City Budget Moves: The Rules Of The Game; The Power Of The Players

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The local media is reporting this week on City Council’s amendments to the Mayor’s proposed budget as the city approaches the May 31st legal deadline for passing a plan for city spending.  Will the Mayor agree to Council’s changes?  Will Council bend to the Mayor’s will in the end?  Does any of this matter?  A little background on governance and the city’s budget process can help Philadelphians better understand the steps in this dance – and help decipher what it all means.

After considering Mayor Street’s proposed budget for the city’s fiscal year (which begins on July 1), City Council made changes, reducing spending on economic development and shifting additional resources to the Fire Department to restore funding for fire companies and increase Emergency Medical Services.  City Council also wants to alter Police Department spending.  The Mayor initially proposed spending $10 million for wages in the Police Department on overtime for a program named Operation Safer Streets.  City Council cut the amount in half and called for the money to be spent hiring 100 new police officers.  City Council also added some funding for favored programs and moved money around within agency budgets to put that money in seemingly odd places.

Understanding the governance surrounding the city budget -- the rules of the game and the powers of the players – these seemingly dramatic changes may be meaningless to the citizenry in the end, but they may have important implications within City Hall.  In Philadelphia, the Mayor sets the amount that the city can spend each year, but he can only spend money if that spending is authorized by City Council.  So while the Council cannot spend more than the Mayor wants to spend in a given year, City Council can limit how much the Mayor can spend.  But, City Council cannot tell the Mayor how to spend the money.  It may be meaningless that City Council wants the Mayor to hire new police officers or restore fire companies or increase spending anywhere in the budget since all Council can do is approve an amount of money set aside in the budget for Police Department or Fire Department wages. 

For example, the Mayor can choose to use the funding that City Council has set aside to hire new police officers to pay existing officers overtime, hire new officers, or simply do neither and leave the funds unspent.  However, if the Mayor wants to spend more than Council has authorized (say, the full $10 million that the Mayor wanted) the Mayor will have to seek permission from City Council.

Without adding or subtracting any money from the budget, City Council created a major problem for the Mayor.  City Council amended the budget to ensure that it has increased input on two of the Mayor’s major initiatives: ­ reorganization of the city’s housing agencies and riverfront development. 

City Council authorizes spending in the city budget by agency by category – so much for wages for employees in the Streets Department and so much for materials and supplies in the Streets Department – and the Mayor cannot spend more than City Council approves within those categories.  So if the Mayor wants to move money around in the budget, even if it is only within a certain agency, he would have to seek City Council’s approval.

That is why City Council moved funding in the city’s Community Development Fund within the Office of Housing and Community Development from one category (salaries) to another category (contracts).  By altering the category those funds can be used for, City Council has ensured that the city administration will not be able to implement portions of the Mayor’s proposed housing reorganization without seeking City Council’s approval of a transfer ordinance to put the money where the Mayor wants.

The Mayor’s $125 million New River City initiative will also require further Council approval.  The Mayor wants funding for his still-developing plan to encourage development along the city’s waterfront, but City Council wants to know more and have its own say about the program before it is prepared to authorize spending.  Thus, Council approved the amount the Mayor wants to spend, but actually placed the funds the Mayor would like to use in a category where it will not be useful to the Mayor’s plans.

So what is the bottom line?  Overall, City Council’s proposed changes to the Mayor’s spending plan merely tinker at the margins, affecting less than one-third of one percent of the $3.6 billion General Fund, which is the spending plan on general city services.  Council’s plans to tell the Mayor to hire new police officers or restore fire companies may not mean so much, but the Mayor will have to ask for approval if he wants to spend the full amount he originally proposed for police overtime.  Similarly, the Mayor cannot spend money on his proposed new initiatives until City Council moves that money to the right place in the budget.  So the Mayor will have to find a way to appease City Council if he wants his signature projects to move forward.  The amended budget was voted out of committee on May 4, and could be passed into law as early as May 11.  Because of City Council’s changes -- it is very likely that negotiation will continue and further changes are likely before final passage.