Mayor Parker releases first budget with spending for public safety, street repaving, and code enforcement

>>UPDATE: Mayor Cherelle Parker delivers her first budget address, promising to ‘enforce the law’ and clean up the city

Mayor Cherelle L. Parker is proposing a $6.29 billion city budget that keeps tax rates flat, adds resources for law enforcement, and boosts funding for priorities such as commercial corridor cleaning, according to administration documents viewed by The Inquirer.

Parker, who took office in January as the city’s first female mayor, is to deliver her first budget proposal to City Council on Thursday in a high-profile address that is likely to be a defining moment in her history-making tenure. Council will negotiate with the administration over Parker’s proposal this spring, and must reach a final agreement before July 1, when the new budget takes effect.

Parker’s first budget proposal comes at an unusual time for the city as it is navigating the complexities of the post-pandemic economy. Typically, City Hall struggles to find money for badly needed investments in city services. But at the moment, city coffers are flush with cash, and the administration is required to spend $449 million in federal pandemic relief money by the end of 2024.

» READ MORE: Mayor Parker calls on Philadelphia businesses to return to in-person work

Despite the influx, it has been difficult to spend money in a way that visibly improves services due to the city’s ongoing struggle to fill thousands of open positions, a symptom of the staffing crisis affecting local governments across the country.

The administration is framing the plan as an investment of $2 billion over five years on Parker’s top priorities, which are encapsulated in the mayor’s oft-repeated campaign slogan and governing principle of making Philly the “safest, cleanest, greenest big city in the nation with economic opportunity for all.”

“It’s really about fulfilling her vision that she articulated on the campaign trail,” Finance Director Rob Dubow said in a briefing for reporters Wednesday.

That includes $250 million for the Streets Department to accelerate street repaving, $33 million in new spending on public safety efforts, $36 million in funding for housing programs, and $36 million for “clean and green” initiatives such as cracking down on illegal dumping, according to the administration documents.

The plan involves borrowing $295 million, which Dubow said will be the city’s largest-ever general obligation bond issuance.

The new administration is hoping to get a jumpstart on its spending plans during the current budget by proposing a $164 million midyear transfer ordinance that it hopes Council will take up in the coming weeks.

Mayors often use their first budget proposal — when their political capital is highest — to push a major initiative that may be difficult to pass in Council. There is little in Parker’s plan, however, that appears likely to raise alarm with the majority of city lawmakers, except, perhaps, the lack of cuts to the city’s wage and business taxes.

For about 30 years, successive mayoral administrations have supported incremental cuts to the city’s wage tax, which is among the nation’s highest at 3.75% for Philly residents and 3.44% for people who work in the city but live elsewhere. In recent years, there has also been broad support for lowering or reforming the business income and receipts tax.

But in public appearances since taking office, Parker has said that before the city prioritizes tax reform, she wants to see Harrisburg take action on two major issues: raising the minimum wage to $15 per hour and granting Philly permission to tax residential and commercial properties at different rates.

She has also said she wants Council’s newly announced Tax Reform Commission to make recommendations before changing tax rates.

Parker’s plan does, however, call for an adjustment in how real estate tax revenue is distributed. She is proposing bumping the school district’s share from 55% to 56% of that revenue, which the administration estimates will increase funding for the district by $119 million over five years. The city will take the remaining 44% of property tax proceeds.

While tax rates are staying stable, many property owners’ real estate tax bills will go up because the administration is resuming reassessments after former Mayor Jim Kenney’s administration froze them last year, Dubow said.

Last year, Parker campaigned on a tough-on-crime platform, calling for the city to hire hundreds more police officers and embracing the controversial policing tactic known as stop-and-frisk.

Parker’s proposal calls for an $877 million police budget, about $1 million less than what the department estimates it will spend by the end of this year. But Dubow called those numbers “a little misleading,” saying the city intends to spend about $22.5 million this year through the midyear transfer on the forensics lab that was originally supposed to be spent next year.

In addition, the department has saved millions of dollars in personnel costs because it has been unable to fill hundreds of open positions. Dubow said that reality means the police can absorb new costs that Parker proposed, including 50 new office clerks, 15 dispatchers to take 911 calls, and 19 people who work in community outreach and victims’ services.

The proposal does not increase the number of officers, instead calling for “maximizing deployment of current force” and improving recruitment.

Dubow said police spending on personnel costs in total could increase if recruiting efforts are successful, “which would be great,” he said.

Parker is also proposing millions of dollars in spending on police technology and equipment, including $15 million for more than 200 new cars, $2.7 million for drones, and $1.4 million for upgrades to investigative tools.

In addition, the proposal includes millions of dollars in anti-violence funding outside traditional policing, including about $25 million for a relatively new initiative that grants money to grassroots community organizations that work with vulnerable populations and in neighborhoods most affected by crime.

The Inquirer has reported that results have been mixed, and that some of the nonprofits improperly managed the funds. Parker has vowed that her administration will ensure accountability, and her budget proposal would fund new staff positions in the office that manages the grantmaking.

Parker’s budget calls for nearly $100 million over five years to support a program called Philadelphia Taking Care of Business, which she created when she was a Council member.

In its previous iteration, the initiative funded community groups to sweep sidewalks and remove litter along commercial corridors. Her plan would allocate $92 million to those contracts and provide an additional $3.5 million to fund new staff positions needed to expand the program.

Parker’s budget would also fund new staff positions in the Department of Licenses and Inspections, which enforces building safety regulations and the city code. Those new workers would focus on audits, investigations, and “clean and seal,” the process the city uses to secure blighted and abandoned properties.

Parker previously announced that her administration is splitting L&I in two, with one arm focused on quality-of-life issues and the other on building and construction safety.

More details of Parker’s spending plan will be unveiled throughout the week. Other highlights that have come to light so far include:

Parker’s budget plan also includes leaving $486 million unspent at the end of the next fiscal year, a surplus known as the fund balance. That amounts to 7.8% of city revenue, below the 17% that government finance experts recommend be kept for unexpected downturns. Parker is proposing putting $220 million more into other emergency funds, for a total of about 11% of revenue in reserves.

It won’t be easy to turn all of those investments into improved services that Philadelphians can “touch, see, and feel,” which Parker has said is her goal. About 18% of budgeted city employee positions are unfilled, according to a December report. That’s despite Council last year approving $45 million in funding to bolster recruitment and retention efforts across the government.

The city has used overtime pay to make up for the staffing shortages and is on track to exceed the record $250 million it spent on overtime last year.