A budget that benefits the bureaucracy

Paul Davies is deputy editor of the Editorial Board

WARNING: The following is filled with sarcasm. Some of it biting. But the numbers are real.

After months of very earnest budget sessions designed to make the public feel good about paying even higher taxes for fewer services as per the requirement to be a Philadelphia resident, Mayor Nutter managed to trim spending next year by almost 3 percent.

The budget slashing spared no one. Some top cops had to make hard choices, such as which of their two city-issued cars to give back: the unmarked sedan or the cruiser with flashing lights.

The ever loyal Ron Donatucci, the register of wills for the last 30 years, volunteered to turn in his city car and ordered all of his committeemen and ward leaders - er, employees - to stop reading newspapers, making personal calls, and eating at their desks.

This is getting serious. The belt-tightening is even putting a crimp on City Council.

Nutter wants Council members and other elected officials to give up the six-figure pension payouts from the lucrative retirement program called DROP. Unfortunately, this reform doesn't apply to the Council members and other elected officials already in line for the perk.

Nutter also is chasing down tax deadbeats. Already, more than $1 million has poured in. He even drew up a list that includes former Mayor John F. Street's brother, Milton, who owes $383,000 in back taxes. Maybe Nutter can garnish the wages Milton is earning in federal prison.

On the bright side, Nutter's budget doesn't lay off any police or fire personnel. He plans no reduction in emergency medical services.

All the fire stations, rec centers, and after-school programs will remain open. Repeat: The libraries will be open, so please refrain from filing any more lawsuits.

Even the trash will continue to get picked up once a week at no extra charge. Well, there will be some extra charges - at least for the homeowners who are too poor or too dumb to move to Lower Merion.

Nutter plans to raise property taxes in fiscal 2010 by a mere 19 percent. But the year after that, property taxes are going up only 14 percent, so that's practically a cut.

Nutter says the property-tax increase is "temporary" and will go away after two years. If you believe that, then you probably supported the Sterling Act.

That's the state law passed in 1939 that gave Philadelphia the authority to impose a temporary wage tax to cope with the Depression.

Seventy years later, the wage tax continues to chase away jobs and residents by the thousands. One can only hope the increase in property taxes won't have a similar effect on the already slumping housing market.

Almost forgot to mention - Nutter also wants to raise the sales tax 14 percent. That hike is expected to cost a family making $50,000 a year an additional $115 annually. But the sales-tax increase is also "temporary" and is expected to go away after three years, provided the state will even allow it.

The two tax increases combined - some of the biggest since the 1970s - are projected to bring in an additional $613 million in revenue during this temporary period. All other business-tax cuts have been suspended until fiscal 2015, which will add $230 million to the city's coffers.

That $843 million combined will cover the biggest chunk of the projected $1.37 billion budget gap over the next five years. Much of the remaining savings will come from city employees.

Nutter didn't budget any money for salary increases for workers. He's looking to save at least $125 million in health insurance costs when he negotiates a contract with the city unions this year. City workers may even have to contribute a few dollars more to their health insurance, like everyone in the private sector.

A change in the pension plan - essentially stretching out pension payments from 20 to 40 years - is expected to save the city $330 million over five years. That measure also needs state approval.

So what about savings through increased efficiencies? Surely, the reform mayor found some fat in a city budget that has grown 40 percent since 2000. Indeed, the $4 billion budget projects $13 million in annual savings through increased efficiencies. Almost 1 percent!

(To be fair, the administration did implement $39 million in savings through efficiencies last year and plans to generate more than $300 million through cuts and increased fees.)

So there you have it, folks. To recap: The budget shrinks about 3 percent. Property taxes jump 19 percent. The sale tax goes up 14 percent. Business-tax cuts have been suspended for the next five years. The city workers get no raises and give up some health and pension benefits.

But most important of all, it looks as if the City Hall bureaucracy is going to survive. And isn't that what really matters most in Philadelphia?