Mayor Kenney to request $5 billion spending plan with big investments in Philadelphia schools, public safety

As he seeks reelection, Philadelphia Mayor Jim Kenney is proposing a $5 billion budget built for the campaign, with no tax increases to irritate voters and new spending on education and public safety initiatives.

In his fourth budget address to City Council on Thursday, Kenney is expected to tout his administration’s first-term accomplishments while laying out a fiscal 2020 spending plan that should draw little controversy, unlike in 2016, when he proposed a soda tax, and last year, when a property-tax increase was on the table.

The city’s fiscal health is “stronger than it’s been for the last few years,” Finance Director Rob Dubow said Wednesday during a budget briefing for reporters.

“We still have a huge unfunded pension liability. We still have lower fund balances than the Government Finance Association recommends. We still have high fixed costs,” Dubow said. "So, there’s still a lot of challenges, but I think we’re headed in the right direction.”

Under the plan, the city would spend $270 million more than in the current fiscal year, and overall spending, at $5 billion, is more than 20 percent higher than when Kenney took office. A budget surplus of $368.7 million left from fiscal year 2018 allows the city to invest in new programs, budget documents show. And for the first time, the city has enough of a cushion to trigger a deposit of $34.1 million into its rainy-day fund.

Some of the higher spending is driven by an increase in disability payments for employees, an effort to pump more money into the pension fund, and higher recycling costs.

City officials are predicting that tax revenues overall will increase 4.58 percent, helping to generate $4.9 billion in revenue for fiscal year 2020.

Income from the sweetened-beverage tax, meanwhile, is expected to decrease. Kenney’s budget projects the 1.5-cents-per-ounce levy will raise $75.9 million in fiscal year 2020, almost $1 million less than the city expects to bring in this fiscal year, which ends June 30. The city has reduced its revenue projections and adjusted the programs it funds since the tax was implemented, attributing decreased revenue to a nationwide trend of slowing soda sales.

Using money from the city’s tax on soda and other sweetened beverages, Kenney plans to open five additional community schools in the next fiscal year, bringing the total number of schools with wraparound social services to 17. He would also increase the number of pre-K slots from 2,250 to 3,300. The city hopes to have 20 community schools and 5,500 pre-K seats by fiscal year 2023.

Under Kenney’s proposal, the wage-tax rate for Philadelphia residents would decrease from 3.8809 percent to 3.8712 percent, saving a resident who earns $50,000 a year about $5. The nonresident wage-tax rate would also decrease. Nevertheless, the administration is predicting that revenue from the wage tax will grow by about 4.3 percent in 2020.

The administration plans to send the School District $214 million, a significant increase from previous years and part of its pledge to increase school spending by $700 million over the next five years. The plan also includes a $1.3 million increase for Community College of Philadelphia, in part to pay for a dual-enrollment program that will allow district high school students to earn college credits.

The mayor’s proposed public safety investments include adding 50 police officers to bring the sworn force to 6,575, along with 1,500 new body cameras, plus adding five new ambulances and 10 emergency medical personnel to the Fire Department. With the help of a $16.6 million FEMA grant, the city plans to reopen five fire engine and two ladder companies over the next five years, with one of each coming back in 2020.

Kenney is also proposing $5.5 million for various community programs to combat violent crime.

As part of the city’s proposed six-year capital budget plan, the administration wants to invest $200 million in a beefed-up streets-paving program that would repave 101 miles in fiscal year 2020, with a goal of repaving 131 miles of roads per year by 2023. In total, Kenney wants to spend $10.8 billion over six years to improve the city’s infrastructure, including renovating city-owned properties and investing in technology.

Kenney is scheduled to give his budget address at 10 a.m. Thursday in City Council’s chambers.