Philly's Revised Fiscal Plan Has Tax Hikes, Layoffs

PHILADELPHIA — A new spending plan was revealed Friday by Mayor Jim Kenney and it comes in the wake of the coronavirus pandemic.

Mayor Jim Kenney unveiled the plan Friday, which includes tax increases and hundreds of layoffs.

The Office of the Department of Finance projects that without such changes, the City would face a $649 million deficit in the coming year—at least five times the projected deficit in 2009 after the Great Recession.

The revised Fiscal Year 2021 spending plan proposes an increase in the rate of the School District portion of the Real Estate Tax.

"This will enable the District to avoid draconian cuts that we know will set our kids back years and harm the future prosperity of our city," Kenney said.

There are also a wide range of reductions, revenue enhancements, and increased efficiencies, including:

• A reduction in overtime across government, including police and fire department overtime.
• Reduced investment in vehicles, technology, and other equipment.
• Reduced hours and programming at libraries and recreation centers.
• Reduced support for special events, non-profits, and the arts.
• A reduction in the use of local tax dollars for economic and workforce development, as well as affordable housing and homelessness prevention and assistance. This is possible since federal funds have been approved to support those areas, including direct assistance to businesses, individuals, and unemployed workers.
• Small increases to certain licenses and permit fees, and an increase in the cost of commercial trash pick-up.
• A delay in scheduled reductions of business tax rates and wage tax rates for Philadelphia residents.
• Rate increases for the non-resident portion of the wage tax and for the parking tax.
• Elimination of the one percent discount for paying Real Estate Taxes early.

To close the projected deficit, the new FY21 budget calls for salary cuts to most exempt employees and a workforce reduction by eliminating full-time, part-time, seasonal and temporary positions through attrition and layoffs.

"To those who are directly impacted by this workforce reduction, I pledge to you that we will offer resources and support to help you through this," Kenney said.

The result is a new budget that proposes General Fund spending to be $4.9 billion, a $341 million decrease over the original $5.2 billion budget.

It reflects the priorities listed above by guaranteeing the following:

• No police or fire layoffs.
• No reduction in emergency medical services.
• All fire stations will remain open.
• All health centers will remain open.
• All recreation centers will remain open.
• All libraries will remain open.
• PHLpreK and Community Schools will be maintained at current funding levels.
• Weekly residential trash collection and single-stream recycling will continue, with some adjustments.
• Using local and federal funding, the City will prioritize keeping Philadelphians in their homes with support for basic systems repairs, preventing mortgage foreclosure and support for renters.

"This budget pares City services down to the most essential, imposes layoffs on hundreds of workers, and reduces or eliminates some programs that are simply no longer affordable," Kenney said. "This is not what I want for our residents—and I understand if this leaves many of you angry. Frankly, I’m angry too. But after that anger fades, we must remember exactly what we are dealing with. What we have is both a pandemic and an economic catastrophe."