Mayor Jim Kenney delivered his annual budget proposal to City Council Thursday, promising tax cuts, restored social services – and above all, recovery from the coronavirus pandemic.
The proposal Kenney laid out Thursday included a $5.2 billionbudget for FY 2022 and a five-year financial plan for the city extending from FY 2022 to FY 2026. Despite the lingering effects of the coronavirus, the mayor indicated that vaccines and federal aid would help the city move beyond lockdowns and pandemic-induced austerity.
“We’ve experienced a great deal of loss, we’ve lost loved ones, many lost their jobs, and others lost business they worked years to build.”Kenney said.“But I for one have never lost hope, hope for our city’s ability to rebound, hope for our capacity to overcome, and hope for an eventual return to all that makes Philadelphia great.”
A highlight of Kenney’s plan was tax relief for people and businesses as pandemic restrictions are lifted. He asked that the council refrain from increasing any taxes, while reducing the business and parking tax to pre-pandemic rates and cutting the city wage tax to its lowest rate in 50 years. Kenney said the city could now afford to move forward with these tax cuts and said that he believed they were necessary to propel the city’s economic recovery.
“It’s time to safely reopen, support business growth, and create economic security for all Philadelphians,” Kenney said. “I’m proud to report that this plan proposes no tax or fee increases, in fact we’ll support businesses and residents by providing tax relief.”
Kenney also asked that the council restore and expand funding to programs that directly support businesses and individual households. He requested $300,000 in increased funding storefront improvement and security and $450,000 in the corridor cleaning program.
Investment in job preparation is another of Kenney’s priority, with the mayor asking for $3 millionto the office ofworkforce development,$2 million in the transitional job programs,and about $1.5 million in adult education programs, and $170,000 for digital equity programs. Kenney said this spending would be vital in ensuring the city would help build a stronger and more racially equitable economy, both as the city tries to move past the coronavirus and as it plans out its long-term future.
He also asked to suspend fees that burden low-income residents, such as library fines, as well as bail feels and other fees that impact incarcerated Philadelphians and their families.
The cut in the city wage tax is particularly notable. It is a move that Philadelphia businesses have long been advocating for, arguing the current wage tax rate puts too great a toll on both consumers and employers, who say the tax requires them to raise wages to attract employees.
A report from the office of City Controller Rebecca Rhynhart further warned that an over-dependence 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. The city’s shortfall of 14.7% of its spending is the second largest of the ten largest cities in the country, ranking behind only Detroit.
Although it has not entirely brought Philadelphia out of the red, federal aid has been vital in giving the city the fiscal security to provide residents with investment and relief. Kenney, a Democrat, credited the latest $1.9 trillion American Recovery Package (ARP) shepherded by President Joe Biden as what has allowed the city to start its economic reopening.
Philadelphia is set to receive $1.4 billion from the ARP over four years and $575 million from the ARP in FY 2022 alone. These funds, Kenney said, would help compensate for forecasted losses in tax revenue stemming from business closures and the job relocation out of the city that has occurred during the pandemic. Kenney also encouraged city residents to file taxes so they could take advantage of the ARP expansion of the Child Tax Credit and Earned Income Tax Credit – something Kenney said could benefit as many as 75,000 Philadelphians.
Kenney called the aid “substantial” butsaid that it was just over $100 million short of the city’s five-year projected deficit when accounting for the need to restore city services, fund “ongoing pandemic response,” and establish “ongoing fiscal stability.”
“While $1.4 billion sounds like, and is, substantial, it by no mean meets our long term and recurring needs,” Kenney said. “The American Recue Plan funds will certainly have a positive impact on jumpstarting Philadelphia’s economy, but I think we can agree it’s not enough to simply recover – we need to rebuild equitably while ensuring growth that benefits all.”
Kenney said that previous government recovery grants have allowed the city to distribute rental assistance, which supplement the city’s subsidizing of home repairs and affordable housing development. The mayor requested that the city give hundreds of millions of dollars in support over the next five years for these measures – as well as maintain support for the city’s new eviction diversion program, established by Emergency Housing Protection Act – a series of pandemic rental relief laws championed last year by West Philadelphia Councilmember Jamie Gauthier, alongside Councilmembers-at-large Kendra Brooks and Helen Gym.
The ARP will send $1.3 billion in more government aid to the Philadelphia School District, in order to help fund COVID-19 testing regimens and other sanitation efforts needed to safely reopen schools. This would be on top of $1.38 billion given from the city over five years to modernize the district, as well as $2.9 million for this year to restart afterschool programs and library programs.
Households with school-age children are also set to benefit from $6.9 million to reopen recreation programs and pools, which have both been shut down by the pandemic.
For post-secondary education, Kenney requested $250 million to fund the Community College of Philadelphia, with $54 million to The Octavius Catto Scholarship, which would allow 5,000 students to attend CCP tuition free and with stipends for other costs.
Kenney emphasized that providing young Philadelphians with community activities might also help the city combat its other epidemic – gun violence. He said that the city funding for afterschool and recreation programs, as well as that for the workforce training program, could help connect young people to career opportunities and divert them from violence. Kenney also wants the city to spend tens of millions of dollars to confront violence directly, asking for $35.5 million for FY 2022 for violence prevention and intervention programs, which would amount to an increase of $18.7 million from FY 2021.
“Solutions must expand to meet the scale of the problem,” Kenney said of gun violence.
There were more than 2240 shootings in Philadelphia in 2020 as well as 499 murders – the second highest homicide total on record and only behind the total for 1990. So far in 2021, there have been 149 Philadelphians murdered, an increase of 28% over this time last year.
Southwest Philadelphia Councilmember Kenyetta Johnson – whose district recently saw a man and his six-year-old son shot, with the former dying of his injuries, – voiced support for the administration’s strong focus on gun violence.
“Thousands of Philadelphians have been shot at work, at school, at rec. centers, at bus stops, and even in their homes – and hundreds have died, they include elders, pregnant women, and children,” Johnson said after the mayor’s speech. “We must do for gun violence what we have done with COVID-19, we must be bolder and more aggressive, moving much more quickly and decisively.”
Kenney further urged the city council to fund efforts to treat the opioid epidemic, requesting $400,000 for treatment and $500,000 for an opioid response unit, which is unveiling an “action plan” later this month.
Kenney’s commitment to reducing gun violence and treat drug addiction was paired with a commitment to reform the Philadelphia Police Department. He requested $6 million to fund the city’s new triage and incipient co-responder model, which would have mental health professionals accompany police officers when responding to certain emergency calls. This would be in addition to $7.2 million for new behavioral health units and crisis hotline workers.
“We must stem the tide of gun violence while also addressing the systemic racism in policing that impacts Black and brown Philadelphians,” Kenney said. “We’ve heard from the public and leaders in our communities that we must reimagine our approach to policing to create the safety that all Philadelphians have a right to.”
Advocates have long pushed for a more active role for mental health professionals in response to emergencies – and their message resonated loudly across the city last October, when Walter Wallace Jr., a 27-year-old Black man in West Philadelphia, was shot and killed by police while having a mental health crisis.
The mayor also requested $1.9 million for a civilian oversight commission, an innovation advocates say could hold the police department accountable for alleged police brutality and racist policing practices. He requested an additional $750,000 to improve police training and $400,000 to launch an “early intervention system”for officers which would proactively “reward positive police behavior.”
Kenney’s proposal also includes $62 million over five years for the city’s long-awaited street- sweeping program; $132 million in FY 2022 for street paving and ramp renovations; and a provision that would allow businesses to be awarded contracts valued less than $75,000 without having to go through the formal bid process.
There would be a projected surplus balance of $109 million at the end of FY 2022, which amounts to about 2% of budgeted revenue and falls short of the city’s stated goal of around 6% to 8% of revenue.
The optimism presented by the Kenney administration comes as the U.S. COVID-19 epidemic is being brought to heel by miraculously effective vaccines. At press time, 39% of Americans had received at least one shot of a coronavirus vaccine. In Philadelphia, 29.1% of residents had been vaccinated, and about 190,000 non-residents who work in the city have received the vaccine as well. In accordance with directives from the Biden administration, city officials expanded vaccine eligibility to all Philadelphians 16 years old or older on Friday.
The city and country, however, are not at all rid of the coronavirus pandemic. The coronavirus has infected about 140,000 Philadelphians and 31.6 million Americans – with more than 3,390 Philadelphians, 566,000 Americans, and three million people worldwide having died of COVID-19. And over the last week, an average of 40,000 Americans and 657 Philadelphians have been getting infected with the coronavirus a day.
As a sign of the times, the council meeting in which Kenney gave his address was held virtually, like all council meetings have been for the last year. And Council-member-at-large Kendra Brooks was absent from the virtual meeting after having recently tested positive for COVID-19.
In acknowledgement of the ongoing effects of the pandemic, the mayor asked the council to allocate $50 million in funds to help prevent coronavirus spread, as part of a $75 million “reopening-and-recession reserve.” This is in addition to $60 million from the ARP to hasten the city’s vaccination effort – and on top of the $140 million the city has already spent to purchase PPE, erect emergency hospital sites, and help safely house and quarantine people who are homeless or housing insecure.
City Council will debate the mayor’s proposals over the ensuing weeks and months – but some councilmembers have already expressed some skepticism that the mayor’s proposal went far enough in capitalizing on federal funds to effect meaningful change.
“The mayor’s vision is a good start, but I’m going to say what I think all of us are thinking and what I think many people around the city,” Councilmember-at-large Derek Green said after Kenney’s speech. “We need a bolder vision on how we’re going to use these dollars [from the ARP].”
Specifically, multiple councilmembers cited the need to take stronger action to reduce gun violence, while others cited the need to ensure Philadelphians affordable housing and promote homeownership.
Kenney was nevertheless optimistic that his plan was ambitious and reflective of the needs of the community. He emphasized that his proposal was crafted with input from online, multilingual surveys and community outreach meetings that involved 13,000 people. Kenney said that he was confident that the city would emerge from the depths of the coronavirus pandemic and be better able to withstand the pressure of future crises.
“Philadelphia must build back towards fiscal resilience to be able to support and serve residents through the next disruption, whatever that may be,” Kenney said.