Controller Butkovitz Approves City’s Five-Year Budget Plan

For Immediate Release
July 10, 2017

Contact:  Brian Dries

Controller Butkovitz Approves City’s Five-Year Budget Plan 

PHILADELPHIA – City Controller Alan Butkovitz today approved the City of Philadelphia’s Five- Year Budget for Fiscal Years 2018-2022 but cautioned there was no funding set aside specifically for the School District of Philadelphia’s future deficit. 

Controller Butkovitz submitted his independent accountant’s report for the Five-Year Plan to the Pennsylvania Intergovernmental Cooperation Authority, the agency charged with providing final approval of the City’s Five-Year Plan.  While the City Controller recommended that PICA accept the plan, he cautioned that the city did not earmark any funds to close the School District of Philadelphia’s future deficit since the prospect of additional state funds is remote.

The School District’s approved budget projects an almost $40 million deficit by 2019 and a $243 million deficit by 2020. The deficit is expected to grow exponentially in the ensuing years.

“Any future unexpected commitments to the School District of Philadelphia could drastically impact city operations,” said Butkovitz.  “This could further erode the city’s fund balance available for future appropriations.”

The City Controller also indicated that forecasted statements for the Real Estate Tax and the Philadelphia Beverage Tax (BPT) revenues may not reach current projections. 

According to Controller Butkovitz, the outcome of the new commercial reassessment for the Real Estate Tax is vulnerable to the appeals process, which Philadelphia significantly under-performs compared to peer cities.  In addition, the PBT fell significantly below projections in fiscal year 2017.

“The City’s Beverage Tax projections appear overly optimistic and did not sufficiently account for changes in consumer behavior,” said Butkovitz.

The City Controller’s analysis also indicated that the Five-Year Plan does not include any potential costs above $200 million in obligations for future labor agreements.  The forecasted amount is dependent on the successful completions of negotiations with AFSCME DC47, Local 810, and the arbitration with the Fraternal Order of Police and the International Association of Fire Fighters.