Transcript Slide 1

FY 2010-2014 Budget Briefing for
City Council
Mayor Michael A. Nutter
February 9, 2009
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 1
February 9, 2009
Table of Contents
•
•
•
•
Rebalancing the budget in November 2008
The current deficit - $1.04 billion
The process for closing the $1.04 billion deficit
Department budget scenarios for 10%, 20%, and
30%
• Reductions and revenue options for closing the
deficit
• What other cities are doing
• Next Steps
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 2
February 9, 2009
A Look Back At What We Did
Rebalancing the Budget in
November 2008
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 3
February 9, 2009
Rebalancing the Budget in
November 2008
• Solved for a $1 billion shortfall over the life
of the five year plan, FY09-FY13
• In FY09 alone the projected shortfall totaled
$108.1 million
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 4
February 9, 2009
The Largest Component of the FY2009
Rebalancing Plan: Suspending Tax Reductions
• City funded tax reductions after FY09 were
suspended
• Dollar value of tax suspensions equated to
almost $230 million from FY09-FY13
• Tax reductions will resume as scheduled in
FY15
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 5
February 9, 2009
How We Closed the $108.1 Million
Budget Gap for FY 2009
Efficiency Savings and
Revenue Enhancements
44%
Other Savings
9%
100%
We identified administrative efficiencies and revenues that had not been collected by the
city or were in need of scheduled increases. These included:
Increasing collections from delinquent taxpayers
Reducing overtime
Consolidating IT functions
Increasing permit, license and registration fees
One-time savings
Furloughs for exempt employees
Unfortunately, enhancements, efficiencies and one-time savings only allowed us to fill
53% of the budget gap. Program, service and employee workforce reductions were
necessary to get us the rest of the way there.
Department and Program
Cuts
47%
Workforce Reductions
Programmatic Reductions
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 6
February 9, 2009
Some Examples of Cost-Savings from
FY2009 Rebalancing Plan
• Reduction in Police overtime: administrative
overtime, arrest/investigative overtime ($8m)
• Furloughs for exempt employees
• Salary cuts for Mayor’s office and Cabinet members
• Consolidation of IT functions
• Increased permit, license and registration fees
• Reduce trash setout limits from 12 bags and 6 cans to
8 bags and 4 cans.
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 7
February 9, 2009
Workforce Reductions in
FY2009 Rebalancing Plan
# of Positions
Full time (filled and unfilled)
800
Part-time
20
Seasonal
1,500
Contractual
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
550
Page 8
February 9, 2009
Independently Elected Officials
• 10% budget reductions were received from:
– City Council
• 5% budget reductions were received from:
–
–
–
–
–
Register of Wills
Courts
Controller
Sheriff
District Attorney
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 9
February 9, 2009
The Challenge We Are Facing
Today
The current deficit is projected to
total $1.04 billion
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 10
February 9, 2009
Projected Negative Fund Balance Totals
$1.04 billion Over 5 years
$0
-$200
FY09
FY10
FY11
FY12
FY13
FY14
-$47
-$169
Millions
-$400
-$600
-$800
-$472
-$667
-$1,000
-$1,200
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
-$871
-$1,045
Page 11
February 9, 2009
Major forecasters expect the US economy to shrink in
2009 as part of a global contraction in economy
activity
Forecasts of US Economic Growth, 2009 and 2010 (forecast as of January 2009)
2009
2010
Blue Chip Consensus Forecast
-1.6
2.4
Moody's Economy.com
-1.6
2.0
International Monetary Fund
-1.6
1.6
Congressional Budget Office
-2.2
1.5
Global Insight
-2.5
2.2
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 12
February 9, 2009
The speed and depth of the unfolding recession has
caught economists and forecasters by surprise
4.0
Blue Chip
In the 5 months between
September 2008 and
February 2009, the Blue
Chip Consensus Forecast
of US growth fell by 3.4
percent
CBO
3.0
2.8
2.3
2.0
1.1
1.0
0.0
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
-1.0
-2.0
Monthly Forecasts of Growth in US GDP for 2009
percent change from 2008
-2.2
-3.0
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 13
February 9, 2009
City of Philadelphia is using Congressional Budget
Office Forecasts to Develop Forecasts of City
Revenues
• Office of Budget and Performance Evaluation (OBPE) is using the most
recent Congressional Budget Office projections (January 2009) of US
economic growth in its forecast
• These national economic forecasts are used to develop forecasts of the
city’s tax base growth and revenue growth
US GDP Growth
