Image: City Council approves Philly’s 2022 budget

City Councilmember Allan Domb

With the COVID-19 pandemic receding, the budget deal struck between Mayor Jim Kenney and City Council signals that city leaders are now prioritizing efforts to stem Philadelphia’s epidemic gun violence.

City Council voted 16-1on June 24 to approve a $5.27 billion city operating budget for fiscal year 2022 – ending months of negotiations over how the city would spend annual tax revenues and hundreds of millions of dollars in federal aid. The budget vote came after Kenney and the council reached a preliminary agreement on a final budget the week before. The sole vote against the budget was cast by Councilmember-at-large David Oh, one of two Republicans on City Council.

Compared to the mayor’s April proposal, the final budget increases funding allotted to anti-violence programs. Focused on solving root causes of violence, the spending satisfies the demands of concerned councilmembers who have seen shooting and homicide rates accelerate relentlessly in their districts and throughout the city. Gone, however, is the mayor’s proposed cut to the business-income tax, which had drawn the ire of progressive councilmembers. The proposed cut to the city wage tax, meanwhile, stood somewhat reduced.

In a statement released on June 18, the day after a preliminary budget agreement was reached, Kenney said he appreciated the opportunity to work closely with the council, despite ongoing pandemic complications.

“I am proud of the collaboration during an abbreviated and unconventional budget season that got us to this point,” Kenney said. “This budget makes meaningful investments to ensure the long-term safety, health and well-being of Philadelphia and our residents.”

Kenney said that the budget features $68 million in new spending to prevent violence, for a total of $155 million in anti-violence spending. These figures, while superficially much greater than the $35.5 million total and $18.7 million increase that the mayor had originally proposed, are largely artifacts of new accounting and reclassification. According to The Philadelphia Inquirer, much of the change between versions of the budget is the result of the city now counting funds for some additional educational and economic programs as anti-violence ones. When only looking at newly inserted spending, the actual increase in anti-violence funding over the mayor’s original proposal is $25.6 million. (The final budget overall is about $90 million larger than the mayor’s initial, $5.18 billion budget proposal.)

Of the $155 million in spending for programs labeled as anti-violence, $20 million is being sent as grants to local community organizations that focus on “healing, prevention, safe havens and community empowerment initiatives.” Another $28 million is being spent on summer school and similar programs, and $7.1 million is being spent on workforce development programs. The hope of councilmembers is that these initiatives will provide young Philadelphians with meaningful educational and economic opportunities and turn them away from the city’s destructive cycle of gun violence.

The anti-violence spending also includes several programs designed to help the city better respond to emergency mental health incidents. There is $6 million to fund the city’s incipient triage and co-responder model, which would have mental health professionals accompany police officers when responding to certain emergency calls; and $7.2 million for new behavioral health units and crisis hotline workers. These spending programs on mental health come in response to the October death of Walther Wallace Jr., a 27-year-old Black man in West Philadelphia who was shot and killed by police during a mental health crisis.

The general budget for the Philadelphia Police Department itself remained steady from FY 2021 to FY 2022 at $727 million. The council did vote, however, to send the department an additional $14 million to equip all officers with Tasers over the next five years. Voted on separately from the budget overall, the Taser-funding bill was passed 14-3. The three votes in opposition were cast by Councilmembers-at-large Kendra Brooks, Helen Gym, and Isaiah Thomas, all of whom have spoken out against increasing funding for police.  

There will be another $2.1 million spent to create a Citizens Police Oversight Commission that will monitor the police department. Supporters of an oversight commission say it is an innovation that could help hold the department accountable for alleged police brutality and racist policing practices.

“The city has prioritized police reform; and we are adequately funding the first phase of the Citizens Police Oversight Commission,” Fourth District Councilmember Curtis Jones said in a June 17 City Council press release about the budget. “Governments expose various positions, but appropriate their true intentions.”

Police funding was a focus of last summer’s racial justice protests and has since become a contentious issue nationwide. Left-wing activists have mobilized around the rallying cry “Defund the Police,” demanding that funds be diverted from police departments to be spent on social services that address the root causes of crime, such as poverty, unemployment, and systemic racism. Conservatives and moderates have raised concerns that reducing police funding could diminish law-enforcement response capacity at a time when violent crime is on the rise.

Philadelphia, like cities across the country, experienced a surge in shootings and murders over the past year. The total of 499 homicides that Philadelphia saw in 2020 was just one shy of the highest annual murder toll in city history – and the 273 homicides recorded thus far in 2021 puts the city on pace this year to exceed its 2020 homicide total by 35%.

President Joe Biden announced on June 23 that Philadelphia would be one of 16 cities and counties to be included in the Community Violence Intervention Collaborative – a federal taskforce designed to help municipal governments share best practices and implement community-based, anti-violence intervention programs.

Biden also announced that he was urging municipal governments to use federal relief funds to increase police budgets. The White House recommended that police departments receive additional funding to hire more police officers, while improving police training and oversight.

City Councilmember Jamie Gauthier said at the council meeting that the crux of preventing further violence in the long-term would be making permanent investments to build up historically marginalized communities. 

