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MAYOR’S BUDGET ADDRESS – JOHN F STREET - JANURY 2006
DELIVERED 1-24-2006 TO CITY COUNCIL
Good morning President Verna, Majority leader Blackwell, Majority Whip Tasco, Minority Leader O’Neill, Council members, distinguished guests, and friends –
I am truly honored to stand before the distinguished legislative body of the next great city in America – The Philadelphia City Council.
I am here today to present for your consideration my proposed __________ General Fund operating budget, my proposed capital budget and program along with my proposed Five Year Financial Plan for FY 07 through 11.
In its October 2005 edition, the prestigious magazine National Geographic Traveler called Philadelphia the next great city in America, saying: “After decades of relative obscurity, Philadelphia, a classic American city, is ready to step back into the national limelight.” Philadelphia has recovered from the economic distress that held this city hostage when Ed Rendell became Mayor and I became President of City Council in 1992, a partnership that provided strong cooperative political leadership at a critical juncture in this city’s history. That recovery gained an identity with the opening of the Pennsylvania Convention Center and the Marriott Hotel in 1993. These and other investments transformed Philadelphia into a top tier destination city. A city where visitors stay in first class hotels, eat at some of America’s finest restaurants, see live performances at World Café or Rotunda, and enjoy the museums and public art along the Parkway. We also flawlessly hosted the Republican National Convention, the X-Games and the Live 8 concert attended by hundreds of thousands of people from throughout the country. No doubt our City has the capacity to host the international Olympics games. (By the way, March Madness returns to the Wachovia Center as the Atlantic 10 Conference hosts the 2006 NCAA Division 1 men’s basketball tournament first and second rounds.)
During the early 1990s, Philadelphia’s signature corporations, Comcast, GlaxoSmithKline, Rohm & Haas, Aramark, and PNC made important long-term commitments to stay in this city. Equally as important has been the development of small-to-mid-sized technology based businesses at the Navy Yard, Keystone Innovation Zone and the University City Keystone Innovation Zone which provide opportunity to grow small businesses, further contributing to the City’s vibrant economic future. The growth and renewal of Center City has been an enormous benefit to all. (PAUSE) My commitment always has been to turn our attention to neighborhoods without turning our backs on Center City.
But as you know, at heart, I am a neighborhood mayor. Philadelphia has always been known as a city of neighborhoods. The courage and passion of long-term residents is infectious and a source of great personal satisfaction for me and I dare say most members of this Council. Together we have created a new look, a new spirit and a better quality of life in neighborhoods. We have invested in neighborhood recreational centers, libraries and other critical public facilities. Under our Neighborhood Transformation Initiative we have spent hundreds of millions of dollars to demolish dangerous buildings, clean and green vacant lots and build much needed housing. Market rate and affordable housing developments are blooming throughout our city like daffodils on a warm spring day. Thousands of housing units have been completed since 2000. Westrum’s Brewerytown development is transforming an entire North Philadelphia neighborhood and the Toll Brothers development at the Naval Home is walking the delicate line between historic restoration and housing rehabilitation on a project I once thought might never happen. The Philadelphia Housing Authority has developed the finest public housing in America. (Carl Greene, please stand!)
We are dramatically changing the face of housing in this city for poor, middle-income and upper income families. The success required the persistence of a diverse group of leaders including Sister Mary Scullion, Pat DeCarlo, Kenny Gamble, John Westrum, Joe Zuritsky, Bob Toll and many critical but lesser-known citizens, churches, CDCs, and civic associations. I thank them and each of you for your efforts. (PAUSE)
Over the past several years, this Administration with your support has made unprecedented investments in children and youth. We have dramatically expanded prevention services, by investing approximately 80 million dollars to create, among other things, a network of over |1013|50 new afterschool programs located at schools, churches and recreation centers, serving approximately 40,000 children. Twenty-three school based beacon programs provide safe havens for hundreds of children and families, nine teen centers offer a wide range of activities for high risk teens, and our youth job training and employment programs are reaching many more. We have enhanced our recreation centers by adding 120 afterschool programs and by creating spray parks, which delight our youngsters with safe summer water play.
We have strengthened fragile families by investing more than $17 million dollars to create innovative parenting programs and home visitation services, reaching over 4,000 families. We invested $5 million dollars to establish a Child Care Health and Safety Fund to support capital improvements in child care facilities. A lead abatement strike team was established to enhance our efforts to eliminate lead hazards that threaten our young children.