(CBO, January 2009)
CY2009
CY2010
CY2011
CY2012
(2.20)
1.50
4.20
4.40
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 14
February 9, 2009
OBPE forecasts of the local economy are not as
pessimistic as other forecasters
•
OBPE expects the Philadelphia economy to slow considerably in CY09 and
begin to rebound in CY10 as measured by total Philadelphia personal income
and total wages
•
In contrast, Moody’s Economy.com anticipates much slower growth for
Philadelphia in 2010 and 2011, particularly in total wages
Growth Rates for the Measures of the Philadelphia Economy
CY2009
CY2010
CY2011
CY2012
OBPE, Total Personal Income
0.9%
2.5%
3.8%
4.2%
Moody's Economy.com Total Personal Income
1.2%
1.3%
2.7%
4.3%
OBPE, Total Wages
1.6%
2.6%
3.5%
3.8%
Moody's Economy.com Total Wages
0.3%
0.1%
1.6%
3.8%
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 15
February 9, 2009
Adopting Moody’s Economy.com forecast for
personal income would increase forecast tax revenues
marginally over the FY10-FY14 Plan
$59,000
$57,263
$57,000
$55,000
For example, if the City adopted the
Economy.com personal income forecast,
sales taxes would be higher by at least $2.3
million over the FY10-FY14 Plan
$57,121
$54,939
$53,315
$54,774
$52,607
$53,000
$52,926
$51,965
$51,650
$51,000
$49,920
$51,192
$49,500
$49,000
OBPE
Economy.com
$47,000
Philadelphia Total Personal Income, in millions of current $
$45,000
CY2007
CY2008
CY2009
CY2010
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
CY2011
CY2012
Page 16
February 9, 2009
However, adopting Moody’s Economy.com forecast
for wages would decrease forecasted wage tax revenues
by at least $214.5 million over the FY10-FY14 Plan
$41,000
$40,000
$39,000
The lower growth rate for wages in the
Economy.com forecast substantially lowers
wage tax revenues during the FY10-FY14
Plan.
$40,597
$39,109
$38,612
$38,000
$37,779
$37,198
$36,808
$37,000
$36,445
$36,232
$36,000
$36,609
$36,558
$35,377
$35,000
$35,087
OBPE
Economy.com
$34,000
Philadelphia Total Wages, in millions of current $
$33,000
CY2007
CY2008
CY2009
CY2010
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
CY2011
CY2012
Page 17
February 9, 2009
Economy.com Forecasts Significant Job
Losses for Philadelphia
• Employment in Philadelphia is projected to fall
from the peak of 660.2 thousand jobs in 2007 to a
low of 637.2 thousand jobs in 2011.
• Unemployment is expected to rise from the current
rate of 8.6% in December 2008 to 12.3% in 2010.
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 18
February 9, 2009
FY09 RTT revenue has fallen significantly
since 2008, compared to the same quarter last
year
0.0%
2008: Q1
2008: Q2
2008: Q3
2008: Q4
2009: Q1
2009: Q2
Percent change over same quarter prior year
-5.0%
-10.0%
-15.0%
-20.0%
-25.0%
-30.0%
-35.0%
-40.0%
-45.0%
-50.0%
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 19
February 9, 2009
FY09 wage tax revenue has fallen since 2008,
compared to the same quarter last year
5.0%
Percent change over same quarter prior year
4.0%
3.0%
2.0%
1.0%
0.0%
2008: Q1
2008: Q2
2008: Q3
2008: Q4
2009: Q1
2009: Q2
-1.0%
-2.0%
-3.0%
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 20
February 9, 2009
FY09 sales tax revenue has fallen, compared
to the same quarter last year
8.0%
Percent change over same quarter prior year
6.0%
4.0%
2.0%
0.0%
2008: Q1
2008: Q2
2008: Q3
2008: Q4
2009: Q1
2009: Q2
-2.0%
-4.0%
-6.0%
-8.0%
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 21
February 9, 2009
Total Projected Tax Revenues Have
Fallen Over $1 Billion
Millions $
FY2009 June Original
FY2009 November Rebalancing
FY2009 January Projections
$2,650
$2,600
$2,550
$2,500
$2,450
$2,400
$2,350
$2,300
$2,250
Revenue projections have decreased over $1 billion from June 2008 to January 2009
$2,200
FY2007
FY2008
FY2009
FY2010
FY2011
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
FY2012
FY2013
Page 22
February 9, 2009
Business Privilege Tax Revenue
Projections Have Fallen Over $425
Million
Millions $
FY2009 June Original
FY2009 November Rebalancing
FY2009 January Projections
$470
$450
$430
$410
$390
$370
$350
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
Revenue projections have decreased over $425 million from June 2008 to January 2009
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 23
February 9, 2009
Real Estate Transfer Tax Revenue
Projections Have Fallen Over $316
Million
Millions $
FY2009 June Original
FY2009 November Rebalancing
FY2009 January Projections
$240
$220
$200
$180
$160
$140
$120
Revenue projections have decreased over $316 million from June 2008 to January 2009
$100
FY2007
FY2008
FY2009
FY2010
FY2011
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
FY2012
FY2013
Page 24
February 9, 2009
Real Estate Revenue Projections Have
Fallen Over $70 Million
FY2009 June Original
FY2009 November Rebalancing
FY2009 January Projections
.
