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 Steve Wray, the Executive Director of the Economy League of Greater Philadelphia.

As the City of Philadelphia grabs headlines with another projected deficit, let's not forget that the fiscal strain is being felt just as strongly by other local governments across the region. Bucks, Delaware, and Montgomery counties are wrestling with how to deal with $7 million, $10 million, and $11 million shortfalls next year for budgets one-tenth the size of Philadelphia's. Not to understate the challenges that Philadelphia faces, but things are tough all over.

Given the spending and workforce reductions that Philadelphia already enacted this year, finding another $31 million won't be easy. The City could take on any of a range of service reductions proposed in previous "doomsday" budget scenarios (e.g., limiting hours or closing branch libraries, recreation and health centers; reducing trash collection) as several other cities have done. A couple of other thoughts on how to fill the FY '10 gap:

  • Mayor Nutter has required five furlough days for some non-union employees – how much more savings could be achieved by further cutting back work schedules? Last year, Atlanta required all employees to work four fewer hours per week, resulting in a 10 percent reduction in pay – with no decrease in overall worker output (as reported by the City of Atlanta). Many cities have used discussion of short-term furloughs as leverage to achieve wage and benefits concessions from city unions.
  • The City has an ambitious set of cost-savings measures included in its Greenworks sustainability plan. How much of the proposed energy efficiency savings could be fast-tracked to occur this fiscal year?

The most important thing that the Mayor can do to shore up economic growth over the long run is to embrace the central idea of his Task Force on Tax Policy and Economic Competitiveness: the shift from mobile (wage and business) to immobile (property) tax bases. Business leaders, policy wonks, and city officials alike have long known that this is the key to stopping the self-inflicted damage that Philadelphia suffers from placing too high a levy on jobs. With the Board of Revision of Taxes ceding control of assessments this week, the Mayor and City Council are perfectly positioned to spend the next two years restoring confidence in the city's property tax system so that they can tackle this politically volatile but necessary change following the 2011 election.