Here’s what Mayor Jim Kenney’s $5.6 billion budget proposal says:

Mayor Jim Kenney proposes a $5.6 billion budget that doesn’t include tax increases, but expects real estate tax revenues to rise 4.5% after new real estate appraisals are imposed, government officials said.

The proposed budget, which Kenney will present to city council on Thursday, will increase spending by 5.5% and include an expected financial buffer, known as the fund balance, of just $153 million for the fiscal year beginning July 1. That equates to 2.8%. of estimated revenue, well below the city’s goal of keeping 6% of the budget unspent on emergencies.

The government proposes that the city continue its path of prudent spending on the $1.4 billion in federal pandemic aid allocated to Philadelphia by the US bailout plan passed by Congress as a result of the pandemic. In fact, Kenney proposes that the city spend just $335 million of that money next year. That would leave more than $800 million untouched.

Overall, the budget proposal would largely maintain the status quo, with Kenney refusing to call for significant or unexpected changes in taxes or spending. The current city budget is $5.4 billion.

The budget plan is the second to last for Kenney, who can serve only two terms and will leave office in January 2024. Rather than launch major new initiatives or rethink the way the city raises or spends money, the administration’s goal in this budget cycle is to implement the priorities started in Kenney’s first term in office and “help the city the best possible way to respond to and recover from the pandemic,” said Kenney chief of staff Jim Engler.

“Our focus with this budget has been on delivering the key services that the mayor has been talking about for the past few years,” said Engler.

Administration officials said that while tax revenues are picking up after the pandemic — and some, like parking and entertainment taxes, have grown faster than expected — the city remains cautious amid uncertainty over the future course of the pandemic, potential hikes in interest rates. and supply chain issues.

Chief Financial Officer Rob Dubow said Philadelphia’s economy is far from thriving, noting that during the recovery, it still lags other counties in the region and the country as a whole in job creation.

He said the city government is in a “financial position that is much better than it was two years ago when the pandemic started, but we are still wary of our financial future.”

The upcoming release of new real estate appraisals, which have been frozen for three years as the city sought to reform its real estate appraisal system and then interrupted the appraisal process amid the pandemic, will play an important factor in the debate over the budget in the Council .

Dubow said the ratings will be released in April and the delay in releasing them was caused by issues with the implementation of the new rating system.

While the administration isn’t proposing tax rate hikes, it estimates property tax revenues will grow by more than $33 million based on higher valuations, to about $760 million.

If the reassessments raise projected property tax revenues by more than 4.5% – which many observers expect given the hot real estate market and the long time since the last assessment – the administration will work with the Council to lower the property tax rate or increase tax breaks such as the home exemption to keep the increase below that amount, Dubow said.

The proposal also leaves payroll and business tax rates unchanged, although Kenney followed the strategy of recent governments by making small annual cuts in those taxes. But Dubow said the administration wanted to wait until the property tax assessments were finalized before discussing all tax rates with the Council.

Even with rates stagnant, the administration expects a 7% increase in payroll tax collections to $1.65 billion, and a 12% increase in business tax revenues to $658 million.

All major taxes, except the real estate transfer tax, are expected to bring in more money next year than in the last full year before the pandemic, fiscal year 2019. (The real estate transfer tax, which is expected to fall 4.3% to $300 million, is expected to fall next year thanks to changes in the city’s property tax reduction program that saw a one-time increase this year.)

With the unveiling of Kenney’s proposal, a three-month budget process begins in which the Council will hold hearings on the departments’ spending plans and negotiate amendments to the proposal with the administration before adopting a final version in late June.

Most city departments would see a slight increase in spending under the plan. An important exception is the city’s public security services.

The administration is proposing to add $23.7 million to the police budget, for a total of $782 million, including $2.7 million for a “police mobility” program that provides cell phones and laptops to detectives from all over the world. homicide, as well as an additional $515,000 for forensic service upgrades.

In 2020, following the murder of George Floyd in Minneapolis, councilors urged the government to cut police spending. This year, however, the tide may turn the other way. Council Majority Leader Cherelle Parker unveiled a community policing plan on Wednesday that would add more police, and Councilor Derek Green said he is introducing legislation to boost officer recruitment.

The Fire Department’s proposed $381 million budget reflects $7.7 million in new funding, including $4 million more for 911 improvements and a co-responder system that deploys mental health specialists to some emergency calls. And the Department of Prisons would receive $2.3 million in food to meet the demands of an increased prison population. However, the total budget of the prisons would fall by $5.3 million to $246 million thanks to a drop in medical costs from COVID year and one-time equipment purchases in the current budget.

Under the plan, the Department of Behavioral Health and Intellectual Disability Services would receive $7.3 million in new funding for the mobile crisis unit program for a total of $27.3 million.

The free library’s proposed $55.8 million budget includes a $10.4 million increase, which the administration says will allow branches to be open five days a week. The library system has struggled to fully reopen branches due to the pandemic, and some council members are pushing for the budget to include funding for branches that must be open for six days.

The budget plan also includes $269.9 million in funding for the School District of Philadelphia, up $14 million from this year, and $50.1 million for the Community College of Philadelphia, up $2 million.

Staff writer Anna Orso contributed to this report.

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