U.S. cities face tough questions in budget squeeze

PHILADELPHIA Wed Mar 4, 2009 7:06pm EST

Related Topics

PHILADELPHIA (Reuters) - When a major city faces a budget shortfall of $175 million, should it close public swimming pools, reduce the size of the police force, spend less money repairing roads or raise taxes?

Cities across America are struggling with such dilemmas as the recession blows holes in their budgets. In Philadelphia, city officials are asking the public to help them decide what to do.

With painful spending cuts, tax increases, or both on the horizon, the city has conducted a series of public meetings to give citizens the chance for the first time to have their say on the new financial plan before it is drawn up.

A majority of around 1,800 people who attended the four meetings were willing to pay higher taxes to preserve essential public services.

"Given a chance to confront the tough tradeoffs, most citizens opted to tax themselves, while struggling to give a tax break to those less fortunate at the same time," said a report from the University of Pennsylvania's Project for Civic Engagement, which organized the meetings.

Among the targets for increases were taxes on wages, sales and real-estate transfers. In return, citizens would preserve current levels of what many saw as non-negotiable services including police, public parks, libraries and the city's public health department.

Even in the City of Brotherly Love, tensions run high when wrestling with tough budget choices.

"Let the bankers hang," said Ed Kirlin, 53, the owner of a public relations firm, at one recent meeting of about 400 people at a West Philadelphia Baptist church.

Kirlin said the city should suspend its debt payments during the recession. Doing so, said a city official, would lead to a downgrade in the city's debt rating and could result in Philadelphia being unable to borrow more money.

"DOUBLE HELL"

Hazel Whittington, 71, who missed her favorite TV show to attend the meeting, said she fears that closing swimming pools will leave young people in her neighborhood with nothing to do.

"It's hell when the swimming pool is open; it will be double hell if they close it," she said.

In the past, public comment has taken place only after the budget was drafted. This year, before the March 19 publication of the fiscal 2010 budget, there have been open city committee meetings, informal visits by Mayor Michael Nutter to neighborhood diners, three "kitchen table" gatherings in private homes, and the public meetings where people discussed specific options.

Participants were split into workshops of about 25 and presented with what officials said was a representative sample of budget options including closing 10 library branches, laying off 929 police officers, or cutting the number of street-repair crews to 18 from 30.

Alternatively, participants could vote to raise the city parking tax, raise the real estate transfer tax or withhold city maintenance on the Philadelphia Eagles football stadium until the team pays $8 million it owes in rent.

Philadelphia, legally required to balance its roughly $4 billion budget, faces deficits of $175 million next year and $1 billion over the next five years. Those gaps, announced in early January, opened despite city action to plug similar-sized shortfalls only two months earlier. Officials say federal money from President Barack Obama's economic stimulus will help with capital projects but not with the city's operating budget.

"PETTING THE LAMB"

The speed and severity of the downturn in city tax receipts, coupled with increased spending on pensions and other benefits, forced officials to consider new ways of balancing the books.

The same forces are hammering city budgets across the United States, said Miami Mayor Manny Diaz, current president of the U.S. Conference of Mayors.

"I hear from mayors all over the country who are forced to reduce the frequency of trash collection, close local libraries or lay off police officers in communities that need them now more than ever," he said.

In Chicago, officials have been giving frequent updates on the growing budget gap to brace the public for more bad news.

In Philadelphia, city officials say they will use the results of their public meetings to help make decisions.

But some are suspicious. Kirlin called the public meetings "rigged" and said they were nothing more than a public relations exercise. "They are petting the lamb before they slaughter it," he said.

(Additional reporting by Karen Pierog in Chicago; editing by Alan Elsner and Mark Egan)

FILED UNDER: