Title
MAYOR JOHN STREET’S
BUDGET ADDRESS TO
CITY COUNCIL
TUESDAY, JANUARY 25, 2005
(as prepared for delivery)
INTRODUCTION
Good morning! Go Eagles! I’m having a great day; not as good as Sunday! While we celebrate, we must also remember our troops at home and abroad as well as the families who are victims of catastrophic acts of nature throughout the world.
President Verna, and members of Council, thank you for the opportunity to present for your consideration my proposed FY 06 operating budget; capital budget and program, as well as my proposed 5 year financial plan.
We have just celebrated another great holiday season highlighted by tree and candle lightings, a best ever Mummer’s Parade and the National Holiday in commemoration of the life and work of Dr. Martin Luther King Jr., one of the great leaders in world history.
Thirty-seven years after his death, Dr. King’s life still stands as a model for service, sacrifice and commitment. Philadelphians should be proud that we host the largest “day of service” in America to honor his memory.
The pursuit of opportunity for disadvantaged citizens largely from North Philadelphia brought me to public life more than 25 years ago, and the pursuit of a better life and opportunity for all Philadelphians inspires the commitment of this Administration to neighborhoods, children, and public education. For five years we have proudly focused our attention on these critical issues without turning our backs on the growth and development of Philadelphia’s economy. Our efforts are making a profound difference in the quality of life of the people who live in our neighborhoods while simultaneously inuring to the benefit of all who work in or simply visit our City.
The proposed financial plan I present today provides the critical funding necessary to support these goals.
Our Neighborhood Transformation Initiative is producing clean, vibrant, livable neighborhoods, with a range of new housing options for students, individuals and families. Since 2001, approximately 3390 units of affordable housing and approximately 3604 units of market rate housing are completed or under construction. Unprecedented increases in property values can be seen in neighborhoods throughout the city – not just in center city. The average sales price in the city has increased by more than 20% over the last several years.
Under NTI, house collapses have been reduced from 1,040 in FY02 to 70 thus far in FY05; $15 Million or 48% of demolition contracts have been won by MBE firms and 72% of the work on demolition sites has been provided by minority workers.
I take great personal satisfaction in the number and quality of public housing units that have been completed since this administration took office and the renewed pride that is evident in tenant leaders and public housing residents. Public housing is lifting neighborhoods up! A special thanks to Carl Greene and his entire staff as well as the PHA Board of Directors for a job well done. Please stand!
Our street corners are no longer an oasis for drug dealers and buyers, and “Public Safety is still a priority in this government.
After school programs keep young people off the streets and out of harms way and our Social Services agencies will continue to attack problems of delinquency and drug abuse as our child welfare agencies work in a more systemic and coordinated way to improve the plight of children in our city.
Growing out of our historic partnership with the Commonwealth, the Philadelphia School District, which was on the brink of bankruptcy when I became Mayor, is now on sound financial footing and showing demonstrable educational progress. I again thank former Governor Mark Schweiker for his commitment to our children. The Microsoft School of the Future is a direct product of the success we are having in providing quality public education. I thank School District CEO Paul Vallas and School Reform Commission Chair Jim Nevels, as well as all the SRC members, for their fine work and assure them our full support! Ordinances have transmitted to Council which continue funding for our public schools.
Our homeless programs have become nationally known as “Best Practices.” The San Francisco Chronicle, in an article entitled “The City That Knows How – Philly,” concluded that Philadelphia could teach other cities how to run programs and how to treat homeless men, women and children with respect. This work will continue under the current budget proposal. In fact, we are committed to creating for public release, before the ’06 fiscal year, a plan to end homelessness in Philadelphia.
This year we will maintain our efforts to improve the opportunities available to inmates in our County prisons. Without a support network to help them refashion their lives, 75% will return to prison within 3 years, usually for more serious crimes. Unless we provide life changing opportunities for these citizens and help them “reintegrate” into their families and communities they will fail and the victims of their predictable behavior will undoubtedly be innocent, hard working, decent people in our neighborhoods.
President Bush supports this goal and as Chairman of the U.S. Conference of Mayors Faith-Based and Re-entry Committee, I am leading a lobbying effort for Federal Legislation to help fund this effort. The proposed 5 year financial plan contains almost a billion dollars for county prison costs. Historically, our prison budget has grown faster than any other department. Working with our faith-based community, we will expand our Re-entry efforts largely from non-General Fund sources. We will also build a state-of-the-art Youth Study Center to create a better future for our troubled youth by putting them in a safe and caring environment designed to reshape their priorities, build their self-esteem and teach them life sustaining skills.
