Faced with a crushing fiscal crisis, Mayor Nutter has put forth a city budget that tries to maintain services and government jobs, while raising some taxes and trimming spending to plug a five-year budget hole of almost $1.4 billion.
Getting this budget passed won't be easy. Nutter needs support from four tough constituencies - City Council, the municipal unions, state lawmakers, and taxpayers.
To balance competing interests, Nutter has tried to spread the pain. As such, he is likely to make no one happy. But give him credit for trying to make the best of a bad situation.
For starters, there are no major service cuts. And no layoffs for police, fire, and emergency personnel. Nutter says it is important to preserve jobs and maintain services for the most needy during tough times.
To pay for services in the face of slumping revenues, he is calling for some big tax hikes. He wants to jack up property taxes 19 percent in the coming fiscal year and another 14.5 percent the following year. Those moves could bring in an additional $271 million over two years.
The property tax hike is sure to anger struggling homeowners watching their property values decline. Some City Council members have already voiced opposition to raising property taxes in a recession.
While Nutter has said the increases would be temporary, that's hard to believe in a city that's heard that before. More spending cuts and efficiencies would be preferable. Philadelphia already has one of highest overall tax burdens in the country.
Nutter's proposed $3.8 billion budget trims spending by just under 3 percent compared to last year. But the savings through efficiencies is only $13 million a year. He can do better than that. Overall, Nutter's five-year spending plan saves more than $300 million through cost cuts and fee hikes.
The mayor has done a good job of going after irritating government perks like assigned city cars and the DROP retirement program for elected officials. He's also chasing down tax deadbeats.
The savings are small, but these moves send the right message about changing the way City Hall operates.
Nutter has also proposed raising the sales tax by 14 percent. Increasing the sales tax rate from 7 percent to 8 percent is expected to bring in $342 million over three years. The measure - which needs state approval - is also designed to be temporary, going away after three years.
Some state lawmakers aren't inclined to raise the sales tax to help Philadelphia. But unless the state is willing to help out in other ways, lawmakers should back Nutter on this reasonable request in a crisis.
Even better, lawmakers could also start paying the $100 million a year that the state is supposed to provide to run the Philadelphia courts. This isn't too much to ask, considering the state Supreme Court ordered the state to do so 20 years ago.
Nutter also needs state approval to spread out the city's pension plan payments from 20 to 40 years, which could save the city $331 million over the next five by lowering the payments. The state seems more inclined to back this measure.
The toughest fight for Nutter will be with the municipal unions. Nutter has set aside no raises for city workers for the next five years. He aims to clamp down on two fast- growing costs in the budget: health insurance and pension benefits.
The mayor is right to rein in employee costs, which eat up 60 percent of the budget. The unions don't want to hear it, but their health and pension benefits are gold-plated and unaffordable, given the city's soaring costs and shrinking tax base.