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Who decides Philly’s budget? Here’s how the process works.

If you live or work in Philadelphia, the budget impacts your life because it determines how much money goes to every department that provides city services.

City Hall and the Benjamin Franklin Parkway as seen from the steps of the Philadelphia Museum of Art.
City Hall and the Benjamin Franklin Parkway as seen from the steps of the Philadelphia Museum of Art.Read moreMONICA HERNDON / Staff Photographer

Springtime is budget season in Philadelphia, when the mayor and City Council decide how the city should spend its money and whether to raise or cut taxes.

If you live or work in Philadelphia, the budget impacts your life because it determines how much money goes to every department that provides city services, including police, trash collection, and social services programs.

The annual budget also determines how much Philadelphia residents, businesses, workers, and visitors pay in various taxes for the following fiscal year.

Who decides what goes in the budget?

A new budget takes effect every year in Philadelphia on July 1, the first day of the fiscal year. The mayor typically presents a budget proposal to City Council in early March. For this coming fiscal year’s budget, which begins this July, the presentation was delayed until April 15 so the Kenney administration could factor in the impact of the new federal stimulus package.

» READ MORE: Kenney proposes reversing Philly’s pandemic budget cuts and reducing taxes, thanks to stimulus money

Once the proposal is in City Council’s hands, Council holds a series of hearings for every department, where officials testify and answer questions about their department’s budget. Council can make changes to the proposal, such as rejecting a tax hike or changing a department’s funding, but the budget and five-year financial plan must remain balanced.

City Council must approve a budget before the end of June, and typically does so after last-minute tweaks and negotiations with the mayor’s office. The mayor then signs the budget legislation into law.

How much money is in Philly’s budget?

The budget approved last year included $4.8 billion in spending. Mayor Jim Kenney’s proposal for the next fiscal year includes $5.18 billion. The size of the budget had increased for several years before the coronavirus pandemic, and Kenney proposed a $5.2 billion spending plan weeks before the pandemic shut down the city and he had to scale back his plans.

The budget adopted last June was based on an estimate that the city would have $4.6 billion in general fund revenue.

Where does Philly’s money come from?

Cities get most of their money from taxes, and Philadelphia’s wage tax is its biggest revenue source. The city also raises money from other taxes, including levies on property, business income, real estate transfers, and retail sales. The mayor and City Council can change tax rates each year when approving the budget.

Money also comes to the city from other city agencies, as well as the state and federal governments. Federal aid will play a significant role in the coming budget cycle, after the latest coronavirus stimulus plan provided $1.4 billion for Philadelphia. Of that money, half becomes available this calendar year and half will be provided next year.

What does Philly spend its money on?

There are two ways to look at the city’s spending.

The first is to examine the city’s expenses. Here’s what that shows you:

  1. Most of the city budget goes to personnel costs for municipal workers, past and present. About $3.1 billion, or 64% of the current $4.6 billion budget, goes to workers. That sum includes $1.8 billion in salaries and wages, $637 million in benefits, and $650 million in payments to the city’s pension fund.

  2. The next-biggest type of expense is for services the city hires contractors for, such as law firms that represent the city in court or security guards at City Hall who work for an outside company. The city this fiscal year is spending $949 million on contractual services.

  3. Part of the money goes to pay off the city’s debt. This year, Philly set aside $238 million for this.

The other way to look at the city budget is to see which departments or programs get more money. Looking through this lens, it’s clear that the main cost-driver is public safety, which accounts for the top four operational spending areas in the current budget.

  1. The Police Department is the biggest slice of the pie, with lawmakers allocating $727 million for it when the current fiscal year began.

  2. The Fire Department has a $307 million budget.

  3. Prisons got $253 million.

  4. Other criminal justice offices, including the courts, District Attorney’s Office, and public defenders, received $237 million combined.

How can I participate in the budget process?

The best way to participate in the budget process is to comment at one of the public hearings Council holds in the spring to examine the mayor’s proposal.

Council typically holds numerous hearings in which members grill administration officials on their departments’ performance and spending priorities going forward.

In some of the hearings, members of the public can call in to offer comments. Council will announce its hearing schedule some time after the mayor delivers the budget address on Thursday.

» READ MORE: Kenney had plans. Then the pandemic hit. Can he avoid lame-duck status and get Philly ‘back on track’?

This year, there’s a new way for residents to get involved, called participatory budgeting. This means that if you have an idea for a program or project that the city should pay for, you can submit your proposal, and it might come to fruition. The Kenney administration is setting aside $1 million in this year’s budget to fund initiatives proposed by people outside city government.

The city will be announcing its call for submissions soon, and the winning idea will be voted on in June.

Will Philly ‘defund the police’?

The “defund” debate promises to be a central theme of this year’s budget season.

Last year’s protests following the police killing of George Floyd were at their peak when lawmakers were in the final weeks of negotiating with the Kenney administration over a budget that had been reduced by $750 million due to the pandemic.

In the end, Council kept the department’s budget flat (instead of increasing it, as Kenney had originally proposed), and moved some funding to the managing director’s office for non-police personnel such as crossing guards.

» READ MORE: What does defund the police mean and what would it look like in Philly?

Councilmember Kendra Brooks voted against last year’s budget because it didn’t go far enough in responding to protesters’ calls for police reform. And others like Councilmember Jamie Gauthier say they can’t support a budget that doesn’t significantly invest in community-based antiviolence programs.

The issue hasn’t faded for progressive activists who say racist policing has made Black and brown communities less safe, but it’s unlikely this year’s budget will involve significant defunding. Neither Kenney nor Council President Darrell L. Clarke speaks favorably about proposals to significantly reduce Police Department spending, which would mean laying off police officers at a time when shootings and murders are taking place at a historic rate.

But both support investing in non-police antiviolence programs and agree that police officers shouldn’t be the ones to respond to certain emergencies, such as mental health crises.

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