The increased spending on anti-violence programs over the mayor’s original proposal was partially paid for by the reduction of the mayor’s proposed tax cuts. On Thursday, council reduced the residential wage tax from 3.8712% to 3.8398%, as the mayor had initially proposed; but only cut the non-residential wage tax from 3.5019% to 3.4481%, rather than to the mayor’s proposed rate of 3.4201%. These new wage tax cuts are estimated to cost the city about $10.6 million and $12.4 million over the next year, respectively, according to The Inquirer.

Advocates for commercial growth have long argued that the wage tax puts an undue burden on Philadelphia businesses, which are theoretically forced to raise wages to offset the tax and attract potential employees. A report from the office of City Controller Rebecca Rhynhart further warned that an over-reliance on wage taxes – the revenues from which are vulnerable to economic downturns that increase unemployment – may be one reason why Philadelphia’s city government has fared the pandemic’s financial repercussions so poorly relative to other cities. (The city’s general budget deficit, measured as a fraction of its expenditures, is the second highest of the ten largest cities in the country at 14.7%, ranking only behind Detroit.)

Progressive councilmembers nevertheless derided the tax cuts as wasteful, saying that the revenues being used to finance the tax cuts should instead be transferred directly to Philadelphians in need. This progressive discontent ultimately forced the rollback of the non-residential wage tax cut that the mayor had proposed. And a cut to the business-income tax proposed by the mayor was voted down outright in a June 17 Committee of the Whole meeting due to similar concerns from progressives.

A potential cut to the parking tax, which was proposed by City Council Majority Leader Cherelle Parker, was rejected as well – with Parker’s failure to secure a commitment from lot owners to raise wages prompting insurmountable liberal opposition to the measure, according to the Inquirer.

A cut to the business-profit tax, which was proposed by Councilmember-at-large Allan Domb, was likewise voted down in the June 17 committee meeting due to liberal opposition.  

During the June 24 council meeting, Domb cautioned his colleagues that a failure to cut business taxes would drive away jobs and hurt the city’s long-term economic health.

“For the past two months I have said that [funds from the federal American Rescue Plan] presented a moment in time, an opportunity, to change the trajectory of our city, a moment to show the world that Philadelphia was open for business and would deliver on this promise by making our business and wage taxes competitive with cities regionally and across the U.S,” Domb said. “We cannot and should not stand and watch jobs go outside of Philadelphia when the decisions we make here could change that story.”

“I whole-heartedly believe that a job opportunity is the best program we can fund to turn this city around, it’s the one investment that can make a real difference in the lives of our residents,” Domb added.    

The final tax package, which included the wage-tax cuts, was voted on separately from the overall budget and was ultimately passed 13-4. Those casting nay votes were Brooks, Gauthier, Gym, and Seventh District Councilmember Maria Quiñones Sánchez.

Although it eschews large tax cuts, the budget does issue city bonds for a $400 million Neighborhood Preservation Initiative (NPI), with commitments to housing and business relief that go slightly beyond those in the mayor’s original proposal. The NPI specifically provides funding for the construction of new affordable housing and home repairs; subsidizes home purchases; and transfers $6.5 million to the Philadelphia Land Bank, by which the city purchases and sells undeveloped property. Another $3 millionis being sent under the NPI to the Eviction Prevention Program – a partnership between the city and tenant-rights organizations, such as Community Legal Services, to help renters stay in their homes.  

The NPI further invests in the community by promoting equitable economic growth. The program lends aid to Black and brown business in Philadelphia and encourages the building trades to create a more racially inclusive workforce.  

“In addition to our work to address gun violence, we want to ensure that Black and brown communities and small businesses do not get left behind in the recovery, as we emerge from the devastating impacts of the pandemic,” Councilmember-at-large Derek Green said in the June 17 press release. “It is incumbent upon us not to squander the opportunity we’ve been given to meet this pivotal moment of racial reckoning and give those who have been historically marginalized by systemic racism an equitable start.”

The budget also contains $7 million to support hospitality industries, tourism, and the arts – a sign of the city’s planned reopening after a long pandemic lockdown.

The city operating budget is being buoyed by federal aid from the $1.9 trillion American Rescue Plan (ARP), which was shepherded by the Biden administration through Congress in March. Philadelphia is set to receive $1.4 billion from the ARP over four years and will spend around $575 million from the ARP in FY 2022 alone. The Philadelphia School District is set to receive $1.3 billion in funds that are meant to help the district establish COVID-19 testing regimens and other sanitation initiatives.

The FY 2022 budget is ultimately reflective of councilmembers and a mayor who are ready to try to move beyond the coronavirus pandemic that has dominated life in the United States over the past 15 months.

In his June 18 statement, Kenney said he believed that the budget would pave a path towards recovery and help make Philadelphia a healthier and more equitable city.

“[The budget] focuses on providing—and in some cases expanding—core services while maintaining our long-term fiscal health, reducing racial disparities among Philadelphians, and advancing equitable outcomes for all Philadelphians,” Kenney said. “Ultimately, I believe it will help Philadelphians in every neighborhood benefit from a strong recovery from the pandemic.”

Brooks, who first took office in 2020 as a member of the progressive Working Families Party, and voted against the budget for FY 2021, said she was disappointed in budget for FY 2022.

“And while I may be disappointed with aspects of [the budget], I want to make a good-faith effort in engaging with my colleagues and continue to work towards transformative, long-lasting solutions to the numerous crises facing our city today.”

The mayor signed the budget into law at the end of June. It went into effect on July 1, the beginning of the new fiscal year. 

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