Legal News

Philadelphia's Budget Measures Must Wait for State Budget Passage, Senate Insiders Say

By Brian Harris

By Amaris Elliott-Engel
Of the Legal Staff

The city's budget process remains in suspended animation. And, if the Senate holds to a timetable described by key aides to the leadership, it may be there for quite some time.

Even though Philadelphia City Council passed a budget earlier this year that balanced a billion-plus deficit, the city is still waiting for the General Assembly's approval for raising the city sales tax by 1 percent.

But there has been no action on the measures -- and adjustments to city retirement plans -- that are needed to implement the budget, and Philadelphia is facing an Aug. 15 deadline set by the Pennsylvania Intergovernmental Cooperation Authority, which must approve Philadelphia's city budgets. Without approval in Harrisburg for the city's pension and sales tax measures, the city must prepare a new fiscal-year plan involving severe cuts by the end of the month.

While the Democratic-controlled House of Representatives appears likely to pass a bill Tuesday that would let the city temporarily raise the sales tax and adjust pension payments, the Republican-controlled Senate won't act on the bill until after the state budget passes, according to interviews.

When asked today if there will be action on Philadelphia's sales tax and pension requests before Aug. 15, Steve MacNett, counsel for the Senate Republican caucus, said, "They're viewed as items that probably don't get our attention until our state budget is finalized."

Erik Arneson, a spokesman for Republican majority leader Sen. Dominic Pileggi, R-Chester, said that the Philadelphia-centric legislation won't advance until the fiscal needs of other counties are addressed within the state budget.

"While they're (the senators) very sympathetic to Philadelphia and fully recognize the central role it plays in the state economically and culturally, they're elected to represent the interests of their areas," Arneson said.

The state budget, which is supposed to be passed into law by July 1, is stuck in a stalemate between the Senate Republican caucus, which opposes raising taxes to fund this year's state budget at a level closer to last year's budget, and Democratic Governor Edward G. Rendell and the House Democrats, who want to raise taxes. A stopgap budget based on the bare-bones budget approved by the Republican Senate is being considered in the House of Representatives with further funding for other areas of government subject to more negotiations, Arneson said.

Even after the state budget is passed into law, it's going to be difficult for Philadelphia to get support to raise its sales tax and tinker with its pension management because the Republican caucus thinks there should be reforms in how Philadelphia manages fiscal matters, including the Board of Revision of Taxes, Arneson said.

Luke Butler, a spokesman for Mayor Michael  A.  Nutter, said the state budget negotiations are understandably "taking up a lot of oxygen in the room," but Nutter continues to make trips to Harrisburg to ask legislators to approve the Philadelphia-centric measures separately and before a state budget accord is reached. "The alternative is unthinkable," Butler said.

Nutter held a rally last week to push legislators to action so the city can avoid layoffs and cuts to government services. The mayor said in a press release that 3,000 jobs, including around 970 police officers, under his direct hiring authority would have to be cut; trash pickup would be reduced to twice a month; and all recreation centers and all regional and branch libraries would have to close.

Without passage of the sales tax and pension measures this month, the city's fiscal plight will become worse because the city will lose out on more and more possible sales tax revenue and will remain unable to demonstrate a balanced budget in order to borrow money, Butler said.

In other news, court officials have detailed for the first time how much of a hit the First Judicial District would take if Harrisburg does not act on the city of Philadelphia's sales tax and pension requests.

Common Pleas President Judge Pamela Pryor Dembe and Court Administrator Dave Lawrence said the FJD would likely be funded at close to $90 million under "Plan C," requiring the court to lay off 293 employees, close the courthouse for 29 days this fiscal year, or some combination of layoffs and courthouse closures.

At that budget level for the courts, other criminal justice entities would be affected, the city prison would become even more overcrowded and police overtime would skyrocket, Dembe said.

Full post as published by The Legal Intelligencer Blog on August 03, 2009 (boomark / email).