These historic investments are working. The infant mortality rate in Philadelphia has fallen by 20% since 1997. The number of children with age appropriate immunizations increased for the second straight year; child abuse cases are 35% lower than in 1996. The number of children testing positive for lead poisoning was cut in half between 1999 and 2002, even though the number of children tested for lead increased over the same period by 45%. There has been an 11% decrease in the number of juveniles arrested for major crimes and births to unmarried teenagers are down 7% since 1999.
We are proud of the continuum of prevention programs that we have initiated, and encouraged by the results we are seeing. We remain committed to maintaining, and ultimately expanding, these programs so that every child in Philadelphia can have the supports needed to reach his full potential.
But while we celebrate the progress, we also understand there is much more work to do.
We remain alarmed by the tragic deaths resulting from co-sleeping that have plagued families throughout our region; co-sleeping is practiced primarily because families cannot afford to purchase cribs for their newborns. To alleviate this problem, we are proposing an additional $250,000 to the Maternity Care Coalition’s Cribs for Kids program to ensure that every family in need receives this critical assistance.
And while the number of juveniles involved in major crimes is down significantly, homicides in general and certainly for young people, have increased over the past couple of years.
In addition to preserving and expanding our prevention programs, we are expanding, with financial assistance from both the state and federal government, our highly successful Youth Violence Reduction Partnership. We are about to enter our fifth police district. This program has demonstrated extraordinary success in reducing the number of young victims of homicide. However, to reach a younger group of potential victims and perpetrators of violence, we will soon launch a citywide Adolescent Violence Reduction Partnership. The AVRP program will provide intensive services to high risk children between the ages of 10 and 15, in an attempt to keep them in school and out of our juvenile justice system.
Public Safety remains a top priority of this Administration. While crime over the past six years has decreased, the recent spike in homicides is unacceptable. The Police Department has launched a new, more strategic policing program in targeted high crime areas and we are committed to getting more residents involved in the war against drugs and violence in an all out effort to reduce the number of homicides. To this end, I proposed to spend an additional $10 million new dollars in police overtime to fight crime and violence in our City. (PAUSE)
The Department’s work is made more difficult by the Commonwealth’s refusal to recognize the special challenges related to guns in urban areas. Until the General Assembly strikes a better balance between the right to bear arms and the tragic consequences of easy access to weapons our efforts will be compromised. We must have limits on gun purchases to one per month and laws that require the reporting of lost or stolen firearms. Easy access to guns will remain a threat to the safety and welfare of our citizens and police officers alike.
To be a vibrant, safe and compassionate city, we must continue to work effectively to help the homeless and those recently released from our prisons. I am proud that our city is nationally recognized as a model in dealing with the challenges of homelessness and reintegration. And I thank Majority Leader Jannie Blackwell for her leadership in this area. Our ten-year program to end homelessness in our city will solve this problem. (PAUSE) I am also pleased to announce that the proposed FY 07 budget contains one million dollars to fund the Mayor’s Office for the Reentry of ex-offenders. We must slow the growth of our prison population while also reducing recidivism and crime on the street. We cannot afford to pay $28,000 dollars per year to incarcerate knowing full well that 7 out of 10 prisoners that leave our prisons are doomed to return in 3 years.
This administration will continue to invest in neighborhoods because we strongly believe there is a direct correlation between thriving neighborhoods and a prospering Philadelphia, a reality often underappreciated or overlooked. A fundamental difference between this administration and some of its critics is our belief that the link between a city’s quality of life and its economic growth is just as important as the link between tax reduction and economic growth. I believe both are necessary to a strong city. (PAUSE)
Our Neighborhood Transformation Initiative has been an overwhelming success and must be continued. I will shortly transmit legislation to establish the “New River City Economic Development Fund” with a recommended funding level of $125 million to make investments in neighborhoods, other NTI related projects and to leverage private investment along Philadelphia’s waterfront. Making Philadelphia the “New River City” in America is the centerpiece of our economic agenda. Thousands of jobs have been created at the Navy Yard since this administration took office and cruise ships now dock in Philadelphia annually; businesses like Barthco International and App Tec Labs have moved to the Navy Yard and the University of Pennsylvania and Children’s Hospital have expanded eastward as they extol the virtues of the New River City plan. The building of river related infrastructure will leverage hundreds of millions of private investment dollars.
