The Price of Service Cuts: Financial Crisis in Philadelphia and Potential Cuts to Children and Youth
July 20, 2009
Deep cuts to public services are being considered in Harrisburg as lawmakers and the Governor work to resolve the budget crisis. PBPC is tracking news reports on the potential impact of these cuts on local communities across Pennsylvania.
Today, we look at how the budget impasse and proposed budget cuts have left the city unable to pay its bills and potentially cutting vital programs for at-risk children and youth.
The Philadelphia Daily News published a commentary by Ben Waxman on July 20 about the impact of the state budget impasse on the City of Philadelphia. It has left the city unable to pay its bills, leading the mayor to delay payment to thousands of vendors and pay only for emergency services. Philadelphia is also awaiting the Legislature’s approval to increase the city’s sales tax from 7% to 8% and to delay pension contributions. Those measures will close half of the city’s $1.4 billion budget gap.
Proposed state budget cuts threaten the city even more, making critical cuts to programs heavily reliant on state funding such as services to at-risk children and youth. Cuts to city government are anticipated to trigger a second round of layoffs outside of government, as contractors that rely on state funding are forced to close their doors.
More information about how proposed cuts will hurt Pennsylvanians can be found at PBPC's 30 Ways in 30 Days Service Cuts Will Hurt Pennsylvanians, which examines proposed cuts to public education, college costs, hospitals, children's health care, senior services, state police patrols, and agricultural programs, among other areas. Return to the Price of Service Cuts.
Read the Philadelphia Daily News article below.
Opinion: The state budget wrecking ball
Ben Waxman
July 20, 2009
http://www.philly.com/dailynews/opinion/20090720_The_state_budget_wrecking_ball.html
On Friday, Mayor Nutter made a dramatic announcement: The city can't afford to pay its bills.
Philadelphia will be delaying payment to thousands of vendors and suppliers. Those vendors range from firms that outfit City Hall with pencils and staplers to nonprofits that run summer programs and camps. Some exceptions will be made for what the mayor defines as emergencies. For now, the city will continue to pay city workers and its debt service.
Why? Thanks to the budget impasse in Harrisburg, the city is literally on the verge of running out of money.
It's certainly chilling to think that we can't afford to meet short-term expenses. But is this a short-term blip or a sign that the fiscal apocalypse is upon us?
It's a little bit of both.
Gov. Rendell and Republican legislators are locked in a battle over the state budget, now 20 days behind schedule.
That means trouble for the city, because it gets hundreds of millions in state funding for all kinds of services, and the budget impasse means those dollars aren't flowing. The city was counting on about $100 million from the state in August, and now no one knows when it will arrive.
And there's another problem.
The budget battle has also kept the state legislature from acting on two key parts of the mayor's plan to deal with the local budget shortfall. He needs permission from Harrisburg to raise the local sales tax from seven to eight percent, as well as allowing a delay in contributions to the city's pension fund. Combined, these proposals represent about $700 million needed to fill the city's $1.4 billion gap.
The city planned to borrow against future sales-tax revenues, but no one is going to lend the city money if the tax increase hasn't been authorized. Short-term borrowing is usually routine, but the budget crisis has made normally simple transactions extremely difficult.
And the problems might not vanish even when lawmakers pass a budget. Even if the mayor gets help from Harrisburg, it might not be enough to prevent drastic cuts anyway. Philadelphia relies on state dollars for much of its municipal budget, so if lawmakers slash spending, it will reverberate throughout city government.
No department will be immune, but the worst hit could be services for children and youth.
The Department of Human Services relies on state dollars for 60 percent of its $600 million budget. If state lawmakers cut that spending, the city will be forced to scale back services for at-risk youth. That could mean major cuts in programs that help prevent crime and keep kids safe from abuse.
The effects will go far beyond government. Dozens of social-service agencies that have DHS contracts will have to scale back. It could even spark a second wave of layoffs for organizations and businesses that rely on city funding. Some organizations that rely on almost exclusively on city funding will be forced to close their doors forever. The same scenario would play out across city departments.
The worst-case scenario:
The legislature approves a state budget with drastic cuts and rejects the city sales-tax hike. If that happens, the mayor will be forced to slash hundreds of millions from the city budget in a few short weeks. The carnage will make the last round of cuts look like a cakewalk.
Philadelphians will probably have to deal with thousands of city employee layoffs, including police and firefighters.
It's likely that hours at city facilities, like libraries and recreation centers, will be drastically cut or eliminated. We could even see trash collections reduced to twice a month or less.
SOME MIGHT say government is bloated and the cuts won't do much harm. That's mistaken. Any progress that's been made in public safety, education, literacy, health or many other areas will be negated by these drastic service reductions.
We are getting very close to the edge in Philadelphia. Unless something dramatic happens in the next few weeks, Philadelphia will need to prepare for the worst. Are we ready?
Ben Waxman reports for "It's Our Money," a joint project of the Daily News and WHYY funded by the William Penn Foundation. Reach him at 215-854-5307 or waxmanb@phillynews.com.
