Legal News

City Still Must Prepare Worst-Case Budget By End of Month

By Brian Harris

By Amaris Elliott-Engel
Of the Legal Staff

The city must still prepare a new five-year balanced budget involving severe cuts in spending by the end of August.

State Senate Majority Leader Dominic Pileggi, R-Delaware, asked the state authority that approves the city of Philadelphia's five-year budget plans for fiscal soundness to delay by a month the city's deadline to crunch new budget numbers. The Senate is considering a bill the city needs to see approved in order to plug a looming deficit in the municipal budget.  The legislation would allow the city to raise its sales tax and readjust some of its pension obligations.

Without approval to raise sales tax and recalculate city workers' pensions, the city can only strike a balanced budget by cutting services. The city has a gaping hole in its fiscal future because of declining tax revenues and poor pension fund performance.

The board of the Pennsylvania Intergovernmental Cooperation Authority declined to push back the deadline at its meeting today.

While the city may yet get permission in Harrisburg for its pension and tax bill, the Nutter administration has said it will be forced to implement its worst-case scenario budget,  "Plan C", and City Council will convene three times to consider a new resolution passing a new five-year plan.

Pileggi has promised the Senate will act on the bill by the end of the month, but the majority leader has not promised to pass the measure without amendments that would cause it to require reconciliation by a joint legislative conference committee.

It will take six weeks for a sales tax increase to go into effect, according to city officials, so a longer delay in Harrisburg could cost the city $10 million in sales tax revenues in October. The delay in passing the sales tax bill into law has already cost the city the projected sales tax figures from August and September, they said.

The state House of Representatives, which is controlled by Democrats, has approved the bill.

Full post as published by The Legal Intelligencer Blog on August 18, 2009 (boomark / email).