These activities paint a portrait of a city that cares about all of its people, a proud legacy Dr. King would be pleased to embrace. We are one of just a few major American cities with no official street named in honor of Dr. Martin Luther King, Jr. so I take this occasion to respectfully request that the Fairmount Park Commission favorably consider naming the West River Drive in honor of Dr. King.
Nothing is more rewarding than seeing the positive results of the hard work of this government as is now happening with our economic agenda.
Retail developments anchored by Loews, IKEA, Home Depot, BJ’s and Circuit City, particularly in the Northeast and South Philadelphia, combined with the stunning growth of residential market rate housing in all areas of the City are the best evidence that Philadelphia is an enormously desirable place to live, work and invest. We will continue our work with our business leaders and local entrepreneurs to build upon this momentum and ensure that small, minority and women owned businesses are included and well positioned to capitalize on this growth and prosperity.
The Barnes collection on the Parkway could become the greatest tourist attraction in the history of our city and will be an indispensable part of our strategy to transform the Benjamin Franklin Parkway into one of the leading centers for art and culture in the world, and it nicely compliments the exciting plans for library expansion, which will make our central library the best in the country. I also support the relocation of Family Court to more appropriate facilities; thereby, creating another exciting opportunity to increase the vibrancy of the Benjamin Franklin Parkway.
The Pennsylvania Academy of Fine Arts, which is celebrating its 200th anniversary this year and exhibiting “The Chemistry of Color, A Collection of Contemporary African-American Art,” will serve as another significant point of entry to our Parkway institutions.
Philadelphia has become an international destination city. Total visitations and traveler spending in the region are up! And the Philadelphia hotel occupancy rate last summer was at a five year high. The expansion of the Pennsylvania Convention Center, which now seems certain, will affirm our reputation as an elite international destination city.
Comcast’s new corporate headquarters and the Cira Center will not only redefine Philadelphia’s skyline; they also represent critical large investments of private capital which will stimulate our economy and make an important statement about our future. I personally and publicly thank the Roberts family, Comcast Corporation and Liberty Property Trust for their important decision to stay and grow thousands of jobs in Philadelphia. A very special thanks to Governor Rendell and this Council, whose support helped make this possible. Philadelphia is Comcast territory! By the way, the incentives necessary to support these projects will continue as part of the City’s Economic Development Blueprint which will be presented at the Chamber of Commerce Luncheon next month.
That Blueprint will include a commitment to make Philadelphia America’s “New River City” by supporting Penn, Drexel, the University Science Center and Children’s Hospital as they increase their capital investments on the west side of the river; by supporting Toll Brothers, Westrum Development, Liberty Property Trust, and Synterra, as they transform acres of underutilized waterfront property into unique mixed use communities at the Navy Yard, and along the Schuylkill and Delaware Rivers; and by working with the Schuylkill River Development Corporation as it spearheads improvements to the trails, ramps, decks and bridges connecting Center City to the burgeoning West Philadelphia community and creating access to and enjoyment of the water.
This Budget contains no major new initiatives. But it does contain funding for the purchase of the surety bond required to make the $125 million dollars available to support the infrastructure projects that will leverage our New River City agenda and other neighborhood economic development activity. Failure to free up those funds could jeopardize hundreds of millions of dollars in private investment in New River City and other economic development related projects.
The Blueprint will also confirm our strategy to grow our population and appeal to university students, young professionals and immigrants through the Knowledge Industry Partnership as well as to empty nesters. We will grow our job base through the coordinated efforts of PIDC and Innovation Philadelphia by enhancing opportunities for business start ups, attracting new businesses in partnership with Select Greater Philadelphia and creating an environment that is business friendly and cost effective for our companies. Our wireless Philadelphia Initiative has enormous potential to help meet these goals.
There is a growing national view that Philadelphia is a “hot city” in America and that view is supported by the conclusions of several respected publications who took a close look at Philadelphia in 2004:
The Milken Institute stated in a report entitled, “Best Performing Cities: Where America’s Jobs are Created and Sustained,” that “the city’s economy improved over the last year largely due to the strength in the leisure and hospitality industry, the fastest-growing segment of Philadelphia’s vibrant economy this past year. Housing prices, which have appreciated at a rapid pace, remain relatively affordable. Philadelphia’s health care cluster provides stability for its economy and should aid future growth.”
Trend Savvy said, “People love Philly because it is both endearingly provincial and culturally vibrant. For those visitors who expect to find narrow, tree-lined streets and elegant brick rowhouses, the city’s charming neighborhoods don’t disappoint. But these days, Philly is bumping with hip night life, an exploding art scene, and a resturant boom that shows no sign of abating.”
Newsweek reported that, “The Real World” may have upped Philadelphia’s cool quotient but it’s the hip restaurant scene and neighborhood revivals that are driving the City’s high ratings.
