Mayor Nutter will announce drastic new steps today to close a $1 billion gap in the city's five-year budget, including the closure of 11 of 54 branch libraries and dozens of city pools, a freeze on tax reductions, reduced hours or programs at more than a dozen recreation centers, and fewer engines at some firehouses, according to sources familiar with his plans.
Until now, Nutter had estimated the budget gap at up to $850 million. "At $850 million, it continues to grow," he said last night.
To address the even bigger figure, scheduled city-funded cuts in the business and wage taxes will be frozen until fiscal 2015, although wage-tax relief from state casino revenue will be unaffected, said sources who spoke on condition of anonymity because Nutter "embargoed" the information until today. Layoffs are anticipated.
All city departments will be hit, and some, including the Free Library, the Department of Recreation, and the Fairmount Park Commission, are in line for 20 percent budget reductions, the sources said. Mechanical pickup of leaves will end, forcing homeowners to bag leaves, but that change is not expected immediately. Free bulk-trash pickup, including refrigerators and other appliances, will end. Many side streets will go unplowed unless at least 12 inches of snow is on the ground.
Nutter will announce the cuts at noon in a live 10-minute television address on 6ABC, a highly unusual move that underscores the severity of the city's fiscal crisis.
"This will be a very painful experience for all of us, both in the public and in the government," said Nutter, who in recent weeks has warned Philadelphians that "sacrifices" were coming.
"There's been a lot going on with the World Series, the presidential race. . . . But I think folks know that we are in a crisis situation."
Veterans of city budget crises said residents should brace themselves for some very bad news.
"Michael, as a responsible executive, is going to have to stand up and make some very, very tough announcements," said Comcast Corp. executive David L. Cohen, who was Mayor Ed Rendell's chief of staff when the city faced bankruptcy in 1992. "This is not a budget address. It's not a fireside chat. It's not a radio talk. . . . You need to send a signal about how serious this is."
Nutter previewed the cuts last evening in a four-hour-plus private meeting with City Council and other administration officials. An armed guard barred reporters from the room.
An attorney for The Inquirer and the Philadelphia Daily News filed a complaint in Common Pleas Court yesterday, arguing that mayoral meetings with a Council quorum violate the state's open-meetings law. Nutter and City Solicitor Shelley R. Smith strongly dispute that view. The court will hear the newspapers' complaint this morning.
Nutter first warned Sept. 11 that the weak economy had knocked his budget off-track. At the time, the budget gap was estimated to be at least $450 million. That figure has more than doubled as Wall Street melted down and the U.S. economy slowed even further, sending city budget officials scrambling to adjust.
"The city's budget is a mess," Cohen said. "It was a mess when Michael Nutter ran for mayor. The recent financial meltdown has exacerbated it and probably accelerated it by a year."
The Free Library cuts are a particular surprise because Nutter, then a councilman, and Councilman Frank DiCicco led a crusade in 2005 to save library funding the last time the city seriously tightened its belt. The effort landed Nutter and DiCicco on the cover of Library Journal, which called them the "politicians of the year."
Although a $1 billion gap is less than 6 percent of the city's projected spending over the next five fiscal years, the structure of the city's budget sharply limits where Nutter can cut.
More than half of city spending is essentially nondiscretionary, going toward big-ticket items such as pension payments, debt service, and federally matched social services.
In effect, that forces virtually all the budget pain onto less than half the city government.
The cuts, however unavoidable they might be, seem likely to make it hard for Nutter to achieve some of the big goals he established for his administration when he took office in January, such as halving the dropout rate, doubling the college-degree attainment rate, and changing the tax structure to encourage job creation.
Nutter's team has also had precious little time - just two months - to draw up a completely new spending plan, all while fielding savings suggestions from Council members, union leaders, and other elected officials. Yesterday, City Controller Alan Butkovitz proposed selling the city health center at Broad and Lombard Streets for $6 million. (Nutter said doing so would be harder than it might appear.)
And Nutter must break the bad budget news to a city that has been far more interested in the Phillies and President-elect Barack Obama's victory than municipal finances. Everyone knew the city faced bankruptcy when Rendell became mayor in 1992; this time, there is no comparable sense of urgency outside City Hall.
Nutter at least has plenty of company, as cities across the country must react to plummeting tax revenue. Just yesterday, New York Mayor Michael Bloomberg announced 3,000 job cuts, including 600 layoffs; the rescinding of a 7 percent property-tax cut and a $400 property-tax rebate; the cancellation of a new class of 1,000 police officers; and a reduction of average library hours from six days to 51/2 days a week.