Revenue projections have decreased over $70 million from June 2008 to January 2009
FY2007
FY2008
FY2009
FY2010
FY2011
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
FY2012
FY2013
Page 25
February 9, 2009
Wage Tax Revenue Projections Have
Fallen Over $60 Million
Millions $
FY2009 June Original
FY2009 January Projections
$1,260
$1,240
$1,220
$1,200
$1,180
$1,160
$1,140
$1,120
$1,100
Revenue projections have decreased over $60 million from June 2008 to January
2009 Note: November Rebalancing and January Projections are the same
$1,080
FY2007
FY2008
FY2009
FY2010
FY2011
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
FY2012
FY2013
Page 26
February 9, 2009
Sales Tax Revenue Projections Have
Fallen Over $60 Million
Millions $
FY2009 June Original
FY2009 November Rebalancing
FY2009 January Projections
$160
$155
$150
$145
$140
$135
$130
$125
$120
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
Revenue projections have decreased over $60 million from June 2008 to January 2009
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 27
February 9, 2009
The current economic situation remains
unstable and uncertain
• The unprecedented financial and economic crisis remains volatile and
exceptionally uncertain
– “the uncertainty surrounding the outlook was considerable and that the downside
risks … were a serious concern.” Federal Open Market Committee minutes
December 15-16, 2008
• Economists continue to change national growth forecasts as a result
– The Blue Chip Consensus Forecast released today lowered economic growth
assumptions for the US to -1.9% from -1.6% for 2009, and to 2.1% from 2.4% for
2010.
• Things may continue to worsen, further lowering Philadelphia’s
revenues
– Two noted economists, Nouriel Roubini, at NYU Stern School of Business (one of
the few to accurately predict the timing and scale and impact of the financial crisis)
and Kenneth Rogoff, of Harvard, argue that the recession may be deeper and last
much longer than currently forecast by most economists.
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 28
February 9, 2009
Impact of the Proposed Stimulus
Package for Philadelphia
• Stimulus legislation is a moving target, and as a general matter we
should not rely on these potential funds in our FY10 budgeting
• Furthermore, most of the potential stimulus funding will support Capital
rather than our Operating Budget, although there would be some for the
operating budgets of the School District and Philadelphia Housing
Authority
• The major exception to this is the way the stimulus may interact with the
Governor’s recently proposed State budget
• Some stimulus cuts could lead to indirect impact on the Pennsylvania
budget that might affect our reimbursements, especially for Social
Services.
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 29
February 9, 2009
Major Drivers of Philadelphia’s Budget
Increasing obligations from the following
areas constrain Philadelphia’s finances:
– Pensions
– Employee Health Benefits
– Criminal Justice
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 30
February 9, 2009
Percentage Change from FY2000-FY2008 of
Major Budget Drivers
160%
144%
140%
120%
100%
96%
80%
69%
60%
40%
31%
20%
0%
% Change in Re maining
Obligations
% Change in Pris ons
% Change in Pe ns ion
Cos ts
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
% Change in Employe e
He alth Be ne fits
Page 31
February 9, 2009
$ Millions
The Rise in Projected Pension Costs
from FY09-FY14
$650
$600
$550
$500
$450
$400
$350
FY
09
Approved Plan (6/08)
FY
10
FY
11
Rebalancing Plan (11/08)
FY
12
FY
13
FY
14
Current Projection (1/09)
Major Assumptions:
• Pension fund loses 30% in FY09 (through December, the fund had lost just over 20%).