The Architectural Record added, “in the past four years, the City of Brotherly Love has become a hotbed of urban development and revitalization.”
And over the last two years, Bliss received Esquire’s coveted Best New Restaurant in the country award; the Franklin Institute and the National Constitution Center are among the 50 top rated family attractions in the country; LaCroix at the Rittenhouse was named the world’s best hotel dining room by Gourmet Magazine and the Rittenhouse ranked sixth among boutique hotels in the U.S. and Canada.
It is gratifying to know non-Philadelphians have published such wonderful things about our city, but it is more important that we know and believe in ourselves.
I do have a serious concern about gaming and its potential impact on the quality of life as well as the economy of our city. Although, state law vests all significant decisions in this important matter in the hands of a State Gaming Control Board, local stakeholders must have a significant voice in determining how gaming will be integrated into the social and economic fabric of our city. We have worked too hard to have others not invested in our city make uninformed decisions that could dramatically impact our business environment and quality of life. For gaming to work, it must be done right.
Towards that end, I will appoint a local Gaming Advisory Board to make recommendations to this government on all aspects of the introduction of the industry in our city. Location, parking, traffic and other implications of this new industry deserve careful study. Dr. Bernard Anderson, Paul Levy, and our own Maxine Griffith have agreed to co-chair the Advisory Board and I am confident their work will offer invaluable help in assisting this government to prepare to influence decision making in this sensitive and important area.
In a November 2001 speech before City Council, I warned that Philadelphia could not afford tax reductions beyond those proposed by this Administration, fund fair labor contracts, unless we reduced the City’s workforce by approximately 2500 employees, which would result in City service levels that would greatly concern the public. In our last budget we labored long and hard to balance our commitment to quality city services as against the benefits of further tax reductions. It was a long and ardently fought debate. While we have delayed the day of reckoning and avoided the most devastating service cuts, we are not out of the woods. We have managed because of the extraordinary work of members of this administration and dedicated City workers who have creatively managed our meager resources to operate this government under increasingly stressful circumstances. Let us take a moment to thank them. (Thank Phil Goldsmith)
Due to their work, overtime is down 12% from the same time last year, managers in L & I, Recreation, Streets and other City Departments have been reassigned to direct service positions, and the Police command structure has been reduced by 31%, while the number of police officers on the street remains the same. 320 city cars have been replaced with the services of Philly Carshare, a local company that uses fuel-efficient hybrid automobiles. By restructuring the hours of operation at 20 neighborhood libraries we will soon have Saturday hours at all libraries. Cell phone and travel privileges have been reduced. Office space has been consolidated; excess real property is being aggressively marketed; and administrative clusters and technology driven efficiencies are being implemented. The recently negotiated short-term disability program for city employees provides stronger support for deserving district council 47 and 33 employees while saving the general fund approximately 2.3 million dollars annually.
There has been considerable, deliberate distortion of our proposals with respect to the Fire Department. We absolutely do not propose to close any fire stations and anyone who suggests otherwise is being untruthful. We do, however, continue to support our proposal to realign Fire Department resources by reducing ladder and engine companies and increasing EMS services.
In all, approximately twenty-four Departments have contributed to this year’s streamlining and efficiency efforts which will produce savings that will exceed $160 Million over the life of our Five Year Plan. Those savings are used, in large measure, to fund our tax reduction programs.
By the end of the current fiscal year we will have reduced the City’s workforce by approximately 2200 employees through a combination of employee reduction initiatives that have unfortunately included more than 200 layoffs.
As everyone knows, I do not like layoffs, which are almost always devastating to a family. I will do everything reasonable to make new career opportunities available to every displaced worker. They will not be re-employed in their former jobs, they have been eliminated. I will honor the request made by our union leaders that their names be maintained in a worker file for two years (one year longer than is required). These workers will be the first considered for new jobs that come available. I am pleased to report we have already found jobs for 25% of the affected employees.
To keep our budgets balanced in a sluggish economy and afford the tax cuts already scheduled, we have made difficult choices among important competing services.
However, in order for the proposed financial plan to work, all independently elected officials must cooperate and reduce their budgets by $ 9.3 Million in FY 06 (before the end of this fiscal year) or the Budget and Five Year Plan we propose today will require major changes which will undoubtedly produce undesirable service level consequences for our constituents. We cannot afford fewer police officers, firefighters, health care workers, sanitation workers and staffing in already strained city operations.
