Mayor Kenney’s last budget proposal sees modest cuts, free SEPTA passes, property tax freeze and more

Philadelphia Mayor Jim Kenney on Thursday unveiled a largely status quo $6.1 billion proposal for the next city budget, which City Council leaders predicted would sail through the legislative process with few clashes between lawmakers and the administration.

In his eighth and final budget address to Council, Kenney proposed modest cuts to wage and business taxes and a freeze of property assessments. He said his plan reflects his administration’s commitment to improving education, addressing economic inequality, and tackling the city’s gun-violence crisis.

The mayor is proposing a $55 million budget boost for police and a $25 million increase to antiviolence programs outside traditional law enforcement. The budget also includes funding for a pilot program that would provide free SEPTA passes to city employees and 25,000 residents living in poverty.

“City Council is going to always make some adjustments,” Council President Darrell L. Clarke said following the mayor’s speech, “but I think this is pretty much one of the most significant consensus budgets early on in the process that I’ve seen, and that happens when you have a significant [surplus].”

Kenney outlined his proposal in Council’s ornate City Hall chambers, the first time in three years that he appeared in person to deliver the annual address. Kenney, who is term-limited and leaves office in January, spent much of his speech reflecting on his time overseeing unprecedented upheaval.

“Together we have navigated and continue to lead our city through a global pandemic, a nationwide reckoning on racial injustice,” he said, “and a national crisis of gun violence that is causing heartbreak and pain for too many families and communities across Philadelphia.”

» READ MORE: Here’s what’s in Mayor Jim Kenney’s final budget proposal

Thursday’s address kicked off months of negotiations between the administration and Council, who must come to an agreement by the end of June when the current budget expires.

The budget talks come amid a busy election season, as nine Democrats are jockeying for the nomination to replace Kenney and every Council seat will be on ballots in May. It will also be the final budget season steered by Clarke, who after 12 years of leading Council will retire at the end of the term.

The budget proposal, which officials say is similar to plans approved in recent years, is perhaps a fitting coda for a mayor who hasn’t undertaken significant policy initiatives in his second term as his administration navigated multiple crises. Over his two terms, Kenney oversaw a more than 50% increase of the overall budget, which was about $4 billion when he took office in 2016.

Kenney said he’s committed to the city’s financial health and touted that it holds its highest bond rating in 40 years.

The overall budget is 4.4% higher than the plan approved by Council last year, which was about $5.84 billion. Spending crept up over the course of the year, and the administration projects it will spend about $6.08 billion by the end of June.

Kenney called for the city to draw down nearly $400 million this year and $449 million next year to exhaust the federal pandemic relief dollars allocated to the city as part of a package passed by Congress in 2021. The city received $1.4 billion, and it must be spent by the end of 2024.

Administration officials project that Kenney’s plan will leave just over half a billion dollars, or about 8% of revenues, unspent in a financial cushion also known as the fund balance. The proposal also calls for putting $42 million in the “rainy day fund,” as well as $54 million in the Recession, Inflation, and Reopening Reserve, a separate reserve created by the Kenney administration.

Council Democratic Majority Leader Curtis Jones Jr. said that the city’s relatively strong financial state can make passing a budget just as hard as when the city needs to make cuts because leaders must agree on what to prioritize.

”It is as hard as when you have a deficit as when you have a surplus,” Jones said.

Jones said that he thought Kenney’s plan was a good first step, applauding the new funding for free transit passes as well as the city’s continued commitment to antiviolence spending.

The administration’s proposed $55 million increase to the police budget is largely to cover forensics upgrades and labor costs and brings the department’s overall allocation to more than $850 million. The mayor is also proposing nearly $10 million for the department to hire additional analysts to carry out its hot spot patrol strategy.

Kenney’s proposed police budget is more than $200 million higher than when he took office in 2016.

Councilmember Jamie Gauthier, a progressive member who has in the past opposed increases to the police budget, said she doesn’t have a problem with the proposed funding boost because it’s geared toward upgrading the crime lab and helping detectives solve more cases.

“There’s no way we get out of the gun violence epidemic that we’re in without being able to clear more cases,” she said.

In addition to increased spending on law enforcement, the budget proposal includes nearly $2 million for employee recruitment and retention as the city struggles to fill thousands of open positions.

Nearly 1 in 5 city jobs are vacant following a steady trickle of employees fleeing government service over the last three years, complicating the delivery of basic city services.

The administration also proposed segregating parking tax revenue to establish a new Transportation Fund, which would commit about $100 million this year to be used on street paving, lighting, engineering, and crossing guards.

Kenney said the administration is also committing about $37 million over five years to open libraries six days a week. As of this month, 10 libraries are open on Saturdays while the rest are open five days a week or fewer. Kenney said all rec centers are also on pace to be open on weekends by the end of 2023.

The mayor’s plan would continue to slightly decrease the city’s wage tax, lowering the rate for Philadelphia residents from 3.79% to 3.7565%. It also asks Council to approve a lowering of the net income portion of the business income and receipts tax from 5.99% to 5.83%.

That’s one area where Kenney could meet resistance. Gauthier said the city is “continuing to push lower business taxes without proof that that’s going to get us where we need to be.” She and other progressive members last year opposed a business tax cut.

The mayor is also proposing that the city freeze the property tax rate and all property assessments amid a flood of reviews requested by homeowners after the reassessment completed last year.

Kenney spent much of his speech sharing the stories of city residents who have benefited from his legacy achievements, noting, for instance, that over 1,400 people have received free tuition at the Community College of Philadelphia through the Octavius Catto Scholarship program that he proposed in March 2020.

“The Catto Scholarship makes dreams possible — not just for individual students, but for their families as well,” Kenney said.

He also highlighted the three programs that are funded through the city’s tax on sweetened beverages, which he proposed in his first budget address in 2016: PHLpreK, community schools, and Rebuild, which funds rec center and playground renovations.

Kenney briefly choked up as he closed his speech by imagining the life of a child who enrolled in the prekindergarten program’s first class in January 2017.

“That was more than six years ago. A three-year-old student who started the program that day is nine years old today,” he said. “They will be in middle school when the 2026 World Cup arrives in Philadelphia, and they will likely start college nine years from now in 2032. It is my hope that they will choose a rewarding career, and a home for their family, here in their own hometown.”

One of them may even become mayor, Kenney said.

“Don’t think it doesn’t cross my mind every time I visit a pre-K,” he said.