With the coronavirus spreading rapidly in Philadelphia and the economy in free fall last year, debate over the city budget was quick. Mayor Jim Kenney had little choice but to to tap reserves, lay off hundreds of city workers, cut services, and set aside any hope of reducing taxes.
This year, with the economy rebounding and the city getting $1.4 billion in federal pandemic relief, there’s money on the table — at least for now.
But as Kenney and City Council President Darrell L. Clarke have seen while budget negotiations dragged on over the last week, having lots of cash doesn’t always make things easier.
Council members each have their own favored programs, and they’re less willing to take no for an answer when they know there’s money to be had. The Kenney administration, meanwhile, is cautioning against quickly burning through the federal windfall. While Philadelphia is getting $1.4 billion, the city is projected to collect $1.5 billion less in taxes over five years than previously forecast because of the pandemic. Kenney’s proposed budget would spend $575 million of the federal aid this year, reserving most of it to plug future tax shortfalls.
“It didn’t solve all our problems,” a senior administration official, who spoke on condition of anonymity to discuss private negotiations, said of the stimulus money. “We restored what we could, but there are lots of people pushing for us to do stuff. … It didn’t make sense to spend a lot of money up front and then have big gaps later.”
Kenney’s plan would use the federal aid to return the city to pre-pandemic spending levels by restoring some services cut last year, reducing taxes, and borrowing money for large projects.
But the administration’s desire to save much of the stimulus money, especially when coupled with its proposed cuts to wage and business taxes, hasn’t gone over well with lawmakers who see constituents in crisis after a year of heightened unemployment and soaring homicides.
“Not granting the kinds of investments that my colleagues are asking for, at the scale that they’re asking for, and then asking for a tax cut? They’re negotiating against themselves,” Councilmember Maria Quiñones-Sánchez, who chairs the Appropriations Committee, said of Kenney’s team.
Clarke initially wanted a budget deal a week ago, but on Monday he again delayed votes on the spending and tax bills for the fiscal year that begins July 1. A deal may come together as soon as Tuesday, after Council leadership on Monday circulated a proposed tax cut compromise to members. If lawmakers follow their usual rules, they have until Thursday to reach a deal on the financial plan for a year that will shape how the city navigates the pandemic recovery and the gun violence crisis.
Kenney and Clarke have spent much of the past week trying to satisfy demands from individual lawmakers or, in some cases, groups of them, such as the 13 who are calling for $100 million in new funding for violence prevention programs. But some members say the administration’s offers don’t go far enough or appear to be budgetary sleight-of-hand maneuvers, rather than new money.
Another dynamic complicating negotiations: Council is packed with ambitious members eyeing the 2023 mayor’s race who are pushing measures that could set them apart from potential rivals and strengthen their political brands.
“That is a problem because a lot of good ideas are viewed through a mayoral election prism,” said Larry Ceisler, a public affairs consultant and longtime City Hall observer. “So Councilperson A could have a great idea, but Councilperson B could say, ‘It is a great idea, but that’s Councilperson A’s idea.’ ”
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For instance, Councilmember Helen Gym, the progressive stalwart widely seen as a potential mayoral contender, and her allies laid down the gauntlet against Kenney’s proposal to reduce taxes, saying the city needs to increase spending on priorities like eviction prevention instead.
Business-friendly Councilmember Allan Domb, on the other hand, has said Kenney’s proposed tax cuts don’t go far enough, and is pushing bills to make larger reductions in levies he says are holding up economic growth.
Majority Leader Cherelle Parker, who has sought to set herself apart both from the most liberal and the more centrist members, has a proposal that appears designed to thread that needle, but that ended up angering many: cutting the parking tax rate in exchange for promises from lot owners to increase wages.
Quiñones-Sánchez has reinforced her profile as a policy-focused and independent-minded member by insisting the administration use the influx of federal cash to redesign how the city delivers services.
Even City Controller Rebecca Rhynhart got in on the action, despite not having a vote on the budget. An early Kenney critic who is also widely seen as eyeing the mayor’s office, Rhynhart last month released a report criticizing the administration’s planned use of the stimulus money and laying out how she would have handled it.
Lawmakers’ funding requests run the gamut, from making sure the Free Library of Philadelphia can operate at full hours, to increasing support for arts and culture programs, to funding after-school programs. The administration has responded with plans designed to meet those requests, or come close, hoping to satisfy members one by one and win them over for Kenney’s tax cuts.
Clarke and his staff have been in the middle, feeling out where potential majorities lie and pushing for all sides to reach a deal as soon as possible. The proposed compromise that emerged Monday — in which Council would forgo Kenney’s proposed business tax cut, while adopting a slimmed-down version of the wage tax cut — may pave the way for a resolution.
In Council, budget legislation and major tax bills typically pass with overwhelming majorities, even after months of behind-the-scenes feuding. But this year, it’s possible that some of the most critical legislation that funds and directs spending for city government could squeak through narrowly.
“The administration wants to take a conservative approach to some degree where they’re kind of laying out this [federal stimulus] money over years,” Councilmember Jamie Gauthier said. “And Council is saying, ‘We need to stimulate our neighborhoods, and we need to take care of the people who have been suffering the most.’”