SEPTA desperately needs adequate, predictable dedicated funding, which the Governor and the General Assembly should make available immediately. The Frankford El must be completed promptly to free the businesses on 52nd, 60th and Market Streets from the economic hardship they are experiencing because of the unreasonable disruption of their businesses. SEPTA should also be seriously identifying cost effective ways to expand and improve its service. I will engage in an unrelenting fight in opposition to the proposed fare hikes and service cuts. Their implementation would punish innocent riders, struggling businesses and ultimately lead to the demise of the system. The importance of this transportation system to our regional economy and its growth cannot be exaggerated.
Let me now turn to the FY06 Budget. The FY06 Budget assumes $3.44 Billion in General Fund revenues. With adjustments, the FY06 Budget is balanced with a small positive fund balance. This Budget supports adequate levels of city services and funds the smallest City workforce since 1955; it provides for the continuation of the currently approved tax reduction program that has reduced the tax burden on wage and business tax payers by more than $1 Billion since 1995, a record no other city can match. In a sluggish economy, with escalating pension, labor and other costs, there is little latitude for change. Each dollar of additional spending or tax reduction must be offset by other reasonable revenue sources or service reductions – otherwise the budget will be out of balance and won’t work.
This Administration continues to support tax reductions and believes that improvements in our financial position should allow us to further reduce the tax burden on wage and business taxpayers so long as tax reductions are properly balanced against the need for high quality City services and new investments. We believe reductions in our business taxes will improve Philadelphia’s economic attractiveness, although there are other important considerations taken into account by businesses when making location decisions. Remember, over the past several years, 83 of 84 major companies operating in Center City decided to stay!
Given our fiscal challenges, the Administration believes that any additional tax reductions must be offset fully by new revenue sources. Accordingly, we propose to reduce the gross receipts portion of the business tax by 71 million dollars over the Five Year Plan by raising the parking tax from 15% to 20% and implementing other efficiencies included in the Plan. This will double the business tax reduction in the present Plan, and result in an aggregated total of $378 Million in tax reductions during the life of the proposed Five Year Plan. I also recommend we commit to reduce the business tax even further by dedicating the repayment of the 45 million dollar PGW loan repayment to business tax reduction.
Today, I am presenting a Budget that works. It’s balanced; provides for the maintenance of our progress and investments in our future.
Those of us who hold the public trust must put our differences aside, focus on the job at hand, and honor the great privilege we have been given to lead this City. External issues should not distract us from our work, nor interfere with our commitment to effectively manage the affairs of our government.
As you begin your deliberations, I make two simple requests (1) that the representatives of this administration be treated with respect and dignity as they testify in public hearings and (2) that you adopt a Budget by March 31, 2005.
In closing, let me summarize my vision for our city which this plan supports. I see an emerging 21st Century world class city.
I see neighborhoods with viable, affordable, market rate and public housing choices; neighborhoods with trees, gardens, and open spaces for children to play; a city with spray grounds; side yards; passive and active recreational options. Good schools, with quality afterschool programs, with art, music and other enrichment activities important to families with children.
I see young adults excited about the Philadelphia urban lifestyle; children anxious to attend major events in our world class facilities.
I see thousands of domestic, business, and international travelers overwhelmed by the impressive array of arts, cultural and recreational activities available throughout our neighborhoods, Center City and waterfront. I see a city of university students who decide to stay in our city because of the high quality of life and opportunity, including jobs, nightlife, restaurants, sports, arts and cultural activities. Students who live on wireless campuses love living in a wireless City.
I see one of the 25 million people who annually go through our world class international airport take a cab; make restaurant reservations; order theatre tickets; reserve a rental car, and pay a few bills, all on line during the ride to the hotel. At lunch time, busy office workers sitting in Love Park grocery shopping on-line while they listen to their favorite music.
I see volunteers and children huddled around a table in Malcolm X Park being mentored in computer technology while students at Norris Square are engaged in an on-line chess tournament with students from one of our sister cities.
I see a city that respects its past by preserving old buildings, but is fully committed to building a new 21st Century infrastructure! I see economic opportunity and jobs. I see a daily stream of construction, office and knowledge workers headed to Comcast Center, waterfront businesses and construction sites. Our skyline is dotted with cranes, the symbol of economic prosperity and growth. Many of these workers live in the neighborhoods of our city; a representative number are minorities and women. Many are living in recently built new housing throughout the city. Some are former inmates; some successfully completed drug treatment programs and others got their skills from their neighborhood schools.
I see a “wireless” city full of new jobs and opportunities. I see our residents with a new appreciation for the transforming power of information and technology in our lives!
In my 21st Century Philadelphia small businesses are more competitive in the global economy. Our city delivers better services, in a more cost effective less labor intensive way.
My emerging 21st century Philadelphia does not simply have the school of the future – it’s the city of the future! A place with opportunity for everyone!
Thank you!
End