Phila. given Monday deadline for budget plan

The state-created agency that oversees Philadelphia's finances yesterday gave the Nutter administration a drop-dead date - Monday - to submit a 2010 budget and five-year spending plan for review.

The action is significant because it will almost certainly require the city to hand in spending plans that remain substantially contingent on legislative action in Harrisburg. The city is awaiting state lawmakers' approval on two key funding proposals - including a plan to raise Philadelphia's sales tax - but there is no guarantee that approval is likely, or that it would happen in the next several weeks.

Until now, the Pennsylvania Intergovernmental Cooperation Authority had anticipated that the city would provide it with two budget proposals: one assuming lawmakers' approval of the two proposals, resulting in hundreds of millions of new dollars in revenue for the city; and another anticipating rejection in Harrisburg, accompanied by deep, detailed spending cuts to make up for the lost revenue.

That line of thinking seemed to change yesterday. In an intense 75-minute discussion during its regular monthly meeting, the five-member PICA board expressed concern that the city might not be ready to submit the contingency plan before the fiscal year ends on June 30. If so, members worried they might be out of compliance with their own statutory rules, which call for a spending plan to be provided by that time.

"I can't see how we don't have some responsibility to do a review of the city's financing plan before the start of the fiscal year," board member Michael Karp said. "You can't make an opinion after the fiscal year starts; that would seem to contradict the process."

Finance Director Rob Dubow was absent from yesterday's meeting; he was with Mayor Nutter in Harrisburg lobbying for the city's funding proposals.

But Judi Cassel, Dubow's chief of staff, told board members she was uncertain when the city's contingency plan would be completed and ready to be shared with PICA. Asked several times, she declined to commit to a June 30 deadline.

"I'm not dying to get this plan, but we have to follow the law," said PICA chairman James Eisenhower.

Once the city submits a plan, PICA would have 30 days to approve or reject it.

Under the current plan, that means PICA would have until July 22 to act - which could be problematic if the state still had not voted on the city's proposals.

Besides raising the sales tax by 1 percent, to 8 percent, for five years, the city wants to delay two years' worth of payments into its pension fund, and increase the number of years, from 20 to 30, that it has to pay its obligations to the fund.

Without those proposals, the city budget will have a $260 million hole in the next fiscal year, and a $400 million-plus hole in the next two years, said PICA executive director Uri Monson.

Even so, Monson said he would probably recommend that the board reject a city spending plan that included a sales-tax increase if Harrisburg had not yet acted. "It's not a reasonable assumption that the revenues are real," he said, noting such a plan would be based on factors outside the city's control.

In response, PICA members, who are appointed by the governor and Democratic and Republican leaders in the House and Senate, said they would ask their appointing authorities whether they should vote on a budget that relies heavily on legislative action.

"It's not a clean situation," Bill Richter, PICA's general counsel, said. "A clean situation would be to get everything completed before the end of the fiscal year."