It's Our Money is asking various experts and advocates to share some suggestions for how the city should deal with the $31 million deficit it has projected for this fiscal year (and remember, because it's the middle of a fiscal year, the city can't raise taxes). This recommendation comes from Sharon Ward, Director of the Pennsylvania Budget and Policy Center.
Philadelphia is not unique in having a mid-year budget deficit. In many cities and states, revenue has failed to meet expectations, and cities like Philadelphia have been particularly hard hit by the recession, with higher-than-average jobless rates.
The city should avoid staff layoffs and service cuts to deal with the deficit. Putting more people on the unemployment rolls will only worsen the city's economy and take more money out of the hands of Philadelphia businesses.
This is a short-term problem that needs short-term savings. The city should cut discretionary programs that can be put off for a few years. Some cities and states have used brief staff furloughs – one or two days – to find savings without jeopardizing services. Furloughs would not be ideal for Philadelphia, but they're better than layoffs.
Over the long-term, Philadelphia has to improve its revenue base. Let's take back a portion of the hotel tax: In these times, do we need such a robust dedicated fund for tourism marketing? The 10-year property tax abatement has to be reformed, too. Every other city (except Detroit) enjoyed a major housing boom during the past decade without having to give up property tax revenue. Philadelphia should also expand its wage tax base to include unearned income, as the school district does. Finally, the city needs a dedicated rainy day fund to help it weather future economic downturns.