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Philadelphia 2020: Chapter Three

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The following is a fictional account.

 

Chapter 3

His hair was white, his mustache and beard were flecked with grey.  But, John Street looked spry, fit and alert as he sat in his la-Z-boy listening to Marty Calubra and Celia Thompson recount Philadelphia's budget woes.

The two city officials had made the pilgrimage to Street's Yorktown rowhouse to seek advice from the former mayor, who had become an eminence gris of sorts, a go-to guy on advice about governance and politics in the city.

"He must have been a very popular mayor," Thompson said to Calubra as they drove up Broad Street.

"You can tell you are from Indianapolis," Calubra said. "What he lacks in charm, though, he makes up with knowledge.  Besides, with former Mayor's Nutter and Rendell retired to Florida and the elder Bill Green in a nursing home, he's the closest thing to institutional memory we have around here."

"What about the Wilson Goode, the Councilman's father, he was mayor wasn't he?" Thompson asked.

"As I said, you can tell you are from Indianapolis," Calubra sighed.

The two outlined the situation for nearly an hour - the decline in tax revenues, the rise in expenses, the looming $460 deficit facing the city in 2019-2020.  Street took a few notes on his yellow legal pad, but said not a word.  Finally, when they ran out of breath and facts, he put down his legal pad and said:

"Well, it looks like you are truly, royally screwed."

"Thanks for that insight, Mr. Mayor," Calubra said.

"Let me see if I got this right," Street saying, ignoring the Chief Deputy Mayor's wise ass remark.  "The only way I see out of this mess is to raise the $460 million through a combination of budget cuts and tax increases and you say you can't do either?

"That's correct, Mr. Mayor," Thompson said.

Street looked puzzled.  "And could you tell me again why?"

Calubra ticked off the obstacles.

"One, with taxes.  Green won't go for it and City Council won't go for it.  They are all up for re-election next year and want nothing to do with it."

Calubra recounted his meeting with Bill Green, now in his second term as Council President.

"And I take it that age has not improved his disposition," Street said.

"No, sir, it has not," Calubra said.  He had to sit through a 40-minute harangue from the Council President about how the Brown administration was misguided, inept, weak-kneed and not worth a damn. A sample line: "She's not a mayor, Marty. She a goddamn mannequin! "

"But these tax increases we're seeking are only temporary, Mr. President,"
Calubra had argued.  "They will sunset in three years - just to get us through this recession."

Green sneered at the Chief Deputy.  "You mean the like 'emergency' increase in the sales tax and the "temporary' freeze on the wage and business tax reductions Nutter did in 2009?"

Calubra gulped.

Both the "emergency' and the "temporary' taxes were still in effect.  The city had become addicted to the income and never could muster the will to do away with them.

"Listen, Marty," Green said. "I sympathize with the city's predicament.  But we can't increase wage taxes and business taxes by 20 percent without it killing this city.  We've got 11 percent unemployment, a 32-percent poverty rate, and we're still losing jobs every year.  Tax increases like that would be a death blow."

"He has a point," Street said, when Calubra repeated Green's arguments.

"So, that leaves spending cuts," Street said. "Can't the mayor sit down with the unions and ask them to make some sacrifices? Given the situation, they might go for it."

It was Thompson's turn to deliver the bad news.

"We tried that and it didn't work," she said. "We suggested that each city employee - from the mayor on down - take a 10 percent pay cut.  That alone would have saved us $130 million. But they refused.

Calubra chimed in: "We even threatened layoffs, but they laughed us off. And we're talking big numbers - about 2,000 to 2,500 layoffs."

Street grimaced.  "That was a mistake," he said. "A union leader would rather have layoffs than touch existing pay or benefits."

Thompson was taken aback.  "But thousands of their members would lose their jobs."

"Are you from out of town?" Street asked Thompson.

"She's from Indianapolis," Calubra said, as if that explained it all.

"Oh," Street said, as if it did. "Let me explain."

"Take Johnny Matthews," he said, referring to the new head of the city's blue-collar workers union.  "He's got 10,000 members.  If he cuts wages and fringe benefits, he's got 10,000 members angry at him - and ready to vote him out at the next election.  But, if you lay off 1,000 of his members, they are pissed, too - but they are gone.  They can't vote in the next union election.  They are non-factors."

Thompson looked shocked, but Calubra nodded.  "That leaves budget cuts," he said.

"It does," Street said. "Now, let me ask you a question: is there any area of government off limits to cuts?

"Yes," Calubra said. "The mayor says she doesn't want to make any cuts in public safety.  The polls show that crime and public safety are what people care most about.  Besides, the FOP has promised to tie us up in court for years if we go after their pay, their people or their benefits."

"Then," Street said.  "I am sorry to say you are doomed."

He pulled out his legal pad and began scribbling.

"You've got - what? - a $5.3 billion budget next year.  Police and fire and the prisons account for 28 percent of that.  And that can't be cut. Fringe benefits account for 32 percent of it  -- and that can't be cut.  Health and Human Services account for 20 percent of it and that can't be cut - those are mostly federal and state mandates.  And eight percent of it goes to pay off bonds - and you can't skip bond payments."

Street did some quick addition on the sheet.  "That adds up to - what? - 88 percent of all city spending that is off limits" he said. "Which leaves 12 percent that you can hack at.  And 12 percent of $5.3 billion is about ....$640 million."

Thompson blanched at the thought.  "That $640 million pays for all of the bureaucracy, the Streets Department, recreation, libraries, the fleet of cars....." she sputtered to a halt.

"That's correct," Street said, sounding very much like the college professor he had become. "And it you cut $460 million out of that $640 million, it would amount to...well, it would amount to the end of government as we know it.  You wouldn't even be able to turn the lights on."

Calubra tough-guy fa├žade had crumbled.  He sat staring at Street's numbers and shook his head. "You are right, Mr. Mayor, the situation is hopeless."

"Not quite," Street said.  "There is one thing you can do."

With sudden hope, Calubra and Thompson drew forward.

Street spoke slowly, measuring out every word.

"I have to warn you. It is very high risk.  A real gamble.  And if it doesn't work, you and everyone in this city will regret it.  But, it may be your only choice."

Calubra and Thompson sat silently as the former mayor sketched out his plan.

As they listened, their reactions varied as night varies from day.

The man is a genius, Calubra thought.

A different thought ran through Thompson's mind: God help us.

 

Chapter Four: The gambit

 

 

 

This short story is fiction, but the facts and figures are real. It is based on the estimation that the tax and spending policies of the city for the last 10 years will continue for the next 10 and it carries them forward to 2020. The crisis in this story is caused by a slight decrease in tax revenue and several extraordinary expenses.   A separate part called "Facts and Figures" will outline current spending trends and projections going forward. This series was written and reported by Senior Editor Tom Ferrick Jr.

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