Title
BUDGET ADDRESS
PRESENTED BY
MAYOR JOHN F. STREET
TO CITY COUNCIL
ON THURSDAY, FEBRUARY 3, 2000
GOOD MORNING COUNCIL PRESIDENT VERNA, MEMBERS OF CITY COUNCIL, MEMBERS OF MY CABINET AND ADMINISTRATION, SPECIAL FRIENDS AND GUESTS.
IT IS A RARE OPPORTUNITY, A UNIQUE CHALLENGE AND A SPECIAL PLEASURE TO APPEAR, AS MAYOR, BEFORE THIS LEGISLATIVE BODY IN WHICH I SPENT 19 OUT OF THE LAST 20 YEARS.
HAVING SAT THROUGH 19 BUDGET MESSAGES, I UNDERSTAND HOW YOU FEEL. MY MESSAGE WILL BE BRIEF.
IN MY INAUGURAL ADDRESS, YOU HEARD ME DESCRIBE MY VISION OF A BETTER PHILADELPHIA — MY COMMITMENT TO NEIGHBORHOODS, TO EDUCATION, TO BLIGHT REMOVAL, TO “TOURISM DEVELOPMENT,” AND TO JOB CREATION.
NONE OF THIS WILL BE POSSIBLE IN THE YEARS TO COME IF WE DO NOT EXERCISE THE DISCIPLINE TO LIVE WITHIN OUR MEANS.
TODAY I PROPOSE AN OPERATING BUDGET OF $2.7 BILLION AND A CAPITAL PROGRAM OF $140.3 MILLION.
THIS BUDGET ALLOWS US TO BOTH REALIZE OUR VISION OF A BETTER PHILADELPHIA, AND MAINTAIN OUR FISCAL DISCIPLINE.
THE FISCAL STABILITY OF THIS CITY IS IMPORTANT BECAUSE:
IT GIVES CONFIDENCE TO DEVELOPERS, WHO BRING JOBS AND ECONOMIC BENEFITS TO OUR CITY
IT ATTRACTS NATIONAL RETAILERS TO PHILADELPHIA, WHO BRING MUCH NEEDED TAX REVENUES
IT LOWERS INTEREST RATES ON THE FUNDS WE BORROW FOR IMPROVEMENTS IN OUR RECREATION CENTERS, OUR LIBRARIES AND OUR HEALTH CENTERS, AND
AS A RESULT PHILADELPHIA HAS JOINED THE RANKS OF THE NATION’S PREMIER CITIES.
WE ALL SHARE A VISION OF A BETTER PHILADELPHIA THAT IS A WORLD CLASS CITY WITH A VIBRANT AND FLOURISHING ECONOMY SUPPORTED BY LOWER TAXES, ENHANCED CITY SERVICES AND A FISCALLY SOUND AND RESPONSIBLE GOVERNMENT.
THE BUDGET I PRESENT TODAY IS A CARRY FORWARD BUDGET. IT LOWERS TAXES. IT ENHANCES OUR CURRENT LEVELS OF SERVICE —
NOT BY INCREASED SPENDING, BUT BY SMARTER SPENDING.
LOWER TAXES AND BETTER SERVICE WILL MAKE PHILADELPHIA MORE COMPETITIVE AS A PLACE TO LIVE AND WORK.
THE TAX REDUCTION PROGRAM WHICH EXTENDS THROUGH FISCAL YEAR 2005 WILL SAVE PHILADELPHIA RESIDENTS AND BUSINESSES $1.1 BILLION IN WAGE AND BUSINESS TAXES.
IN ADDITION, IN ORDER TO BALANCE THE BUDGET, WE WILL AGGRESSIVELY PURSUE $60 MILLION IN SAVINGS BY 2005, THROUGH MANAGEMENT AND PRODUCTIVITY IMPROVEMENTS.