The FY07 Operating Budget and Five Year Financial Plan contain debt service to borrow 150 million dollars to provide funding for two cornerstones of the City's economic vitality: our Arts and Culture institutions and our neighborhood commercial corridors.
The City’s cultural assets are economic engines for the region. They are not, however, self-sustaining. The Dali exhibit at the Philadelphia Art Museum attracted 370,000 visitors, generated 20,700 room nights, and had an economic impact of 54.9 million dollars. Without financial support from both the public and private sectors crucial organizations such as the African American Museum, the Philadelphia Art Museum and Freedom Theater will be crippled or, indeed, go out of business. Other organizations, such as the Please Touch Museum have raised millions of private dollars, and with City support can proceed with projects that will not only enrich the lives of residents, but also support the City’s historic preservation, job creation and hospitality objectives. The Zoo and other similar institutions have substantial private support but need capital infrastructure funding that cannot be generated from private funders. There can be no doubt that investments such as these will have a positive and lasting impact on Philadelphia and the region as the City's investments leverage increasing support for this powerful economic engine. By making these investments, we will create an enduring legacy that will sustain Philadelphia for our children and future generations.
Beginning in FY06, the City broadened the scope of the Neighborhood Transformation Initiative (NTI) to focus attention and resources on neighborhood commercial corridors. In FY07, the Administration will undertake a major initiative, NTI’s ReStore Commercial Corridor Initiative, weaving together the principles of NTI with the strategies developed in the City’s Economic Development Blueprint, supported in part by $65 million in bond proceeds proposed as a part of the FY07 Operating Budget and FY07-FY11 Five Year Financial Plan. This will allow the city to breathe new life into long neglected commercial corridors by putting in new curbs, sidewalks, lighting, trees and façade work so these areas will be appealing places for residents to shop and work. To help those small businesses, we propose to support the Small Business Guarantee Fund proposal sponsored by Councilman W. Wilson Goode. Under the program the city would guarantee 20% of the loan in the event of default. $6 million dollars would generate a $30 million dollar loan pool.
National Geographic Traveler in its review of this city also concluded, “Philadelphia comprises . . . 152 distinct neighborhoods ranging from working-class South Philly to yuppified Manayunk to ivied University City to up-an-coming Northern Liberties and Fishtown. But it is the Center City, the heart of downtown, that’s energizing the rebirth.” Unlike many other places, our Center City is a residential neighborhood as well as a business district. Its population has increased by 13% since 2000. That growth is under girding the resurgence of retail in our central business district. The recently opened Cira Center at 30th Street is 93% leased and the Comcast Center is 69% leased and scheduled to open in late 2007. They are the first skyscrapers built here in 15 years. Both projects received strong political support from this administration. And despite earlier predictions the vacancy rate in existing office towers is expected to fall below 12% during 2006, well below the national average and also below the average in the surrounding counties (PAUSE).
Hi-rise condos for middle-income homebuyers and the growing population of young adults under the age of 35, as well as luxury condos for empty nesters are being developed all over Center City and along the waterfront with no shortage of buyers. Make no mistake developers do not build in a city nor do people plop down large deposits for homes unless they have confidence in the future of the city. These housing developments have benefited immensely from the 10 year real estate tax abatement championed by Councilman Frank DiCicco. (PAUSE)
Our Center City developments are complemented by two state-of-the-art sports stadiums that together have an important economic impact on the region’s economy annually. Also, the one million dollar annual contribution from both the Phillies and the Eagles to the Children’s Fund that Councilwoman Reynolds Brown advocated provides critical resources to local children’s programs. Beyond their economic impact, the Eagles, Phillies, 76ers and Flyers make Philadelphia one of the most envied professional sports cities in the country. (PAUSE)
We also look forward to the Barnes collection being relocated to the City provided site along the Benjamin Franklin Parkway; to the opening of two world class gaming facilities that will provide the city with 4% instead of 2% of their gross revenues, an increase this administration successfully lobbied for in Harrisburg; and to an expanded Pennsylvania Convention Center, which will be built and operated by the state. These three (the big three) have the potential to set us up and set us apart as we plunge deep into the 21st century. (PAUSE)
All of these activities are part of an expanding economy and a growing revenue base that will help underwrite the escalating cost of city services and further tax reductions. This administration and Council have already reduced taxes over the last six years by over a billion dollars. I am, however, prepared to support as a part of this total tax and spend program a five million dollar reduction in the business privilege tax in FY07. I do feel compelled to emphasize my reluctance to defer our proposed investments in our Arts and Cultural institutions, our neighborhood commercial corridors, or the city’s most vulnerable citizens for deeper tax cuts. (PAUSE)
I also believe the inclusion of minorities and women in the economic mainstream is important. It is a barometer of our progress in achieving the dream so eloquently articulated by Dr. Martin Luther King Jr. Diversity is something to embrace, not fear. There should be greater diversity within the executive ranks of Philadelphia’s business community. It is a challenge the Chamber and other business organizations should accept.