• In FY10 and moving forward, the fund returns to making its earnings assumption of 8.75%
Major Risks: Losses beyond 30% in FY09 or failure to hit earnings assumption in future years.
Opportunities to Outperform Budget: Losses below 30% for FY09, earnings in excess of assumption in future years,
Page 32
legislation in Harrisburg or Washington or ability to issue pension obligation bonds at attractive rates.
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
February 9, 2009
The process for closing the
$1.04 billion deficit
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 33
February 9, 2009
Process: The Lead Up
• Town Hall Meetings: Nov & Dec 2008
– 8 meetings, citywide
– After rebalancing the FY2009 budget, we knew we were
about to start another, longer budget process for FY2010
– We heard the public:
• They want us to look at everything
• They want to better understand the options and trade-offs
Philadelphia faces
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 34
February 9, 2009
Process: Informing the Public
• This unprecedented level of public engagement in the budget
process is a demonstration of the Nutter Administration’s
commitment to dialogue, education, and moving forward
together as one city.
Five PhillyStat sessions on the budget
– 2 informational, context setting sessions
 January 26: The State of the City
 January 28: The State of the City’s Finances
– 3 sessions, led by the Mayor, on budget scenarios
• February 12: Health and Opportunity
• February 17: Public Safety
• February 18: Transportation & Economic Development
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 35
February 9, 2009
Process: Engaging the Public
• Community budget workshops coordinated by the Penn
Project for Civic Engagement and WHYY
Thursday, February 12, 2009
Northeast: St. Dominic’s School
Wednesday, February 18, 2009
Germantown: Mastery Charter School
Thursday, February 19, 2009
South Philadelphia: St. Monica’s Catholic School
Monday, February 23, 2009
West Philadelphia: Pinn Memorial Baptist Church
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 36
February 9, 2009
Process: Transparency & Communication
• Transparency of Scenarios
– Scenarios from departments are public
– These scenarios will be the bases for discussions
• Meetings with stakeholders on the challenges and choices
– Conducted by the Mayor and his senior staff
• Conversations across the City
–
–
–
–
–
Kitchen table chats
Visits to faith institutions
Meetings with Block Captains
Participation in civic and community meetings
Stop bys at local diners, businesses, barbershops and salons
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 37
February 9, 2009
Process: City Managers
• The Budget Director has requested 10%,
20% and 30% budget reductions from:
– The Administration’s Department Heads
– Independently Elected Officials
– City Council
• Financial, personnel and service/program
impacts have been requested at all levels
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 38
February 9, 2009
Guiding Principles
• Any proposed reductions and revenue
enhancements should be considered within
the context of increasing:
–
–
–
–
Fiscal integrity
Safety
Education
Jobs
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 39
February 9, 2009
How do we begin to close the
How do we begin to close the gap?
$1 billion gap?
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 40
February 9, 2009
$1.8 Billion of the City’s FY09 Budget is Discretionary.
$2.1 Billion of the City’s FY09 Budget is
Nondiscretionary
Contractually Required:
Mandated/Reimbursed:
Other Fixed Costs
All Other
Basic Operations:
$112.2
$674.4
$74.5
$1,870.3
$1,200.3
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 41
February 9, 2009
Closing the $1 Billion Deficit
• A 10% reduction across all departments
would provide $187.5 million annually
• A 10% reduction across all departments
would provide $937.5 million over the five
year plan
• This is still $107.5 million less then what is
needed to close the gap
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 42
February 9, 2009
Impact of a 10% cut across the board
$180,000,000
$160,000,000
F re e Libra ry, R e c re a tio n, F a irm o unt P a rk
$ 7,694,507
First Judicial District
$10,309,698
Public Health, Supportive Housing, DHS
$12,822,679
Streets
$12,662,286
$140,000,000
$120,000,000
Fire
$19,279,639
Prisons
$23,505,731
$100,000,000
$80,000,000
Police
$52,499,653
These
departments
would
comprise 70%
of all cuts
$60,000,000
$40,000,000
All Other Operating Departments and
Independently Elected Officials
$48,790,119
$20,000,000
$0
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 43
February 9, 2009
What happens when departmental cuts
are removed from the plan?
