Four big questions the city needs to answer in the next month ... or be left with no money to spend

by Doron Taussig

Published Jun. 1, 2011, 10:59 a.m. ET

If the city of Philadelphia doesn't pass a budget by June 30, the city can't spend money. And that means bad things happen. Workers and contractors don't get paid, and services don't get performed.

Today is June 1. The mayor and council have one month.

What are they waiting for? Before it passes a budget, the city needs to resolve these Big Questions.

Will the city give more money to the school district? The city's budget process was rolling along smoothly. Then last week, the school district marched into council chambers and requested between $75 and $110 million in additional funding. Otherwise, officials said, they'd have to cut vital educational services like full-day kindergarten. The School Reform Commission put some juice behind this threat last night by passing an "interim budget" that makes those brutal cuts.

You could argue the city should have been thinking about the district's budget troubles months ago. You could argue it is very convenient for the mayor and council that the issue has only come up now that the primary election is over.

You could also argue the cuts being proposed by the district are not, in fact, the best cuts the schools can make, and that officials are trying to bully the city into handing over the cash.

Regardless, the mayor and several council members have signaled that they intend to help the district. If they get their way, this brings us to our second question …

Where will the city get the money? This is the hard part about promising millions of dollars for education: It's got to come from somewhere.

The city could raise an existing tax, like the property tax. It could institute a new tax, like the sugary drink tax the mayor proposed last year. It could cut elsewhere in the budget and shift the money to the schools – although it should be noted that $100 million is a lot of money, more than the entire city sanitation budget.

As Catherine Lucey documents today, the mayor and council don't seem to be unifying around any one idea yet. Some hate the idea of cuts. Some hate the idea of a tax hike. Some are skeptical of the schools' request. This makes budget watchers nervous, because, again, bad things happen on June 30.

And speaking of June 30: If the city does go with a tax hike, it needs to pass it before then. Otherwise, it can only cut to come up with the money.

Will the city have any say in how its money gets spent? Council gives money to the schools, but it has very little control over the schools. This means Council could, in theory, pony up $100 million for full-day kindergarten … only to see it spent on Arlene Ackerman's Imagine 2014 program.

One of the things Council will try to figure out over the next 30 days is whether it can gain control in exchange for its money. Bill Green has asked for additional oversight powers. Others will be looking for ways to make sure the money the city turns over goes toward specific programs.

For instance: Could the city give the district money for full-day kindergarten, but transfer the money in pieces, on a quarterly basis? That way if the money goes somewhere else, the city can withhold the next transfer.

This would only work for the first year, however, because according to state law, once the city increases its contribution to the district, it has to keep matching its new, higher contribution, forever.

Is the district's budget gap really $610 million? As we noted earlier, there's some reason to believe that the district's budget situation might not actually necessitate cutting full-day kindergarten – it might be a scare tactic.

There's also reason to worry that the district's budget situation might be even worse than it sounds. The district is counting on $75 million in savings from renegotiating contracts that it may not get.

Council will need to consider these factors as it decides how much to give the schools.

That's four big questions for the next 30 days. We'll bring you explanation and commentary throughout. If you have specific questions you want answered about the city budget and the district debacle, post them in comments, or email itsourmoney@phillynews.com.