THIS IS WHY WE ARE WORKING CLOSELY WITH THE GREATER PHILADELPHIA CHAMBER OF COMMERCE, THE AFRICAN AMERICAN CHAMBER OF COMMERCE AND THE PHILADELPHIA HISPANIC CHAMBER OF COMMERCE. THEY WILL TO HELP OUR CITY MANAGERS IDENTIFY NEW AREAS FOR POTENTIAL COST SAVINGS AND REVENUE ENHANCEMENTS.
WHILE THE BUDGET AND FIVE-YEAR PLAN INCLUDE FUNDING FOR CITY SERVICES AND KEY INITIATIVES — LIKE EXPANSION OF AFTER SCHOOL PROGRAMS, — IT IS A CONSERVATIVE BUDGET.
IT MUST BE CONSERVATIVE BECAUSE, BEGINNING THIS YEAR, WE WILL START SPENDING THE $205.7 MILLION SURPLUS THAT WE ACCUMULATED OVER THE PAST SEVEN YEARS. IN FACT, WE EXPECT ABOUT A $55 MILLION OPERATING DEFICIT IN FISCAL YEAR 2000 AND WE PROJECT OPERATING DEFICITS IN THREE OF THE NEXT FIVE YEARS.
THOSE OPERATING DEFICITS DO NOT COME AS A COMPLETE SURPRISE. THE SURPLUS WAS BUILT UP IN ANTICIPATION OF INCREASED COSTS, INCLUDING OUR CURRENT LABOR CONTRACTS.
THE $205.7 MILLION SURPLUS WAS CLEARLY A FISCAL ACHIEVEMENT, BUT THE GREATEST MISTAKE WE COULD MAKE WOULD BE TO FORGET THE PAINFUL HISTORY OF OUR FINANCIAL CRISIS OF THE EARLY 1990’S.
YES, WE HAVE RECOVERED FROM THE WORST FISCAL CRISIS IN THE CITY’S HISTORY AND ACCUMULATED A RECORD SURPLUS. BUT THIS SURPLUS WAS BUILT, IN PART, BECAUSE OF EXTRAORDINARY FACTORS.
FOR EXAMPLE:
THE UNPRECEDENTED GROWTH IN THE NATIONAL ECONOMY
ONE TIME SAVINGS FROM PRODUCTIVITY INITIATIVES
SAVINGS ACHIEVED THROUGH THE IMPLEMENTATION OF COST EFFECTIVE RISK MANAGEMENT PROGRAMS WHICH HAVE NOW BEEN STABILIZED, AND
RENTAL SAVINGS REALIZED BY CONSOLIDATING CITY OFFICES.
EVEN IF WE SPEND SMART, WE PROJECT THAT OUR $205.7 MILLION SURPLUS WILL SHRINK TO $4.9 MILLION BY THE END OF FISCAL YEAR 2005 WITHOUT ACCOUNTING FOR ANY INCREASED COSTS ASSOCIATED WITH NEW LABOR CONTRACTS.
MOREOVER, OUR ABILITY TO MAINTAIN THE FISCAL BALANCE IN THE FIVE YEAR PLAN COULD BE THREATENED BY OTHER FACTORS BEYOND OUR CONTROL.
WE ARE VULNERABLE TO ANY DOWNTURN IN THE NATIONAL AND LOCAL ECONOMIES.
WE ARE VULNERABLE TO ANY INCREASED DEMAND FOR CITY SERVICES AS A RESULT OF WELFARE CUTS.
WE ARE VULNERABLE TO ANY CHANGES IN STATE OR FEDERAL REIMBURSEMENT FORMULAS.
WE ARE VULNERABLE TO ANY SPIKES IN HEALTH BENEFITS COSTS FOR CITY EMPLOYEES.
WE ARE VULNERABLE TO THE POSSIBLE LOSS OF THE $18 MILLION ANNUAL RENTAL PAYMENT FROM PGW.
AND WE ARE VULNERABLE TO THE CONTINUING LOSS OF REVENUES AS A RESULT OF ELECTRIC DEREGULATION.