Hey, Big Spender

Hey, Big Spender

The mayor has increased the spending of your taxpayer dollars by a whopping 17 percent since taking office. What is our return on that investment?

October. 11, 2018

There was an unintentionally revealing moment last March when Jim Kenney was being interviewed by Matt O'Donnell on Channel 6's public affairs bear witness, Inside Story. O'Donnell had noted that Kenney inherited a budget of roughly $iv billion, and was now presiding over one of $4.seven billion—a 17 percent increment in 3 curt years, seven times the rate of inflation. O'Donnell, wondering if the city had a spending—and non a revenue—trouble, asked whether it would exist possible to "cutting wasteful municipal jobs."

Prefer the audio version of this story? Mind to this commodity on CitizenCst below:

"What does that mean?" Kenney said, pouncing. "What does 'cutting wasteful jobs' mean? I don't know what that means."

It was a revealing moment, in that it non but exposed the Mayor'due south big spending predilections, only also showed him to be a lifelong product of sprawling, unaccountable government. But someone long trapped inside the trappings of bureaucracy would reflexively dismiss the notion that a government'southward fiscal engine might not be running at peak efficiency.

Fact is, Jim Kenney at present has a $4.7 billion budget and a $3 billion schools upkeep. If, as he suggests, his government were running at peak efficiency, how is it that most $8 billion is non enough to service 1.iv meg residents?

Well, recent headlines accept answered Kenney's challenge to O'Donnell by identifying the waste material. There have been ample examples of belatedly illustrating just how inefficient and wasteful Jim Kenney'south government is. Charles Ellison covered many of them for The Citizen here , and an Inquirer editorial laid out the disturbing trend here .

The case studies run the gamut from the unreconciled city depository financial institution accounts, $924 million in bookkeeping errors and missing $33 million (the Kenney administration'due south sleuthing to find the money is reminiscent of O.J.'s tireless efforts to find the real killer), to the $50 million boondoggle over a new police headquarters, to the fact that the metropolis overshot its overtime upkeep this year past a mere $40 million.

Fact is, Jim Kenney now has a $4.7 billion budget and a $3 billion schools budget. If, as he suggests, his government were running at tiptop efficiency, how is it that nearly $viii billion is not enough to service 1.iv million residents? Supply-side economic science may have since been discredited, but that doesn't mean Ronald Reagan was incorrect when he said, "Nosotros could say the government spends like drunken sailors, just that would exist unfair to drunken sailors, because the sailors are spending their own money."

Councilman Alan Domb, whose cross-examining of the urban center's Managing director of Finance Rob Dubow and Treasurer Rasheia Johnson last April kickoff uncovered the metropolis's systemic accounting woes, recently asked his staff to dive into just where the city's contempo spending splurge has gone. Kenney has added $709,702 meg in new spending since taking over from Michael Nutter in 2016. Of that, an phenomenal sixty percent—$425,806 meg—is tied up in city worker salaries, benefits and labor costs. Kenney has gone beyond just feeding the beast, in other words; the beast is eating the budget.

"Nosotros accept a spending problem," Domb explains. "It'southward very telling. For every $1 you increment salaries, wellness and pension costs go up by nigh $ane, too." And go on in mind that our unfunded alimony liability currently eats up roughly 16 pct of the budget—and the assistants'due south plan to get the fund to fourscore percent funded past 2029 is full of rosy-scenario assumptions—similar the lie that we'll see but shy of an 8 percentage rate of return.

Domb says inefficiencies abound in merely virtually every urban center department. Take the prisons, he says. We've laudably cutting the number of those incarcerated from 8,300 three years ago to 5,300 today, but have only reduced the prisons upkeep past ii.5 percent. "Don't tell me you need the same number of guards when you've taken three,100 people out of the prison house population," he says. "If y'all cut the prisons budget by 15 percentage, you could salvage $threescore million a year. Over time, that's a skilful chunk of the spending on salaries these terminal three years."

