Where, Oh Where, Will Philadelphia Get The Money? The City Just Can't Do It; Harrisburg's The Answer

Posted: September 23, 1990

Philadelphia's fiscal situation has crossed a significant threshold: The city no longer has the legal or economic resources to solve its financial crisis on its own.

This means that the state is in control, whether it wants to be or not. It will be state politicians who will set the price that the city - its taxpayers, its businesses, its union members and its politicians - will pay for fiscal relief. It is clear from Thursday's City Council meeting that this truth has not yet sunk in and that some Council members still think it matters what they say. It doesn't.

Given the size of the deficit - more than $200 million - no solution lies in the city's power. There are not enough assets to sell that would close that gap. Given union contracts and really essential services, there are not enough layoffs and "fat" to be cut to close the gap. And the option to enhance

revenues - i.e., raise taxes - cannot, under current law, be taken at this time of year without state legislation.

There is not an honest public official around who does not know this. Philadelphia will - must - go bankrupt if the state does not act. Glad as most of us are to be out of the hands of local politicians, it is hardly comforting to be in the hands of the state, for many of us believe the state's role in causing this crisis is at least as great as those of John F. Street, Lucien E. Blackwell, Wilson Goode, et al.

Indeed, state funds have been a declining part of the city's budget, and the state's failure to adequately provide welfare and human services funding has helped provoke the social problems that have overwhelmed the city's

financial capacity.

Any long-term solutions therefore must include new state resources -not just the right to tax Philadelphia at a higher rate.

Nevertheless, a governor elected with a majority of votes in Philadelphia has not said a word about what he will do to prevent a municipal bankruptcy. Philadelphia's representatives in Harrisburg say they are stymied because of traditional anti-Philadelphia attitudes in the legislature and the absence of any leadership by the governor. Former City Finance Director Ed DeSeve is presumably providing advice, but, like Henry Kissinger's secret plan to bomb Cambodia, evidently it is too awful to be discussed publicly before an election.

It would be utterly irresponsible if the governor had no secret plan, but so far none of Philadelphia's leaders has demanded to know what it is. The only explanation for this passivity is that they don't want to admit that power has shifted. It's too late for that now.

Why has the governor been so slow to assume any leadership? Maybe he is waiting until it became obvious even to Pennsylvanians with the most severe case of Philaphobia that there is no other choice. That, of course, is the definition of a follower and not a leader.

Ultimately everyone knows that there will be a mix of solutions that will be called "sharing the burden." It will include new state resources in terms either of access to state credit for borrowings, the transfer of costs of certain activities (courts, prisons, services for children or mental health and retardation are all candidates) or new taxing authority.

A second component of any plan will include state control (either directly or through an authority) to assure "prudent" use of the city's funds - i.e., a review of expenditures and some real cuts. No one is going to allow the same jokers who got us into this mess to spend one more nickel of taxpayers' money.

A third element will be the sale or transfer of some city assets - such as the airport to a regional authority - to reduce the dollars needed from the first two elements.

Last, there may be direct wage concessions by city employee unions or agreements on layoffs, although this element probably is not possible by bluff alone and would seem to require an actual submission to bankruptcy. Is that why the governor is waiting?

Several things won't be known before the election. If there is some kind of fiscal control board, will the governor appoint all the members or will he share that with the legislature? How many from each party? Will anybody on it be from Philadelphia? When the board starts making cuts, will City Council and Mayor Goode have any say on the size of the police force, on whether to contract out trash collection or on negotiating the next set of union contracts? And who will determine whether the Museum of Art or Free Library are essential services in a time of austerity?

It should be obvious from the above list that there will be real consequences for all Philadelphians on how the crisis is resolved.

Citizens and business and community leaders must demand that the governor and the state legislature address the fundamental issue of how to allocate between the city and state the provision and payment for a full range of government services. That does not mean just police, fire and trash collection, but public transportation and protection and support for the needy and dependent. And we must all face up to the new reality that these basic decisions will be made in Harrisburg.

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