PHILADELPHIA – Mayor Jim Kenney today delivered to Philadelphia City Council the Fiscal Year 2022 operating budget, capital program and Five Year Plan that will serve as financial blueprints for the city’s equitable recovery in the wake of the COVID-19 pandemic. The documents can be found here.
“This budget was created with one guiding vision: that Philadelphians in every neighborhood benefit from what I believe will be a strong recovery,” said the Mayor. “It focuses on providing core services, maintaining our long-term fiscal health, reducing racial disparities among Philadelphians, and advancing equitable outcomes for all Philadelphians. While the threat of the pandemic is still very much with us, this plan envisions a path beyond the devastating impact of the virus.”
An integral part of the Plan is an estimated $1.4 billion from the American Rescue Plan, passed by Congress and signed into law by President Biden. This relief will greatly help ease the effects of projected revenue declines from business closures and changes to workplace occupancy that were necessary to slow the spread of the virus.
“The importance of this federal relief is tempered by the fact that this is one-time money,” cautioned the Mayor in his address to City Council. “While the amount is substantial, it isn’t enough to restore the City to its pre-pandemic service levels or have funds for ongoing pandemic response. We still must make some tough choices.”
Despite that caution, the Mayor proposed ambitious investments in areas of education, economic development, violence prevention, public health, and quality of life for Philadelphians. Highlights of the plan include:
- The plan proposes no tax or fee increases. To help jumpstart our economy and provide relief to workers, it enacts Wage Tax reductions to the lowest level in 50 years and achieves the biggest Wage Tax rate cut in more than a decade, with a deeper cut than was even included in the pre-pandemic plan for FY22. “This will help jumpstart our economy and provide relief to workers,” said the Mayor.
- The plan restores previously planned reductions to business tax rates and the Parking Tax rate will return to pre-pandemic levels.
- The Five Year Plan calls for the City to invest a quarter of a billion dollars in the Community College of Philadelphia, with $54 million dedicated to the Octavius Catto Scholarship. This initiative will enable 5,000 first-time, full-time, students to attend college tuition-free, as well as receive food, book and transportation stipends.
- PHLpreK will grow with 700 new slots (to 4,000 in the coming fiscal year).
- Offerings at Community Schools will expand to include case management support.
- The Five Year Plan envisions a return of teachers and students to classrooms, with $1.38 billion in funding for the School District of Philadelphia. This is on top of the $1.3 billion that the District will receive through the American Rescue Plan.
Inclusive Economic Growth:
- The budget includes $3 million for the Office of Workforce Development and proposes $2 million for a Transitional Jobs Program focused on supporting our Gun Violence Intervention program.
- Other workforce investments include $150,000 for the “Color Me Back Same Day Pay” program, $1.5 million in adult education programs, and $170,000 for digital equity initiatives.
Safer and More Just City:
- To improve the City’s response to issues related to mental health, the Plan funds a $6 million expansion of the pilot 911 triage and co-responder program, as well as a $7.2 million expansion of behavioral health mobile crisis units and a hotline to improve emergency mental health services.
- Nearly $2 million is proposed to establish a new Citizen Police Oversight Commission to restore public confidence, to review citizens’ complaints, and to create better police community interactions.
- The Plan also allocates $750,000 for expanded police officer training to ensure that officers have the tools and skills to make good decisions when put in difficult situations.
- $400,000 is earmarked for the Early Intervention System, a critical piece of the police reform plan which uses technology to help identify and reward positive officer behaviors as well as intervene before an officer warrants formal redirection through counseling and or education, based disciplinary action.
- The plan sets aside $1.3 million to expand violence interruption programs like Community Crisis Intervention Programs and Group Violence Intervention.
- $500,000 is allocated for an expansion of Targeted Community Investment Grants for violence prevention programs run by community partners.
- Also proposed is $1.35 million for community improvements including graffiti clean up, vacant lot remediation, clean and seal efforts, and improved lighting and visibility in key neighborhoods.
Keeping Philadelphians Healthy and Housed:
- The Plan sets aside $50 million for COVID-19 containment, as part of a $75 million Reopening and Recession Reserve.
- To eliminate health disparities and safeguard residents from threats that cause disease and injury, the City will invest $250,000 to build on existing efforts for a citywide strategy to improve racial equity in health outcomes.
- To continue the City’s battle against the scourge of opioids, the Plan allocates $400,000 for opioid treatment, and $500,000 for the Opioid Response Unit, the multi-departmental effort to address the opioid epidemic.
- The plan adds $12.9 million for shelter beds for Philadelphia’s unsheltered population, to replace one-time federal dollars.
Quality of Life Investments:
- Additional investments in Philadelphia’s shared public spaces include $2.9 million to restore five-day service, after-school programs, and other services at libraries and $6.9 million to restore recreation programs and reopen pools.
- The Capital program includes $317 million over six years in street paving, reconstruction, and ADA curb ramps. With 132 million in FY22, this is the largest single-year investment in the City’s history.
- To help our commercial corridors, the plan provides $300,000 in additional funding for storefront improvement and security grants.
- $450,000 is allocated to the Streets Department for the PHL Taking Care of Business Corridor Cleaning program.
- Other significant capital projects over the next six years include Citywide Technology Improvements and Enhancements ($136.8 million), FDR Park Master Plan Improvements ($50 million), and Neighborhood Commercial Centers ($26.5 million).
“To align the proposals with our goals for reducing racial disparities, the budget process this year included opportunities for diverse and inclusive input, through focus groups, town halls, and an online survey,” shared Budget Director Marisa Waxman. “We’ve expanded who is involved, with a concerted effort to engage Black and brown Philadelphians, and we’ve altered how we make decisions, to produce budgetary decisions that we expect to have a measurable impact on improving racial equity.”
The proposed FY22 operating budget assumes $5.22 billion in revenues, and $5.18 billion in expenses, leaving a $109 million projected fund balance. Expenses in the spending plan were reduced by cuts of up to five percent in many of the City’s back-office functions. The plan includes restorations of some cuts imposed in the current fiscal year because of the pandemic.
The $109 million fund balance is far lower than the pre-pandemic level of $439 million and represents just over two percent of revenues. The City’s internal goal for a fund balance is usually six-to-eight percent, and national best practices call for a 17 percent fund balance. The operating budget also sets aside $75 million as a Recession and Reopening Reserve, as well as a $25 million reserve for pending labor contracts.