Philadelphia's_Prese

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Philadelphia's_Prese

  1. 1. January 28, 2009 • City of Philadelphia • Informational Session Philadelphia’s Present Condition Part 2 1/28/2009 City of Philadelphia
  2. 2. Philadelphia’s Present Condition AGENDA I. How the national economic crisis affects Philadelphia’s budget II. Description about the major drivers of the Philadelphia budget 1/28/2009 City of Philadelphia
  3. 3. State of Philadelphia How the national economic crisis affects Philadelphia’s budget 1/28/2009 City of Philadelphia
  4. 4. When the national economy suffers, Philadelphia’s economy suffers US Economic Growth 2001 to 2010 8.00 % Change in Real GDP 6.00 Percent Change 4.00 2.00 0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 -2.00 -4.00 -6.00 -8.00 Calendar Year 1/28/2009 City of Philadelphia
  5. 5. When the national economy suffers, Philadelphia’s economy suffers Real GDP Growth compared to Philadelphia Total Tax Growth 8.00 % Change in Real GDP % Change in Real City Tax Receipts 6.00 4.00 Percent Change 2.00 0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 -2.00 -4.00 -6.00 -8.00 Calendar Year 1/28/2009 City of Philadelphia
  6. 6. As real estate market declines, so does the real estate transfer tax revenue Philadelphia Realty Transfer Tax Growth FY2000 to FY2010 80.0% 60.3% 60.0% 52.0% 51.4% 40.0% 29.7% Percent Change 31.0% 22.3% 20.0% 11.5% 10.0% 0.0% 0.0% FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 -10.2% -20.0% FY2000 to FY2008 are actual; FY2009 and FY2010 are projected -37.3% -40.0% -60.0% Calendar Year 1/28/2009 City of Philadelphia
  7. 7. Market forces determine pension performance Philadelphia Gross Pension Returns vs Dow Jones Annual % Change Gross Pension Returns Dow Jones Annual % Change 30% 18.1% 16.9% 20% 15.9% 11.4% 10.3% 9.8% 10% Percent Change 5.7% 5.1% 4.9% -0.4% 2.4% 0% -5.2% -3.7% -5.5% -10% -13.8% -20% -17.0% -20.0% -30% -28.2% -40% Jun-08 Jan-09 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 DATE * Note: The pension fund invests in other items in addition to equities. 1/28/2009 City of Philadelphia
  8. 8. Breakdown of local tax revenue Real Estate Transfer Other 5% Real Property 8% 16% Business Privilege 14% Wage, Earnings, Net Profits, PICA 57% 1/28/2009 City of Philadelphia
  9. 9. Financial Shortfall Over 5 Years Without corrective action, Philadelphia’s projected shortfall will continue to get worse FY09 FY10 FY11 FY12 FY13 FY14 $0 -$47 -$200 -$169 -$400 -$472 Millions -$600 -$667 -$800 -$871 -$1,000 -$1,042 -$1,200 1/28/2009 City of Philadelphia
  10. 10. State of Philadelphia Description about the major drivers of Philadelphia’s budget 1/28/2009 City of Philadelphia
  11. 11. Funding Breakdown The total annual City budget for all funds is $6 billion FY ‘09 Budget  Enterprise Funds: $926 million  Grants / Community Development Funds: $1.1 billion  Other Funds: $29 million  General Fund: $3.9 billion  Discretionary = 41%  Non-Discretionary = 59% * As of November rebalancing plan The entire $1.04 billion shortfall in the 5 year plan is in the General Fund 1/28/2009 City of Philadelphia
  12. 12. Pension costs have skyrocketed beyond health benefits, wages, and department costs Wages Benefits Pensions Fire, Library, Recreation, and Fairmount Park Costs 200% 180% 160% 140% Percent Change 120% 100% 80% 60% 40% 20% 0% FY99 FY09 FY13 FISCAL YEAR 1/28/2009 City of Philadelphia
  13. 13. Losses driving the $1.04 billion shortfall in the 5-Year Plan Tax Revenue Losses -44% Failure to achieve POB Increase in savings pension -12% payments -32% Department operating deficits -12% 1/28/2009 City of Philadelphia
  14. 14. The “Big Six” departments make up 49% of the City’s budget Fire Department 5% Police Department 14% Other Departments Prison System 24% 6% Debt Service First Judicial District 3% 3% Streets Department 3% Pensions and Department of Benefits Human Services 24% 15% Department of Public Health 3% 1/28/2009 City of Philadelphia
  15. 15. The “Big Six” departments employ 76% of the City’s workforce Other Departments Police 24% Department 32% Department of Human Services 8% Fire Department Streets 10% Department 8% First Judicial Prison System District 10% 8% 1/28/2009 City of Philadelphia
  16. 16. Benefits and Pensions make up 25% of all budget costs Salaries and All Other Overtime Expenses 36% 39% Benefits Pensions 13% 12% 1/28/2009 City of Philadelphia
  17. 17. Pension costs will continue to increase through the 5-Year Plan 1/28/2009 City of Philadelphia
  18. 18. Other City Responses to Financial Crisis Boston, MA Seattle, WA $140 million shortfall for FY10, $1 million cut from borrowing for $600 million in operating costs in FY08 capital projects postponed, one-year San Francisco, CA Chicago, IL and FY09 real estate tax wage freeze for ALL employees, 15% $575 million shortfall in $500 revenue projections down cut across departments FY09 and FY10 and $26.7 million, or 40% million in cuts to the 8%, in cuts Health Department Los Angeles, CA Washington, DC $432 million shortfall in FY09 and $258 million shortfall in cuts to core services like Public Safety, FY09 and elimination of New York, NY considering privatization of services 200 vacant positions $5.2 billion shortfall in FY09 and FY10, 12% cuts Houston, TX across departments, 7% $200 million in infrastructure property tax increase, tax projects postponed and plans cuts delayed and 3,000 to liquidate certain layoffs investments for capital Phoenix, AZ Atlanta, GA $270 million shortfall in $140 million shortfall in FY09 and cuts ranging from FY09 and approximately 15% to 60% in departments 600 layoffs, including the Fire Department 1/28/2009 City of Philadelphia * Source:
  19. 19. Civic Engagement Dialog Sessions • Thursday, Feb. 12th: St. Dominic's School, Frankford Avenue near Benson Street, Holmesburg. • Wednesday, Feb. 18th: Mastery Charter School, Pickett Campus, Wayne and W. Chelten avenues, Germantown. • Thursday, Feb 19th: St. Monica's Catholic School, 16th and Porter Streets, South Philadelphia. • Monday, Feb. 23rd: Pinn Memorial Baptist Church, 54th Street near Woodcrest Avenue, Overbrook. 1/28/2009 City of Philadelphia

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