Minority and women owned businesses are an important part of the local tax base providing needed jobs in neighborhoods where too many men and women cannot find work.
I am pleased to report that the city has substantially increased its minority participation on city contracts. A comprehensive report will be presented during our budget testimony. I do want to assure Council members Tasco and Goode, who have been leaders on this issue; we will continue to do more.
MBEC also will prepare strategies to increase diversity on union job sites. Real progress must be made on the issue and minorities and women must more fully participate in union trades on work sites in our City. (PAUSE)
Because of the fiscal discipline this administration has maintained and our unwavering commitment to basic services, the economy of this city is strong and the confidence of our citizens is high. In fact the best evidence of this reversal of fortunes is the change in attitude of Philadelphians. We have rediscovered important intangibles like confidence, enthusiasm and imagination and developed a “can do” mind set. Increasingly the creative class is migrating to Philadelphia and their presence is giving us a national reputation as a city that welcomes new ideas and encourages freedom of expression. In fact, Philadelphia will host the first-ever Global Creative Economy Convergence Summit and the Mismo Mundo Music Festival. We have even earned a reputation as a “hip” city.
Our commitment to make Philadelphia a 135 square mile hot spot has become big international news. Wireless Philadelphi will move our city ahead on the technology curve, improve the City’s ability to deliver basic services, and give us a legitimate strategy to bridge the digital divide. Wireless Philadelphia is about more than technology, it is about fairness and equality. America’s next great city cannot allow the digital divide to further exacerbate the educational and economic divide that separates important segments of our community. As we celebrate the birth, genius and public spiritedness of Benjamin Franklin, let us pay respect to his legacy and add to our reputation as the city of firsts by becoming the first major city in America to go Wireless.
This is really a great time to be part of the Philadelphia scene. We heard it from the convention planners who spent several days in our city earlier this month. We heard it at the hospitality summit we convened, just last week when 50 leaders in the Philadelphia hospitality community came together to discuss our future. Everyone agrees. It is time to tell the New Philadelphia story. Toward that end, we have included in our FY 07 budget 2.5 million dollars to support this marketing effort which we will strive to get matched by the Commonwealth and other sources.
Philadelphia has momentum. Now is the time to come together as a team – Team Philadelphia. Time for City Council and the Mayor to find the common ground that an odd couple like Rendell and Street found in the 90s. It is time for public and private sector leaders to transcend single issues and open-mindedly work for compromises that best position Philadelphia to succeed in the new challenging global economy.
The future of cities is increasingly defined by global competition. Last year the City participated in a forum in China that was attended by more than 150 cities, including 5 from the United States. Multinational companies like General Electric, Wal-Mart, and Microsoft routinely outsource low skill jobs to cities like Bangalore, India, where 245,000 people answer service calls from American customers. Those jobs are never coming back to Philadelphia or America.
