The Mayor’s proposal contains a Contingency Plan in order to demonstrate to the Pennsylvania Intergovernmental Cooperation Authority (PICA) that the City has a credible and swiftly implementable alternative to the Mayor’s preferred approach in the event the City does not gain Commonwealth approval of the pension and sales tax initiative.
The contingency plan would require that the City’s Real Estate Tax increase by 21 mills in 2010 to 103.64 mills, by 17 mills in 2011 to 99.64 mills, and by 5 mills in 2012 through 2014 to 87.64 mills if the Commonwealth does not approve the pension plan and sales tax legislation. These rate changes will generate an additional $252.9 million over the FYP.
The contingency plan also anticipates implementing an additional $405 million (a Tier 2) in departmental expenditure reductions over the FYP in order to ensure that the FYP is balanced. These reductions would have to be implemented at the beginning of FY10 by the Administration in the event the pension and sales tax legislation is not approved by the Commonwealth. Those reductions total $81 million annually — $405 million over the FYP— and would be in addition to the $58.8 million in expenditure reductions and fee increases already included in the FY10 budget.
- Laying off 256 Police Recruits, saving $12.3 million
- Freezing Sworn Police Hiring, saving $6.5 million
- Deactivating 3 engine companies, 3 ladder companies and 3 EMS units, saving $16.8 million
- Reducing waste collection to 3 times per month, saving $4.8 million
- Reducing City-wide cleaning, saving $1.7 million
- Close one Health Center, saving $2.3 million
- Reducing Supportive Housing services, saving $3.8 million
- Reducing hours at Recreation Centers, saving $7.2 million
- Reducing hours at Libraries, saving $3.2 million
The Administration has also developed a set of FYP balancing scenarios in the event the Commonwealth approves either the pension or sales tax legislation, but not both. Those scenarios utilize the Tier 2 departmental reductions and a smaller property tax increase, where necessary, to ensure a balanced FYP and sufficient resources for the City’s cash management purposes. Each of these options would require painful steps that the Administration believes should be avoided, but that would have to be implemented to ensure a balanced FYP that meets the requirements necessary for subsequent approval by PICA.