PHILADELPHIA (KYW Newsradio) — Philadelphia received $1.4 billion in federal economic relief from the 2021 American Rescue Plan in response to the fiscal challenges of the COVID-19 pandemic. That extra funding, which kept the city’s budget afloat and allowed generous spending on new programs, will come to an end in December 2024 — halfway through Mayor Cherelle Parker’s first budget.
That means, Parker will have millions of dollars less to work with.
The Kenney administration left behind a blueprint for how to manage the fiscal cliff the city faces at the end of the year, with cuts in spending that keep the budget balanced five years out.
The cuts include $12 million from community group anti-violence efforts, $2 million from towing abandoned vehicles, and $3.5 million from programs related to the opioid crisis — all areas Parker has promised to bolster.
Marisa Waxman of the Pennsylvania Intergovernmental Cooperation Agency, a fiscal watchdog, says Parker can revamp the plan but will still need to make hard choices.
“We need realistic decisions, making sure there’s no magical thinking around being able to do more with less,” she said.
The state requires the city budget to be balanced over five years, so there are consequences if it doesn’t happen.
Waxman says some other revenue sources, like the real estate transfer tax, are also coming in short, which may require additional cuts.
She notes that if Parker restores any cuts, she will have to find reductions elsewhere or perhaps raise taxes because state funding is tied to that balanced five-year plan, and failing to account for the lost income would mean losing hundreds of millions more from the state.