(PAUSE)
Over the next two years I intend to work with the Commonwealth of Pennsylvania reach out to the international operations of local companies and support trade missions in an attempt to encourage foreign investors and companies to consider Philadelphia. We will continue to support Innovation Philadelphia and the activities of First Deputy Director of Commerce, Mjenzi Traylor who leads our international economic development efforts. We also will work more closely with our ten international sister cities. (PAUSE)
To be serious competitors in the global economy the productivity of this government must improve, the city’s executives and managers need greater management prerogatives and the resources to establish a better-trained city workforce. So let me sing an old song. The Philadelphia Home Rule Charter needs to be amended into a 21st century governing document. We are driving a 1950 vehicle on the raceway of an increasingly competitive global economy. Over the coming weeks I will meet with City Council, other elected and private sector leaders in an effort to develop a consensus around this effort. (PAUSE)
Young professionals in this government have told us that better training; better use of technology, better mentoring, better performance based career opportunities and an objective merit based pay system would make local government more competitive as a career choice. We are blessed to have many young dedicated public servants. Our challenge and responsibility is to keep them. This will require some changes to the Civil Service system. We must not be invested in a system that in its infancy was a reform measure, but which in its older years serves as a straightjacket. I have asked Managing Director Pedro Ramos to recommend a comprehensive training and internship program and appropriate change to the Civil Service regulations. (PAUSE)
In January 2000 I appointed the first Secretary of Education in the city’s history, Debra Kahn. Together we resisted state attempts to force programmatic cuts that were totally inconsistent with quality education; established the CEO model of governance; negotiated contracts with the Philadelphia Federation of Teachers that lengthened the school day and the school year; and established a partnership with the state that produced increased funding for public education and established the School Reform Commission. Over the last three years Paul Vallas, Jim Nevels and the Commission with full cooperation from the City’s appointees have provided students with a range of education options, developed an aggressive capital program that is symbolized by the Microsoft School of the Future under construction in Fairmount Park, and they have instituted important curriculum changes, including the mandate that every high school student take African American history. These programs are producing measurable results. In 2005, public school students improved their statewide test results for the third consecutive year. That progress is important, but more is required! The Philadelphia Public School system must become the gold standard for public education in urban America. A system impatient with modest progress and marginal funding. A system that bridges the digital divide and steers gifted students toward the technology friendly fields of mathematics, science and engineering. A system whose students graduate from high school and go on to college or pursue other trades and training. The ultimate question is not whether the District is controlled by the state or local government, but whether the students are getting the knowledge, motivation and discipline required to prepare them for productive lives in the 21st Century.
Our new Secretary of Education, Jackie Barnett, over the next year will work with the School Reform Commission, CEO Paul Vallas and the education advocates to evaluate the performance of the School District and make recommendations to accelerate our progress. (PAUSE)
The financial support of the corporate and philanthropic communities will be needed to accelerate the pace of improvement in public as well as private schools. As Mayor, I am concerned about the achievement of all city students whether they attend public, parochial, or private schools.
However, our efforts will go unrewarded, unless adequate state funding for public education becomes a legislative priority. The deficit borrowing proceeds supported by the City and used to balance the School District’s budgets in recent years will run out at the end of FY06. To avoid surprises and disruptions, the School District should articulate its needs now. It is my prayer that Pennsylvania does not follow in the footsteps of the federal government, which has made the unconscionable decision to reduce spending on education. (PAUSE)
The ethics and disclosure bills that have been passed by City Council and signed into law will be strictly and fairly enforced. The FY07 budget requests $ 700,000 to implement the mandates of those bills, and the city will spend $ 1.2 million in the current fiscal year to support that effort.
This administration is proud to have continued the fiscal discipline that has anchored Philadelphia’s recovery over the last 14 years. Despite federal and state cutbacks in funding, we have reduced taxes in each of the last eleven years by an aggregate $ 1.1 billion while reducing the size of government by 10.6%.
There is a buzz about Philadelphia around the country. I hear it at the conferences for mayors. Cities are visiting and calling to learn about NTI, Safe Streets, Wireless Philadelphia, our homeless initiatives and our marketing strategies to attract gay tourists. Many complimented our Katrina relocation program that served desperately needy fellow Americans. Our sister cities marvel at the fact that we have reduced taxes in each of the last 11 years. It is the kind of predictability and economic stability they would love to duplicate. This administration in a tough political environment has kept a firm hand on the economic rudder of this city and a clear eye on the growth of neighborhoods, Center City, commercial corridors and the well being of its most vulnerable citizens. As a result, Philadelphia is flourishing. We are proud of our accomplishments and rightfully celebrate the progress of the last six years. However, Thomas Friedman, in his book, “The World is Flat” gives us a glimpse of the challenge for cities in this African proverb: “Every morning in Africa, a Gazelle wakes up. It knows that it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows that it must outrun the slowest gazelle or it will starve to death. It doesn’t matter whether you are a lion or a gazelle. When the sun comes up you better start running.” (PAUSE)
Tomorrow when we wake up – start running!
God Bless!
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