$1,100
$1,000
All
departments
take a 10%
cut
$1.04 billion needed for balanced five year budget
$900
Without
Police
cuts
$800
(in millions )
$700
And w ithout
pris on cuts
$600
$500
And
w ithout Fire
cuts
$940
$400
And w ithout
Streets cuts
$675
$300
$200
$560
$460
$400
$100
And w ithout
Public Health, OSH
And
and DHS cuts
w ithout
FJD cuts
$335
$280
And w ithout
Library, Rec.,
and Fairmount
Park cuts
$245
$0
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 44
February 9, 2009
The Budget Scenarios
Department scenarios for 10%, 20% and 30%
budget reductions
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 45
February 9, 2009
The Budget Scenarios:
• Reflect potential impacts from service
reductions and revenue enhancements
• Demonstrate the depth and scale of the
challenges and tradeoffs we face
• These are potential scenarios that help us
evaluate our choices
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 46
February 9, 2009
Police
$
Positions
2008 Actual Budget
$523,965,930
6,624 sworn, 822 civilian
2009 Original Budget
$524,001,749
6,824 sworn, 843 civilian
2009 Rebalanced Budget
$536,442,088
6,624 sworn, 843 civilian
2010 Base Budget
$524,996,525
6,624 sworn, 838 civilian
Reduction Value
Positions Lost
10% Reduction
$52,499,653
929 sworn, 73 civilian
20% Reduction
$104,982,383
1,765 sworn, 87 civilian
30% Reduction
$157,517,172
2,598 sworn, 107 civilian
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 47
February 9, 2009
Fire
$
Positions
$189,179,212
2,389 uniform,
114 civilian
$192,693,965
2,469 uniform,
114 civilian
2009 Rebalanced
Budget
$195,831,554
2,321 uniform,
114 civilian
2010 Base Budget
$192,796,390
2,157 uniform,
115 civilian
Reduction Value
Positions Lost
Service Levels
163 uniform
3 engine companies, 2 ladder companies, 3
medic units
395 uniform
9 engine companies, 5 ladder companies, 8
medic units
627 uniform
15 engine companies, 8 ladder companies, 13
medic units
2008 Actual
Budget
2009 Original
Budget
10% Reduction
20% Reduction
30% Reduction
$19,279,639
$38,559,278
$57,838,917
Revenue
Value
Increase transport
fees
$5 million
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 48
February 9, 2009
Prisons
$
Positions
2008 Actual Budget
$222,013,102
2,400
2009 Original Budget
$230,001,319
2,400
2009 Rebalanced Budget
$230,180,119
2,400
2010 Base Budget
$235,057,310
2,360
Reduction Value
Positions Lost
10% Reduction
$18,628,540
40
20% Reduction
$42,134,271
210
30% Reduction
$65,640,002
590
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 49
February 9, 2009
First Judicial District
$
2008 Actual Budget
$120,016,366
2009 Original Budget
$114,552,203
2009 Rebalanced Budget
$108,824,593
2010 Base Budget
$103,096,983
Target Value
10% Target
$12,667,750
20% Target
$20,090,750
30% Target
$23,941,740
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 50
February 9, 2009
Streets
$
Positions
2008 Actual Budget
$128,589,201
1,839
2009 Original Budget
$145,092,480
1,966
2009 Rebalanced Budget
$133,188,280
1,906
2010 Base Budget
$126,662,858
1,796
Reduction Value
Positions Lost
10% Reduction
$12,667,750
110
20% Reduction
$20,090,750
274
30% Reduction
$23,941,740
372
Revenue
Commercial Property Collection charge
City Plan fee
Increase hauling permit fee
Save as you throw
Value
$3 million
$18.75K
$230k
$26.5 million for Q4 FY10;
$106 million annually
($5 per week per household)
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 51
February 9, 2009
Licenses and Inspections
$
Positions
2008 Actual Budget
$30,254,839
356
2009 Original Budget
$27,635,668
374
2009 Rebalanced Budget
$27,307,561
336
2010 Base Budget
$26,875,594
330
Reduction Value
Positions Lost
10% Reduction
$2,687,559
6
20% Reduction
$5,375,118
55
30% Reduction
$8,062,677
100
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 52
February 9, 2009
Human Services
$
Positions
2008 Actual Budget
$614,779,975 / $71M City
