COVID-19 in Philly: Pandemic sends Kenney back to budget drawing board

By Michael D’Onofrio

PHILADELPHIA — The novel coronavirus pandemic has blown up Mayor Jim Kenney’s proposed $5.2 billion spending plan for 2021.

A month after he gave his fifth budget address, Kenney said he will introduce a new 2021 proposed budget and five-year plan by May 1 due to the economic earthquake caused by the virus.

“It’s unprecedented in the fact that it’s almost like a depression and pandemic at the same time,” Kenney said during his daily briefing on Tuesday.

The city now faces an expected “substantial increase” in spending and “significant decreases in tax revenue,” Kenney said, adding that some city taxes were taking in “hardly anything.”

The mayor did not rule out layoffs and furloughs of city employees.

The total of the virus’ economic toll remained unknown on Tuesday. The mayor expected to have a clearer understanding of the financial repercussions by month’s end.

Kenney hoped the federal government would reimburse the city for expenditures related to responding to the virus.

Brian Abernathy, the city managing director, said the lack of revenue and the severe impact on the city’s wage and businesses taxes will drive budgetary decisions going forward.

COVID-19 in Philly: Breaking down results by ZIP code tells the city’s story

“Unless the federal government provides direct support for city operations beyond reimbursement, we’re going to have to make some very difficult decisions,” Abernathy said.

Unlike the federal government, the city cannot run a budget deficit, so Kenney must put forward a balanced spending plan.

“We’ll do whatever we have to do,” Kenney said. “It’s not going to be nice and people are going to complain and they’re going to expect certain things that are not going to be done.

“But when there’s no money, there’s no money.”

The coronavirus outbreak and social distancing orders have already derailed City Council’s budget negotiations and hearings, which should have been well underway.

City Council must approve a budget by June 30.

Kenney’s now-scrapped 2021 budget proposal would have raised spending by 4.2% ($210.7 million) over the previous year and did not include a property tax hike.

The biggest revenue source in Kenney’s budget was the city’s wage earning and net profit taxes, which were expected to pull in $1.7 billion. All city taxes were expected to make up 85% of total revenues in the proposed budget.

Before the pandemic hit the city, the Kenney administration anticipated revenues to increase 5.3% while pulling in a $352.3 million fund balance, or surplus.

But those rosy projections were days before state and city orders shuttered all non-essential businesses to reduce the spread of the virus.

Nearly 1.18 million Pennsylvanians have filed claims for unemployment compensation since the outbreak began here in mid-March, all of whom won’t be paying wage taxes. Unemployment claims nationally reached approximately 10 million.

New numbers

Confirmed cases of coronavirus soared 544 on Tuesday since the previous day, an increase of 14.5%.

The city’s total number of confirmed cases reached 4,272 — up 225% since March 31.

Twenty new deaths of city residents were reported from COVID-19, the disease caused by the coronavirus, bringing the total to 65 since the outbreak began in the state.

Of the total fatalities, 26 individuals were residents of nursing homes and 66% were those over 70 years old.

City hospitals saw a 12% increase in patients being treated for the virus in their facilities overnight. Patient totals in city hospitals reached 554 on Tuesday, and 402 in healthcare facilities outside Philadelphia.

Michael D’Onofrio is a reporter for the Philadelphia Tribune, where this story first appeared.