6 takeaways from Philly Mayor Jim Kenney’s new budget

Philadelphia Mayor Jim Kenney this week unveiled a $5.2 billion budget proposal that uses hundreds of millions in federal aid to cut taxes, restore spending cuts made last year, and fund some of his second-term priorities.

City Council will soon hold hearings on Kenney’s pitch. Lawmakers and Kenney have until July 1, the start of the fiscal year, to pass a budget.

Here are six takeaways from Kenney’s proposal and what it all means:

If it weren’t for the $1.9 trillion federal coronavirus relief package, which will send $1.4 billion to Philadelphia over two years, the city would be facing a $450 million budget hole. Instead of restoring services cut last year, cutting some taxes, and making new investments, Kenney would likely be proposing a mix of tax hikes, service cuts, and layoffs. The city will get $700 million this calendar year and next year to help balance the books.

That doesn’t mean the city has escaped the pandemic budget crunch scot-free. Finance Director Rob Dubow has said the recession’s impact on tax collections over the next five years will be so severe that it will exceed the federal aid.

But it could have been much worse without action by President Joe Biden and Democrats in Congress, who passed the bill over unified Republican opposition.

Criticism of the mayor’s budget proposal spans the ideological spectrum but has a common theme: Kenney didn’t go far enough.

For some, Kenney didn’t do enough to reimagine policing. For others, he didn’t do enough to reform the city’s tax structure.

Instead, Kenney played it safe. He proposed resuming the city’s slow reduction of its oft-maligned business and wage taxes, restoring some services cut last year, and funding priorities that were put on ice when the pandemic began, such as expanded street sweeping and boosting the Community College of Philadelphia.

“We’re making new investments. We have no new taxes. We’re hoping for a good recovery,” Councilmember Maria Quiñones-Sánchez said. “It’s called a safe budget.”

The proposal is consistent with a broader pattern of the Kenney era: After an ambitious first term in which he pushed high-profile issues like the sweetened beverage tax to fund pre-K and returning the school district to local control, Kenney seems to be taking a more cautious — critics say disengaged — approach in his second term.

Police reform and funding remain hotly debated topics across the country. But in Philadelphia, the movement to “defund the police” is unlikely to succeed this year.

Kenney proposed keeping police funding at $727 million, the same amount allocated in the current fiscal year’s budget. But he also proposed new money for police that would be placed in other departments. That includes funding a new program for behavioral health specialists to team up with officers to respond to mental health-related 911 calls, police training, technology for detectives to better use forensic data, and other reforms. There’s also $25 million set aside for potential raises for police and other municipal unions as new contracts are negotiated this year.

Activists said the plan falls short of a plan to fix what’s wrong with policing.

”Mayor Jim Kenney is trying to pull the wool over our eyes,” said Kris Henderson, executive director of Amistad Law Project, a West Philadelphia public-interest law center that advocates ending mass incarceration. “Resources that end up in the hands of police are police funding.”

» READ MORE: Mayor Kenney said his budget wouldn’t increase police spending. It’s not that simple.

Some City Council members said they’d like to push for a bolder rethinking of policing. But they may be limited by the city’s contractual obligation to pay salaries, which account for almost 97% of Kenney’s proposed police budget.

Usually it’s proposals to increase taxes that generate controversy. This year, Kenney’s plan to modestly cut the wage and business income taxes could turn out to be a hot-button debate.

Following Kenney’s speech to Council on Thursday, a coalition of progressive groups and activists held a “people’s budget response,” saying the mayor’s plan would cost the city money it needs for affordable housing, public health, and gun violence.

But progressive Council members like Helen Gym weren’t the only ones expressing skepticism over the proposed tax cuts. Council Majority Leader Cherelle Parker also sounded unconvinced, saying administration officials would need to prove to her that the tax cuts would translate into job opportunities.

The Chamber of Commerce for Greater Philadelphia, meanwhile, applauded the cuts, and Councilmember Allan Domb said they didn’t go far enough.

» READ MORE: Philadelphia businesses would see modestly cut tax rates under Kenney’s budget plan

Kenney proposed restoring some services cut last year, including reopening city pools and increasing the hours that recreation centers are open. Kenney also wants to keep libraries open five days a week.

The budget includes $62 million over five years for street sweeping, a program Kenney had said before the pandemic that he wanted to expand citywide. Kenney said street sweeping would require residents to move their cars, and would first be focused “on Black and brown communities that are often hit the hardest by illegal dumping.” Officials said this week that they haven’t finalized neighborhoods or a timeline for that program.

Arts and culture funding, reduced dramatically in last year’s budget, would increase again under Kenney’s proposal — but not to its pre-pandemic levels.

Even after much of Philadelphia is vaccinated and health restrictions are lifted, the pandemic’s economic impact will continue. City officials predict it will take a few years for the economy to recover enough to return tax revenues to pre-pandemic levels.

”It’s going to take some time, and we’ve built that in,” Budget Director Marisa Waxman said.

There could also be a permanent impact. The administration predicted that 15% of suburban commuters may never return to city offices, leaving a lasting hole in wage tax revenue. The wage tax in the city’s largest revenue source, and before the pandemic about 40% of it came from commuters.

» READ MORE: The pandemic took a big bite out of Philly’s tax base. What happens if suburbanites keep working from home?