share
1,772
2009 Original Budget
$616,308,936 / $60M City
share
1,871
2009 Rebalanced Budget
$605,419,669 / $67M City
share
1,871
2010 Base Budget
$591,305,201 / $61M City
share
1,871
Reduction Value
Positions Lost
$18,638,087
Subject to State or Federal
funding
$38,644,692
Subject to State or Federal
funding
$58,651,297
Subject to State or Federal
funding
10% Reduction
20% Reduction
30% Reduction
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 53
February 9, 2009
Free Library
$
Positions
2008 Actual Budget
$40,458,971
739
2009 Original Budget
$40,245,065
730
2009 Rebalanced Budget
$36,984,508
619
2010 Base Budget
$32,196,051
628
Reduction
Value
Positions
Lost
Service Levels
67
10 branches closed, 32 branches 3.5 days/week, 3 regionals
6 days/week, Central 7 days/week OR all 49 branches 3
days/week, 3 regionals 6 days/week, Central 7 days/week
96
23 branches closed, 26 branches 5 days/week, 3 regionals 6
days/week, Central 7 days/week OR 17 branches closed,
23 branches at half days, 3 regionals and 9 branches 6
days/week, Central 7 days/week
162
30 branches closed, 19 branches 5 days/week, 3 regionals 6
days/week, Central 7 days/week; 162 positions
10% Reduction
20% Reduction
30% Reduction
$2,447,294
$5,666,899
$8,886,505
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 54
February 9, 2009
Recreation
$
Positions
2008 Actual Budget
$38,769,657
496 FT/114 PT
2009 Original Budget
$40,395,732
517 FT/141 PT
2009 Rebalanced Budget
$38,746,870
484 FT/231 PT
2010 Base Budget
$32,156,586
440 FT/98 PT
160 recreation centers
Reduction Value
Positions Lost
Service Levels
$2,996,659
69
10% Reduction
20% Reduction
30% Reduction
$5,993,316
$8,989,974
121
28 recreation centers
closed OR 40 centers
operate at half day
schedule
182
58 recreation centers
closed
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 55
February 9, 2009
Fairmount Park
$
Positions
2008 Actual Budget
$13,172,039
170
2009 Original
Budget
$15,740,540
189
2009 Rebalanced
Budget
$14,301,486
169
2010 Base Budget
$12,592,432
169
Reduction
Value
Positions
Lost
$1,259,243
16
10% Reduction
20% Reduction
$2,368,486
40
Service Levels
All (13) Park fountains, summer
and fall seasons of historic
mansions
All (13) Park fountains, summer
and fall seasons of historic
mansions, Horticultural Center,
Page 56
February
9, 2009
Lloyd Hall, Welcome Center
at
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Public Health
$
Positions
2008 Actual Budget
$112,695,423
665
2009 Original Budget
$122,778,884
757
2009 Rebalanced Budget
$121,062,235
746
2010 Base Budget
$119,149,986
740
Reduction Value
Positions Lost
$4,934,999
6
10% Reduction
20% Reduction
30% Reduction
Revenue
Value
Sliding scale co-pay for uninsured
visits at Health Centers
$1,022,000
Charge fee for pre-employment
and “back to work” physicals
58
Close Nursing Home, close
one health center
157
Close Nursing Home, close
three health centers
$9,869,998
$14,804,997
Service Levels
$759,769
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 57
February 9, 2009
Supportive Housing
$
Positions
2008 Actual Budget
$40,544,073
131
2009 Original Budget
$40,210,085
138
2009 Rebalanced Budget
$39,650,143
137
2010 Base Budget
$38,863,600
134
Reduction Value
Positions Lost
Service Levels
6
167 family beds and 117 single
adult beds lost
11
334 family beds and 233 single
adult beds lost
13
501 family beds and 350 single
adult beds lost
10% Reduction
20% Reduction
30% Reduction
$3,886,360
$7,772,720
$11,659,080
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 58
February 9, 2009
Records
$
Positions
2008 Actual Budget
$7,633,941
76
2009 Original Budget
$7,679,871
76
2009 Rebalanced Budget
$6,952,884
69
2010 Base Budget
$6,093,897
69
Reduction Value
Positions Lost
10% Reduction
$1,468,377
23 filled
20% Reduction
$2,077,766
28 filled
30% Reduction
$2,687,156
33 filled
Revenue
Update recording fees by $30
Value
$3 million