"We're like the guy in the automobile, looking in his rear-view mirror and marveling at how far he's come," Levy says. "Concurrently, he'due south not looking out his side window, where all these other cities are passing him by."

Domb is quick to emphasize that our problems are mostly systemic, and not necessarily the product of whatsoever one mayor'south fiscal irresponsibility. "The crux of our problem is that we take a 26 percent poverty rate and another 31 percent that don't pay taxes—the nonprofit eds and meds," Domb says. "That leaves 44 pct of our population that pays all the taxes. We've got to effigy out ways to abound that 44 percent taxation-paying base, instead of only taxing them more to spend more."

That's why it's imperative to effigy out what our return on our taxpayer investment has been. Yes, Kenney has spent like a drunken crewman—but has said spending grown the local tax base?

Turns out, there are some indications that the city has added a sprinkling of jobs the terminal two years, thanks in large measure to the national economic blast that has been fueled at least in part by the Trump taxation cuts. In its ane,000 day written report released last week, the Kenney administration heralds that working city residents rose to 660,000 last twelvemonth from 646,000 in 2015. That would amount to a 2.two percent rise that beats out Baltimore and Pittsburgh, among other cities.

Problem is, Bureau of Labor Statistics Expanse Unemployment Statistics (LAUS) don't always accurately tell a urban center's economic development story considering they report by "place of residence"—and not by where the jobs actually are. In other words, a hypothetical bedroom customs could have 0 percentage unemployment and 100,000 working residents but no jobs at all if everyone works at a plant the adjacent boondocks over. In our example, given that roughly 40 percent of Philadelphia's "working residents" reverse commute to the suburbs, LAUS statistics don't accurately capture the city's economic growth.

That said, the report is right that we are doing a bit better of late. Comparing Bureau of Labor Statistics one-year rolling averages (September 2016-Baronial 2022 compared to September 2017-August 2018), nosotros've added 12,000 jobs for a growth rate of 2 percent. That'southward in a higher place our mail service-recession average of i.4 pct annual growth and the national average of ane.seven percent.

That's a proficient thing, just let's keep the corks in those champagne bottles. The gains are nowhere near where they demand to be to justify our current ballooning of city spending. Roughly half of the jobs we've added accept been in the same revenue enhancement exempt eds and meds sector, and a sizable number accept been depression-wage jobs. Moreover, we're still trailing too many peer cities in terms of economic growth. Paul Levy, President and CEO of the Middle City District and our foremost guru of growth, calls these baby steps "Philly-style growth. We beat Memphis and Baltimore. Yippee."

Since the smashing recession, Philadelphia's annual charge per unit of growth—i.4 percent—ranks 24th out of the nation's top 25 cities. Equally Levy points out , had we grown at the rate of the average metropolis during that time, nosotros would have already added the equivalent of an Amazon workforce to our economy. Levy points out that cities with higher rates of job growth tend to accept lower rates of poverty, which is why he ties his taxation reform plan—raising commercial existent estate taxes in order to cutting the wage and Business Income and Receipts taxes—to attacking poverty. The best way to address poverty is to  grow the tax base, rather than just continually redistribute what you already accept.

Instead, Levy says, we're stuck. "We're similar the guy in the car, looking in his rear-view mirror and marveling at how far he's come up," he says. "Meantime, he'due south non looking out his side window, where all these other cities are passing him past."

Last week, Mayor Kenney did something truly innovative when he alleged a disaster in opioid-plagued Kensington and created an on-the-ground emergency operations eye to interruption down bureaucratic roadblocks in getting services to those well-nigh in need. "Enough is enough," he tweeted. "What's going on in Kensington isn't acceptable."

It'southward that kind of leadership we need on addressing poverty by way of economic growth. The first stride to becoming that kind of visionary leader volition require the mayor to brand sure that what he spends gets us what nosotros need.

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Source: https://thephiladelphiacitizen.org/hey-big-spender/

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