|FY 2015||Change||FY 2016|
“Today, my proposed FY16 budget recommends key investments that will strengthen our communities, with a particular focus on public safety and workforce development,” said Mayor Nutter. “This budget also faces an issue that we have been working on for a long time: public education. And, it continues to invest in our priorities from the last seven years; priorities that I believe will keep the City of Philadelphia a great place to live, work and raise a family.”
The proposed $3.95 billion FY16 General Fund budget has nearly $90 million in added expenditures, which represents a modest increase in spending over FY15. The majority of new spending, about $78 million, will go toward rising employee costs including pension, health care and arbitration awards.
Mayor Nutter is proposing a 9.34% property tax millage rate increase to raise $105 million to support Philadelphia school children, which would bring the property tax rate to 1.47%. Coupled with the proposed $160 million in new funding from the Commonwealth, this money would support School District Superintendent Dr. William Hite’s Action Plan 3.0 – a bold new plan for city schools to move away from crisis management and toward a successful, opportunity-driven model that better serves all students.
The Mayor has also committed to $169.6 million in City-supported Capital investments, the highest level of capital funding since FY02. Some of the Mayor’s FY16 spending proposals include:
$5.5 million in new funding to strengthen the Department of Licenses & Inspections (L&I) as recommended by the Special Independent Advisory Commission in its report, A Plan for a Safer City. This new funding will rise to $10.8 million total by FY18.
$3.9 million for Philadelphia Parks & Recreation to launch a new office dedicated to youth workforce learning and development through expansion of its existing summer jobs program, the establishment of a year-round career development, and the creation of a transitional jobs program.
$18 million for the Office of Fleet Management to replace aged vehicles in the Police Department, and large vehicles and apparatus in the Fire and Streets Departments.
$3.6 million for the Police Department to expand the use of body cameras work by officers and to support mandatory training and equipment including 1,300 new bulletproof vests.
$6 million for improvements to Police and Fire stations and other facilities.
$3.4 million for the Community College to offset the need to increase tuition as well as funding capital needs.
$1 million to support the Philadelphia Talent Collaborative, a new umbrella organization which will house the Graduation Coach Campaign, PhillyGoes2College, Campus Philly and Graduate! Philadelphia and other college attainment programs.
$1 million to the Free Library for the ‘Read by 4thCampaign’, a city-wide coordinated effort to ensure that every student is ready at grade level by 4th grade.
$1.5 million for improvements to various Free Library branch facilities, which represents the third year of funding for libraries totaling $4.5 million overall.
$18.7 million for improvements to Philadelphia Parks & Recreation facilities across the city.
$5 million for improvements to neighborhood commercial corridors including curbs, sidewalks, lighting, landscaping and parking.
$20 million for the Streets Department to pave neighborhood streets throughout the city, this represents a $4 million increase over FY15.
$31.9 million for the Office of Innovation and Technology to make citywide technology improvements, including the creation a new data warehouse for the Department of Revenue which will help the city capture even more delinquent tax revenue: $5.7 million in FY16 and a total of $20 million over the Five Year Plan.
$22 million for the purchase of new voting machines.
Each of these proposed investments is essential to meeting at least one of the five goals that Mayor Nutter has established for the City of Philadelphia. These goals are for Philadelphia to become one of the safest cities in America, to improve the education and health of Philadelphians, to make Philadelphia a place of choice, to become the greenest and most sustainable city in America, and for the government to work efficiently and effectively.
A proposal of future costs for the next fiscal year presented by the Mayor to City Council for approval.
A independent fiscal and accounting entity with a self-balancing set of accounts recording cash and/or other resources, together with all related liabilities, obligations, reserves and equities which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations.
Monies appropriated from one fund to another fund. This is done to reimburse the fund for expenses or to finance the operation of the other fund.
This visualization incorporates all available data in the city’s proposed operating budget for Fiscal Year (FY) 2016. More information will be added to this tool following passage by City Council.×
The Office of the Director of Finance is the chief financial and budget officer of the City and is responsible for the financial functions of the City including development of the annual operating budget, the capital budget, and capital program; the City’s program for temporary and long-term borrowing; supervision of the operating budget’s execution; the collection of revenues through the Department of Revenue; and the oversight of pension administration as Chairperson of the Board of Pensions and Retirement. The Office of Budget and Program Evaluation (OBPE) within the Office of the Director of Finance oversees the preparation of the operating and capital budgets. Once the operating and capital budgets are adopted, OBPE is responsible for monitoring operating spend by class code and department and capital budgets, including projects, budget lines, funding, historical records of bid awards, cost over runs, as well as other fiscal and project information.
