarts Kenney’s efforts to bring street sweeping back to Philadelphia, with a plan to spend $62 million by 2026, and boosts the Community College of Philadelphia, a major second-term priority. Over the course of the administration’s five-year fiscal plan, which Kenney unveiled alongside the budget, the city will send $250 million to the school, including $54 million for the mayor’s Octavius Catto Scholarship, which aims to help disadvantaged students enroll.
“This initiative will enable 5,000 first-time students to attend college tuition-free, and with the supports they need like food, books, and transportation stipends to successfully earn their degree,” Kenney said.
Several Council members have said Kenney’s proposal was not bold or imaginative enough to meet the moment.
“Winston Churchill had a great quote: Never waste a great crisis,” said Councilmember Allan Domb, who is pushing for an overhaul of the city’s tax structure. “This is a tremendous opportunity, probably once in our lifetime, to change the direction of our city.”
Councilmember Derek Green said the city needs to do more than Kenney is proposing to provide job opportunities for young people who may become involved in gun violence.
“We need a bolder vision on how we are going to use these dollars,” Green said. “Today’s address was a good start.”
Councilmember Katherine Gilmore Richardson, who chairs the Committee on the Environment, said she wished Kenney had made climate change a focus of his address. (Kenney, who has many times spoken on the need to address climate change, called for a $1 million effort to improve air-pollution oversight, but on Thursday he did not address global warming directly.)
“I was disappointed that there was not a single mention of climate change in today’s budget address,” Gilmore Richardson said in a statement. “While the Mayor has made significant commitments to reducing our greenhouse gas emissions, achieving zero waste, and protecting our natural resources, we must integrate this work into all City operations and understand how our decisions today will impact our resiliency tomorrow.”
Councilmember Helen Gym said that while she and Kenney shared the same values on budget priorities, she would like to have seen a bolder proposal, including more support for students who have been out of school buildings for more than a year, investments to modernize public transit, and increased spending on housing and safety instead of tax cuts.
“The relief money that was provided to us by the American Rescue Plan is unprecedented and every dollar of that money should go toward relief,” Gym said. “It was not meant to subsidize taxes, especially for corporations.”
A coalition of progressive groups presented a “people’s budget response” shortly after Kenney’s address, mimicking the televised response to the State of the Union that is usually given by a member of the party that does not hold the White House. The groups called for the city to cut the police budget instead of keeping it steady as Kenney does in his proposal, and to increase taxes on wealthy Philadelphians and corporations to pay for expanded city services.
“This budget barely gets us back to pre-pandemic status quo. That was already an austerity budget‚” said Nicolas O’Rourke, Pennsylvania organizing director of the Working Families Party. “Cutting taxes is a backwards idea that only serves the political expediency of Mayor Kenney without considering the long-term future of Philadelphia.”
The Chamber of Commerce for Greater Philadelphia backed Kenney’s tax-cut schedule.
“We believe that investment in neighborhood economic development, regulatory simplicity, and a less burdensome wage and business tax regime in an equitable model are imperative to making Philadelphia a true magnet for business and employment growth,” Liz Ferry, the chamber’s vice president for state legislative affairs, said in a statement.
Despite the federal aid and new investments, the city’s finances are still in perilous shape. The city’s “fund balance” — the amount of unspent money projected at the end of each year — would be $109.3 million next year under Kenney’s plan, or about 2% of spending, leaving little wiggle room if the city faces unexpected costs. Government finance experts recommend cities carry fund balances of 17% to prepare for calamities.
“Cities with that level of fund balance didn’t have to make the painful choices we did in the face of the pandemic. They had reserves to draw on,” Kenney said. “Philadelphia must build back toward fiscal resilience to be able to support and serve our residents through the next disruption, whatever it may be.”