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 59
February 9, 2009
Revenue Options
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 60
February 9, 2009
Value of Potential Tax Rate Changes
(amounts in millions)
Current
Increase
Sales (requires State authorization)
7.0%
0.1 percent
$12.8
Real Estate
3.305%
1 mill
$10.8
BPT – Gross Receipts
1.415 mills
.1 mill
$5.0
Real Estate Transfer Tax
3.0%
0.1 percent
$4.3
BPT – Net Income
6.45%
0.1 percent
$4.2
Amusement
5.0%
1 percent
$3.7
Parking
20.0%
1 percent
$3.5
Wage – Resident
(requires PICA approval)
3.9296%
0.1 percent
$2.3
Wage – Non Resident
(requires PICA approval)
3.4997%
0.1 percent
$1.6
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Additional
Revenue
Page 61
February 9, 2009
Annual Resident Wage Tax Burden for a
Hypothetical Family of Three in Philadelphia,
2007
FY2010 3.9296% Wage Tax Burden Amount
$12,000
Wage Tax Burden Amount with 0.1% Increase
51 City Average Burden Amount
A 0.1% Wage Tax Increase will add the following amount to a family's tax burden:
$25,000 income
$50,000 income
$75,000 income
$100,000 income
$43
$86
$128
$170
$150,000 income
$255
$10,264
$10,009
$10,000
$8,000
$6,683
$6,853
$6,763
$6,000
$5,036 $5,164
$4,030
$4,000
$3,361 $3,447
$2,634
$2,000
$1,672 $1,715
$1,386
$331
$0
$25,000 family income
$50,000 family income
$75,000 family income
$100,000 family income
Source: Government of the District of Columbia, (August 2008) "Tax Rates and Tax Burdens - in the District of Columbia - A Nationw ide Comparison. 2007"
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
$150,000 family income
Page 62
February 9, 2009
Annual Real Estate Tax Burden for a
Hypothetical Family of Three in Philadelphia,
2007
Current 3.305% Real Estate Tax Burden Amount
Real Estate Tax Burden Amount with a 1 mill Increase
51 City Average Burden Amount
A 1 mill Real Estate Tax Increase will add the following amount to a family's tax burden:
$25,000 income
$50,000 income
$75,000 income
$100,000 income
$12,000
$54
$128
$157
$190
$150,000 income
$299
$10,197
$9,898
$10,000
$8,000
$6,275
$6,000
$6,465
$5,199 $5,356
$5,004
$4,235 $4,363
$4,000
$3,101
$2,538
$2,000
$1,786 $1,840 $1,786
$2,035
$0
$25,000 family income
$50,000 family income
$75,000 family income
$100,000 family income
Source: Government of the District of Columbia, (August 2008) "Tax Rates and Tax Burdens - in the District of Columbia - A Nationw ide Comparison. 2007"
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
$150,000 family income
Page 63
February 9, 2009
Annual Sales Tax Burden for a Hypothetical
Family of Three in Philadelphia, 2007
Current 7% Sales Tax Burden Amount
Sales Tax Burden Amount with a 0.1% Increase
51 City Average Burden Amount
A 0.1% Sales Tax Increase will add the following amount to a family's tax burden:
$25,000 income
$50,000 income
$75,000 income
$100,000 income
$2,250
$8
$11
$15
$21
$150,000 income
$23
$2,062
$2,050
$1,844
$1,850
$1,645 $1,669
$1,650
$1,491 $1,512
$1,450
$1,321
$1,250
$1,003
$1,050
$803
$850
$1,046 $1,061
$814
$723
$650
$566
$574
$450
$250
$25,000 family income
$50,000 family income
$75,000 family income
$100,000 family income
Source: Government of the District of Columbia, (August 2008) "Tax Rates and Tax Burdens - in the District of Columbia - A Nationw ide Comparison. 2007"
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
$150,000 family income
Page 64
February 9, 2009
Business Privilege Tax Burden
• According to a study by Wharton Economist
Robert Inman, increasing the City’s business tax
rate will result in revenue increases in the short
term, but a reduction in revenues in the long term
– because businesses become less likely to stay or
move to Philadelphia.
Source: Robert Inman, “Local Taxes and the Economic Future of Philadelphia: 2008 Report.”
• We are one of only a few cities which tax
businesses on both income and receipts.