Submitted on an annual basis, the operating budget is comprised of a consolidated budget of all the operating obligations and expected revenues of the City. The Home Rule Charter requires the Operating budget to be adopted by City Council at least thirty days before the end of the fiscal year. The City’s fiscal year begins July 1 and ends on June 30th of the following calendar year. The operating funds of the City, consisting of the General Fund, nine Special Revenue Funds (County Liquid Fuels Tax, Special Gasoline Tax, Health Choices Behavioral Health, Hotel Room Rental Tax, Grants Revenue, Community Development, Car Rental Tax, Acute Care Hospital Assessment and Housing Trust Funds) and two Enterprise Funds (Water and Aviation), are subject to annual operating budgets adopted by City Council. Included with the Water Fund is the Water Residual Fund. These budgets appropriate funds for all City departments, boards and commissions by major class of expenditure within each department. Major classes are defined as: personal services; purchase of services; materials and supplies; equipment; contributions, indemnities and taxes; debt service; payments to other funds; and advances and other miscellaneous payments. Expenditures for the repair of any property, the repaving or repairing of streets, and the acquisition of any property, or for any work or project which does not have a probable useful life to the City of at least five years are deemed to be ordinary expenses provided for in the annual operating budget ordinance. Appropriations for the use of any departmental board or commission are made to the department with which it is connected. The appropriation amounts for each fund are supported by revenue estimates and take into account the elimination of accumulated deficits and the re-appropriation of accumulated surpluses to the extent necessary. All transfers between major classes (except for materials and supplies and equipment, which are appropriated together) must have City Council approval. Appropriations that are not expended or encumbered at year-end are lapsed. The annual review process for the operating budget has several stages. The process begins with the Budget Call, where departments are required to submit their budget requests, including the following information: previous fiscal year actual expenditures, current estimates, the proposed current budget, the five year plan estimates and information on personnel projections. The information is also sorted by major class and fund which is the legal requirement. Departments submit their budget requests which are compiled and used by OBPE to discuss departmental requests and make budgetary recommendations. At least 90 days before the end of the Fiscal Year the operating budget for the next Fiscal Year is prepared by the Mayor and must be submitted to City Council for adoption. Once the budget review process is over, OBPE assembles the proposed budget which is known as the Mayor’s Operating Budget in Brief. Once the budget ordinance is introduced in City Council, the Operating Budget Detail is prepared and distributed in time for the annual operating budget City Council hearing process.
The Charter requires that at least 30 days before the end of each fiscal year, City Council must adopt by ordinance an operating budget and a capital budget for the ensuing fiscal year and a capital program for the next six years. If the Mayor disapproves the bill, he or she must return it to City Council with the reasons for his or her disapproval at the first meeting thereof held not more than ten days after receiving it. If the Mayor does not return the ordinance within the time required, it becomes law without his or her approval. If City Council passes the bill by a vote of two-thirds of all of its members within seven days after the bill has been returned with the Mayor’s disapproval, it becomes law without the Mayor’s approval. The City’s capital budget is appropriated by project for each department. Requests to transfer appropriations between projects must be approved by City Council. Any appropriations that are not obligated at year-end are either lapsed or carried forward to the next fiscal year. The capital budget ordinance, authorizing in detail the capital expenditures to be made or incurred in the ensuing fiscal year from City Council appropriated funds, is adopted by City Council concurrently with the capital program. The capital budget must be in full conformity with that part of the capital program applicable to the fiscal year that it covers.
Each Financial Plan reflects balanced budgets for each fiscal year of the City. All revenue and appropriation estimates are on a modified accrual basis in accordance with generally accepted standards. Revenues are recognized as soon as they are both measurable and available. The City considers tax revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are generally recorded when a liability is incurred, as in the case of full accrual accounting. Debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due; however, those expenditures may be accrued if they are to be liquidated with available resources. The City, through the Office of Budget and Program Evaluation (OBPE) estimates general fund revenues. The OBPE provides forecasts of the six major taxes, as well as the estimates for the other categories. OBPE employs a number of approaches to developing its forecasts of local revenues:
OBPE’s tax projections for the Five Year Plan are developed in conjunction with a revenue forecasting consultant, which created econometric models that include variables such as wage and salary disbursements in the metropolitan statistical area (MSA) and the county, personal income in the county, the unemployment rate, house prices in the county, real estate transaction growth, and national corporate profits. These models, together with their forecast of the Philadelphia economy, are used by the consultant to project tax revenues for the City with a focus on six taxes – Wage and Earnings Tax, Business Income and Receipts Tax, Real Estate Tax, Real Estate Transfer Tax, Sales Tax and Net Profits Tax. These projections are refined by OBPE after discussions with economists at the Federal Reserve Bank of Philadelphia. Estimates of revenues to be received from the Commonwealth are based on historical patterns, currently available levels, or on levels proposed in a budget by the Governor. Estimates of revenues to be received from the Federal Government are based on historical patterns, currently available levels, or on levels proposed in a budget by the President of the United States or in a Congressional budget resolution. Nontax revenues are based on current or proposed rates, charges or fees, historical patterns and generally recognized econometric models. Appropriation estimates include, at a minimum, all obligations incurred during the fiscal year and estimated to be payable during the fiscal year or in the 24 month period following the close of the current fiscal year, and all obligations of prior fiscal years not covered by encumbered funds from prior fiscal years. All cash flow projections provide for operations of the City to be conducted within the resources projected and are based upon assumptions as to sources and uses of cash. These assumptions include, but are not limited to, assumptions as to the timing of receipt and expenditure of cash and the issuance of tax or revenue anticipation notes of the City. All estimates take into account the past and anticipated collection, expenditure and service demand experience of the City and current and projected economic conditions. Budget schedules prepared on the legally enacted basis differ from the General Accepted Accounting Principles basis in that both expenditures and encumbrances are applied against the current budget, adjustments affecting activity budgeted in prior years are accounted for through fund balance or as reduction of expenditures and certain inter-fund transfers and reimbursements are budgeted as revenues and expenditures. A difference between the City’s fund balance on a GAAP and budgetary, or legally enacted, basis can arise when, for example, taxes are collected midyear (e.g. April 2014) for the current calendar year. While legally these revenues are collected for and accounted for during that fiscal year (FY15), on a GAAP basis only half of the revenue can be accounted for in that fiscal year (FY15). The other half of the tax revenue would need to be accounted for in the next fiscal year (FY16). Thus differences can arise between fund balance estimates on a GAAP basis versus a budgetary basis as a result of the timing of receipts.