PHILADELPHIA (CBS) – The COVID-19 pandemic is forcing Philadelphia Mayor Jim Kenney to do some serious belt-tightening. His revised budget calls for a nearly 4% hike in the city’s property tax, a 4.5% increase in the parking tax, and raising the non-resident wage tax about a half-a-percent.
It also calls for hundreds of layoffs by eliminating full-time, part-time, seasonal and temporary positions, and salary cuts to most exempt employees.
“This budget pares city services down to the most essential, imposes layoffs on hundreds of workers, and reduces or eliminates some programs that are simply no longer affordable,” Kenney said in a recorded address to the city. “This is not what I want for our residents — and I understand if this leaves many of you angry. Frankly, I’m angry too. But after that anger fades, we must remember exactly what we are dealing with. What we have is both a pandemic and an economic catastrophe.”
Kenney’s newly-proposed budget for America’s poorest large city includes reducing overtime, laying off hundreds of workers, and non-union workers making more than $35,000 a year will have pay cuts from 1 to 7%.
Calling the proposed budget “bare bones,” Kenney said shuttered businesses due to COVID-19 means tax revenue has dramatically decreased, creating a budget hole.
The Office of the Department of Finance projects that without such changes, the city would face a $649 million dollar deficit in the coming year — at least five times the projected deficit in 2009 after the Great Recession.
“Even as our operating departments rushed to respond to the virus, I directed our finance and budget directors to start the budget process all over again,” Kenney said. “They developed a new plan that addresses the unfortunate economic reality we now face.”
The result is a new budget that proposes General Fund spending to be $4.9 billion, a $341 million decrease over the original $5.2 billion budget. It reflects the priorities listed above by guaranteeing the following:
- No police or fire layoffs.
- No reduction in emergency medical services.
- All fire stations will remain open.
- All health centers will remain open.
- All recreation centers will remain open.
- All libraries will remain open.
- PHLpreK and Community Schools will be maintained at current funding levels.
- Weekly residential trash collection and single-stream recycling will continue, with some adjustments.
- Using local and federal funding, the City will prioritize keeping Philadelphians in their homes with support for basic systems repairs, preventing mortgage foreclosure and support for renters.
Citywide street sweeping that was supposed to begin this year will no longer happen.
Some of the decisions aren’t sitting well with some councilmembers.
“I think it’s necessary we look through the budget where we can identify savings before we can move forward with something like that,” Councilmember at-large Katherine Gilmore Richardson said.
Still, Kenney vows to keep libraries open with reduced hours, something the previous administration under former Mayor Michael Nutter received community anger for trying to close during the 2008 recession.
“I think there’s probably lessons that have been learned from the last big recession ten years ago,” assistant political science professor Michael Sances said.
The revised spending plan also proposes an increase in the rate of the Philadelphia School District portion of the real estate tax.
“This will enable the district to avoid draconian cuts that we know will set our kids back years and harm the future prosperity of our city,” Kenney said.
City Council must hold a hearing on the spending plan before the new fiscal year starts on July 1.
CBS3’s Matt Petrillo contributed to this report.
You can watch the full budget address below: