Philly’s spending more, but it’s in line with other big cities

Philadelphia’s annual government spending has steadily increased in recent years, growing by $1 billion — or 25% — in the four budgets passed since Mayor Jim Kenney took office.

While the increases are significant, a study released Tuesday by the Pew Charitable Trusts found that Philadelphia’s spending pattern between 2008 and 2018 is comparable to those of other large U.S. cities.

On a per capita basis, Pew found that Philadelphia’s spending increased by 15% in the decade — the same as the median increase among the 30 largest cities in the country.

“What we saw over this 10-year period is that Philadelphia’s increase was very much in line with other cities',” said Larry Eichel, director of Pew’s Philadelphia research initiative.

The city has faced criticism for spending hikes, including from City Council members and the state board that oversees Philadelphia’s budget. Kenney proposed a $5 billion budget this year.

But Marisa Waxman, the city’s budget director, pointed to the report’s findings as a sign that Philadelphia’s spending is not an outlier.

“I think it’s actually striking how normal we look in this,” Waxman said.

Pew compared overall spending increases as well as spending increases per capita, and also compared the 30 largest cities’ changes in the number of full-time employees between 2008 and 2018. Philadelphia had a 1% decrease in full-time employees, which is slightly below the median figure for cities nationwide.

The report does not include the city’s two most recent budgets — for the fiscal year that ended in June and fiscal year 2020, which began in July. It only includes the first two budgets of Kenney’s first term.

Pew also did not compare cities’ reserve funds, which have been a focus for Philadelphia officials as they plan for a possible recession in the next few years. Although Philadelphia made its first-ever contribution this summer to its rainy-day fund, the city still has just $439 million — or 33 days of expenses — in reserve. Based on national best practices, that amount should be about $821 million.

Waxman said the city is attempting to make much-needed investments as it continues to recover from the Great Recession while also saving money for future needs.

“We’re doing both at the same time as best we can,” she said.

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When adjusted for inflation, Pew said, Philadelphia’s spending increases between 2008 and 2018 would be 6%.

The National League of Cities, which conducts its own annual survey of cities and tracks financial trends, found that expenditures, adjusted for inflation, increased 2.78% between 2008 and 2018. That figure is based on aggregate data for all cities nationwide and is different than Pew’s analysis, however.

“Overall expenditures are increasing for cities nationwide, notably for the largest cities,” said Christiana McFarland, research director for the league. “The economy is improving so expenditures are going to start increasing.”

The Pew report found that Philadelphia’s rising costs can be attributed to employee benefits, payments to the pension system, payroll expenses for the police and fire departments, and spending on education — including funding for the School District and the pre-K and community schools programs, the latter funded by the tax on soda and other sweetened beverages.

Philadelphia’s reasons for increased spending — especially personnel costs, pensions, and benefits — are typical among cities nationwide, McFarland said.

A big question for Philadelphia and other cities, she said, will become: “Are there revenues for the long term to maintain those spending levels?”