Controller's Opinion About City's Five-Year Budget Plan

According to a statement released last week, City Controller Alan Butkovitz believes the city's five-year budget plan in reasonable but includes several assumptions and uncertain conditions that could dramatically impact the city's financial standing. 

The FY12-16 Forecasted General Fund Statement of Operations is prepared by the City’s Finance Office and then submitted to the Pennsylvania Intergovernmental Cooperation Authority (PICA).  The controller’s opinion, a release stated, provides approval for the city’s budget plan but warns PICA about two sensitive assumptions contained in the forecast: 

• The city is assuming that $59.5 million in wage and benefit savings will be realized over the five years, but civilian labor negotiations and an arbitration award to the International Association of Firefighters Local 22 (IAFF) are still not settled.

• The city estimated savings related to self-insurance of $202.5 million over the five-years of the forecast. These savings are based on previous premium-based amounts due to the uncertainty in the timing and outcome of the appeal of the IAFF arbitration award. 

“I strongly urge PICA to be vigilant in analyzing and evaluating the impact of these assumptions on the Plan,” Butkovitz continued in the release. 

In addition to the sensitive assumptions in the plan, the controller cautioned about other uncertainties which could dramatically impact the plan’s effectiveness.  These uncertainties, the release stated, include: 

• Potential federal budget cuts that could affect city programs and services have not been incorporated into the financial plan.

• Future increases in additional school district funding. 

• Impact of implementing Actual Value Initiative, which could create a real estate tax burden on senior citizens and low-income taxpayers. 

“While the budget debate in Washington rages on, it would be naïve to believe that the city would be unaffected by any reductions in the current level of federal financial assistance,” Butkovitz's statement continued.

The controller also cautioned the city about the school district's additional financial requests.

"Unless the school district takes necessary steps to operate within its budgetary constraints and eliminate the uncertainty regarding its future funding requirements, the possibility of further shortfalls will remain, placing additional strain on the city," he added. 

To view a copy of the City Controller’s review of the Forecasted General Fund Statement Operations for FY2012-16, please visit the Controller’s website at www.philadelphiacontroller.org