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 65
February 9, 2009
What Other Cities Are Doing
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 66
February 9, 2009
New York, NY
• Balanced $500 million problem for FY09
• New $4 billion gap for FY10 out of $43.3 billion
total budget
• The Four Components of Mayor Bloomberg’s
Plan:
– Reduce operating expenses: $1 billion
– More generous Medicaid reimbursements from
federal government: $1 billion
– Pension reforms, health care contributions and other
sources from unions and the state: $1 billion
– Increase sales tax to 8.625 percent from 8.375
Page 67
February 9, 2009
percent: $894 million
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
New York, NY
• Reduce operating expenses: $1 billion
– Reduce the number of education employees by 1,440:
$91 million
– Reduce subsidies to libraries by 7 percent: $20 million
– Reduce money for senior centers by 5 percent: $5
million
– Reduce the police force by 1,000 officers, to 34,700:
$48.9 million
– Reduce firefighter crews from 5 to 4 per company or
eliminate companies in dual-company fire houses
• (requires union negotiations)
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 68
February 9, 2009
New York, NY
• More generous Medicaid reimbursements from
federal government: $1 billion
– Not applicable to Philadelphia
• Pension reforms, health care contributions and
other sources from unions and the state: $1
billion
– Tier 5 pension system for new employees: $200
million
• work longer and retire at a later age
• legislation pending
– Bloomberg has asked for the suspension of pay
raises
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 69
February 9, 2009
Los Angeles, CA
• Balanced $406 million shortfall for FY09
• New $433 million problem in FY10 of $7
billion budget
• Considerations by Mayor Villaraigosa include:
– Recall take-home vehicles
– Voluntary retirement of union employees
– Layoffs
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 70
February 9, 2009
Chicago, IL
• Balanced $469 million problem for FY09
– 420 layoffs
– Furloughs for all employees
• Unions agreed to furloughs to avoid 1,000 layoffs
– New taxes, fines and fees
– Privatization of the Chicago Skyway, Midway Airport,
downtown parking garages and city parking meters
– Slowed police hiring
• New estimated $50.5 million deficit for FY10 (revised
twice since November)
• Mayor Daley has requested additional cuts from
departments and concessions from labor unions to help
balance
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 71
February 9, 2009
Phoenix, AZ
• Balanced $250 million problem for FY09
• New $270 million in FY10 out of $1.2 billion general
fund and $3.7 billion total budget
• Mayor Gordon’s Budget includes:
– Eliminate 50% of afterschool programs
– Cut branch library hours and only 1 of 8 branches now
open on Sunday
– Close "mini" city-hall offices
– Leave 250 police officer positions and 51 firefighter slots
vacant
– Reduce graffiti removal
– Eliminate softball leagues from 12 parks
– Eliminate 1,091 positions
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 72
February 9, 2009
Phoenix, AZ
• Reductions (continued)
– Increases in all fees
– Cut maintenance for parks and streets
– Increase the weekly garbage and recycling trash rate by $1.35
a month for homeowners from $25.45 to $26.80 a month and
increase commercial trash fees by $2 a month from $36.25 to
$38.25 a month
– Close transfer stations on holidays and weekends
– Reduce hazardous waste events from ten to four times a year
– Cut daytime security officers
– Eliminate weekend clean-up staff
– Cut quarterly pick ups for old sofas, kitchen appliances, yard
trimmings and other bulk items to twice a year.
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 73
February 9, 2009
Detroit, MI
• $300 million deficit for FY10
• Mayor Cockrel’s plan includes:
– 20% Mayoral paycut
– Cut $2 million from Mayor’s Office budget
– 10% paycut for all 15,000 City workers
• Alternative is 1,000 layoffs
• Downgraded to below investment grade due
to poor financial management
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 74
February 9, 2009
Fundamental Questions as We Address
the Budget Problem
• What city services should we provide, and at
what level?
• What is the best way to pay for these
services?
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 75
February 9, 2009
Where We Go From Here
• Continue to engage with City Council
• Maintain a vigorous public participation process
• Conduct meetings with stakeholders
• Mayor presents his budget to City Council on
March 19, 2009
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 76
February 9, 2009
FY 2010-2014 Budget Briefing for
City Council
Mayor Michael A. Nutter
February 9, 2009
Disclaimer: This is a planning document for discussion only. This document does not reflect any decisions by the Administration.
Page 77
February 9, 2009