The newly proposed “bare bones” budget for Philadelphia contains basics only. Fire and police service, limited library hours, preschool, community school, recreation centers, health centers, emergency health services, residential trash collection, and support for residents to stay in their homes all made the list.
Perhaps some lessons were learned from the last economic crisis. At that time, the local libraries were not supported. There was a huge backlash.
This time, the bare bones budget comes with the understanding and empathy of Mayor Kenney. He knows that this, in combination with proposed tax hikes and wage cuts for non-union city workers, is unsettling. In fact, he admits that he isn't happy with it either.
But what can he do? The closure of businesses from COVID-19 has caused a huge deficit. Without revenue from business taxes coming in, the city budget was looking at a deficit five times the projected deficit from the Great Recession.
Here’s what this difficult budget really means for Philadelphia.
For example, scheduled city sweeping has been canceled. But that’s not the only kind of road maintenance a city needs. It’s imperative that roads stay in good condition in crowded cities.
Potholes are just the beginning.
Unkempt roads and storefronts lead to undesirable activity, but they also lower the real estate value of the properties involved.
A Slower Economy
Kenney is making a tough choice to reduce overtime, cut wages of non-union workers making over $35,000, and make layoffs. But reduced wages for the workers who are essential to running a city creates a decline in the overall economy.
When the budget gets that tight, people spend less overall. Even though people are saving their cash right now, they will have to keep saving it when people go back to work if the wage cuts happen.
This means less steam for the economy overall as Philly recovers from the COVID crisis.
A Smaller Deficit
Of course, Kenney is reducing the deficit by taking these actions. The real question is whether he actually has to do this to reduce the deficit.
It’s a long discussion about what really has to be done. But there’s no denying that he is addressing a huge financial issue.
A Minimalist City Government
This approach will shrink City staff substantially. Those in favor of a smaller government might be pleased with this result. It comes at a difficult time, however. It’s not likely to be a popular choice to reduce the government staff during a crisis.
The new budget proposes more property tax, non-resident wage tax, and parking tax. Still, the mayor has only brought the General Fund spending down to 4.9 billion from the original 5.2 billion.
This will not really address the underlying issue in the long run, which is revenue. So people will be stuck at the drawing board again to come up with a better budget in a few years.
This budget puts most of the financial burden on businesses that are already stretched too thin. If it goes through, there could be more taxes later to make up for lost revenue. People could be forced to tax at much higher rates if the city’s infrastructure falls through.
They will have to replace what has been lost in support, services, and programs.
It’s tough being stuck inside with only a few outings here and there. This budget is basically shutting the city down. Non-essential programs will be cut under this budget.
Culture matters, especially during difficult times. Cutting programs is not likely to win resounding approval. People rely on city-funded programs to connect with their neighbors.
If anything, this has laid the gauntlet down for a serious restructuring of the budget. People are already asking if there are any other options at all.
It’s difficult to get revenue out of a city that is simply shut down. Without services, businesses could potentially have a harder time recovering from the COVID crisis.
If they are left to do all the reopening by themselves, especially structural repairs in an older city, they could have a hard time funding their businesses. It could take much longer to reach a desirable revenue level.
This budget brings into harsh light the need for serious financial talks. Philadelphia is widely known as the poorest of America’s large cities. In the long run, increasing revenue is at the top of the priority list. Many people in the city needed help before this crisis.
Bereaved further by the economic crisis amid the COVID outbreak, Philadelphia is at a critical turning point. It’s likely that tempers will rise and discussions will be difficult.
But hopefully cool heads will prevail. It’s good that the preschool, community school, recreation centers, and libraries were not put on the chopping block. But it takes much more than just those things to run a city.