WHEN MICHAEL NUTTER took office in January, most thought his big test would be the soon-to-expire union contracts. How would the staggering amount of money needed for pension and benefits affect the city, and the new mayor's agenda?
But as we should know by 2008, the biggest challenges are the ones no one sees coming.
And so, as finance ministers of the world's most powerful countries met over the weekend to solve the worldwide banking crisis, we trust the mayor and his advisers were similiarly hunkered down to try to resolve the crisis facing the city: a budget gap that seems to be getting bigger each week.
In September, Nutter announced that faltering business tax receipts were about to create a hole of at least $450 million over five years. Last week, he said the gap could be almost double that, and announced freezes on nonunion bonuses and across-the-board department cuts. A fuller plan is due at the end of the month.
The city is not only seeing less tax revenue, but it is staring down a frozen municipal bond market that seriously inhibits the city from making the routine loans it usually gets to cover cash flow gaps and fund initiatives. (See Page 21 for more.) And the market has temporarily killed the pension obligation bond that was to inject money into the city and fund more of the city pension plan.
A shortfall of at least $850 million over five years brings back disturbing memories of tough times for the city. We can take some comfort from the fact we're not alone, but that comfort doesn't last long considering how long the global crisis could last.
Righting the ship is going to take some hard choices, including cuts that may be unpopular. As Nutter said last week, everything is on the table, including services.
But we hope the larger strategy for dealing with this is not death by a thousand cuts, but a radical realignment of our government to be more productive and cost-efficient.
This is the moment we elected Nutter for: not only to right the ship, but to use this crisis as an opportunity to remake our government. Nutter and his team have already embarked on the idea of "outcome-based budgeting."
We hope he continues to stay out front on this, and involve more voices than are usually involved in budget-making. City Council will need to focus on the big picture instead of the smaller issues they love (foie gras, anyone?) But the public also needs to be involved, because this ultimately is a conversation about who we are and what we value as a city. What is most necessary, and what's at the edge of necessary?
If casino revenue lets us keep libraries open, should we shift course and get them open? Who's going to have the guts to make the first move toward full valuation of property taxes? Are our services in line with the size of our city, or the size of our past?
What are you willing to give up? Your rec center? Your fire house? Town watch? Neighborhood health centers? Think about the five most important city services to you. Suppose you get to keep four. Which would would you compromise on? (We really want to know; send us your comments to the address on the letters page, or post them on www.ourmoneyphilly.com)
None of this is going to be easy. But this is the mayor's moment to show us he's not afraid to do the hard stuff . . . as well as the new stuff, like rethinking how the city operates.
The city stared down bankruptcy in the '90s, but came back as a better place. This is one of those redefining moments: a crisis, to be sure. But also an opportunity.*