While Plan C will no longer go into effect in Philadelphia, the city cannot rely on temporary fixes.
Philadelphia narrowly avoided its doomsday budget, which would have cut off funding to libraries, recreation centers and thousands of city employees, but there isn’t much reason for elation.
Granted, the doomsday budget didn’t go into effect, but we have only stepped out of the way of a speeding train and into a patch of quicksand.
The city was waiting on two concessions from the state, raising the sales tax and deferring payments into the pension fund. While these two steps will help Philadelphia balance its budget this year, it is going to push more money and people and businesses out of the city and create another crisis next year or the next, and again the year after that.
First, the sales tax. It isn’t going into effect immediately, but it will soon. And when that happens, more people will travel to Delaware or King of Prussia, or anywhere outside Philadelphia, to buy their big-ticket items. So over a few years, the city could actually lose money by raising the sales tax, because it will be even more economical to travel to buy a big-screen TV or a new computer.
In essence, the sales tax will encourage consumers, and by extension businesses and the taxes they pay to the city, to leave.
Deferring payments to the pension fund – the fund that the city uses to pay its employees and retired employees their benefits – is necessary but really only puts the city another inch into the quicksand. The pension fund will be a little less flush, and bringing back its health will be difficult at best considering the city’s falling tax revenue.
This may not hurt the city in the next five or 10 years, but not having as much revenue and losing residents to the suburbs will only bring us back to the brink of doomsday again and again.
Meanwhile, the city’s attempts to bring revenue in aren’t as forward-thinking as they could be. Casinos will provide jobs and plenty of revenue for the city, but they won’t support the city on their own, and they won’t create any skills that will trickle down to other industries in any significant way.
Mayor Michael Nutter is doing what he can, and he should be commended for his efforts, but at some point Philadelphia will have to find a way to bring people and new businesses back into its city limits.