Mayor Nutter's Budget Update | Addressing the Budget Shortfall: A Snapshot

In the last fiscal year, the global financial crisis has caused a severe loss of revenues in the City of Philadelphia’s budget. In November 2008, the Nutter Administration implemented a series of rebalancing actions to address a projected $1.035 billion dollar shortfall over the FY09-FY13 Five Year Plan. In January 2009, the Nutter Administration announced that the City faced another estimated $1.045 billion shortfall over the FY10-FY14 Five Year Plan. As of March 2009, FY10-FY14 revenue projections have been further reduced by over $333 million.

These are highlights of some major actions that were taken in FY09-FY13 and are proposed for FY10-FY14 to address the combined $2.4 billion projected shortfall. It should be noted that most of the reductions taken and proposed were made to the discretionary portion of the City’s General Fund expenditures – 42% of the FY10 budget. Over 58% of the City’s budget consists of mandated services and costs that the City cannot reduce without cooperation from others — referred to as nondiscretionary spending. In some instances the City proposes reductions to the General Fund’s non-discretionary costs. As such, these items require the cooperation of other entities before they can be implemented.

FY09-FY13 Rebalancing Actions:

Enhanced efforts to collect delinquent taxpayer collections: $8.2 million annually
Furloughs for exempt employees in FY09 and FY10: $1.7 million in FY09 and FY10
Salary reductions in the Mayor’s Office and the Managing Director’s Office: $400,000 annually
Reduced employee overtime city-wide: $18.5 million annually
Eliminated vacant and filled positions city-wide (approximately 800 full-time and 2,000 part-time and seasonal positions): $33.6 million annually
Increased fines and fees: $4.8 million annually
Consolidated information technology operations: $850,000 annually
Closure of approximately half of the City’s 73 pools: $1.4 million in FY10 and $3 million annually in FY11-FY13
Reductions in Free Library staffing, materials and supplies: $4 million in FY09 and $8 million in FY10-FY13
Suspension of City-funded wage and business privilege tax (BPT) cuts until FY15: $230 million over FY09-FY13
Eliminated bulk and tire collections, and special collections for leaves: $1.2 million annually
Fleet reductions: $7.9 million
Reductions in Arts and Culture: $3 million annually

FY10-FY14 Plan Proposal:

Additional employee overtime reduction: $2 million annually
Waste minimization efforts in the Streets Department: $2 million annually
Fleet reductions: $1.5 million annually
Energy efficiencies city-wide: $1.5 million in FY10 and $3 million in FY11 and FY12
Staff reductions city-wide (approximately 250 positions): $11 million annually
Anticipated savings from pensions, health benefits, and work rule changes: at least $25 million annually
Changes in pension amortization assumptions: over $330 million from FY10-FY14
Eliminating reserve for city–wide wage increases: $180 million from FY12-FY14
Increasing Fire Department EMS fees: $5 million annually
Enacting fees for commercial trash collection: $7 million annually
Instituting a utilization review process related to prescription medications: $1.125 million annually
Reducing demolitions by the Department of Licenses and Inspections: $2.1 million annually
Freezing civilian police hiring: over $700,000 annually
Temporary 1% sales taxes increase in FY10-FY12: over $340 million from FY10-FY12
Temporary property tax increase of 16 mills in FY10 and 12 mills in FY11: over $270 million from FY10-FY11