Will A Spoonful of Sugar Help the City Budget?

(March 2016)

Last week, Mayor Kenney unveiled his first proposed city budget, hoping that a spoonful of new spending will help the medicine of a Sugary Drink Tax go down.  I'll let others analyze the politics of big soda, small businesses, and everything in between.  For me, budgets are about priorities and choices and in Kenney's proposal, I see some things remaining very much the same, but other things moving in a most delightful way.

Sweet Dreams

Budgets are read as numbers from a ledger, but those figures comprise the expression of our public will and collective civic aspiration.  How we raise and spend our scarce resources reflects what we want our city to be.

Despite public promises and legislation pushing Philadelphia toward program-based budgeting, the budget proposed by Mayor Kenney can be read as a fairly traditional spending plan that makes mostly incremental changes based on last year's budget.  It is, therefore, instructive to see how priorities have shifted.

Kenney’s budget would increase spending by about $115 million over the current year’s expenditures.  Small changes in spending are spread across various agencies with this year’s increase in spending driven primarily by two factors.  Half of the increase in spending can be accounted for by Kenney’s ambitious new plans to provide universal pre-K education and issue debt to invest in public facilities.  The other half of new spending is driven by increased workforce costs    chiefly the old problem of Philadelphia’s ever-expanding pension expenditures.

Think of it as opening a shaken can of soda to find only half a glass of sugary beverage left after the foam fizzed over to make a mess of the rest.

Sweet Science

Here, the weakness and strength of Kenney's plan are revealed.  On the campaign trail, candidate Kenney expressed confidence that he could use a zero-based budgeting approach to shift around government spending to fund his priorities.  So far, though, he has apparently resigned himself to the idea that Philadelphia will once again have to pay higher taxes to fund the increasing cost of our city government.  

In seeking a Sugary Drink Tax, Kenney does go beyond a maintenance-of-effort increase to ask for revenues sufficient to fund programs that he and other officials have championed.  So, for the first time in recent years, Philadelphians are being asked to support a tax increase that will actually fund new programs instead of simply covering the increasing cost of existing programs.

That is notable because, in the past, the idea of a Soda Tax was promoted as an initiative to combat obesity and promote a healthy city even though its revenues were actually necessary to generate revenues to fund city expenditures.  If Philadelphians were to actually kick the soda habit, the budget would be a mess.

When it comes to the proposal to tax sugary drinks, it seems that Mayor Kenney has decided to sell the fizzle not the slake.  Public-health benefits are now taking a back seat to the benefits of increased revenues.

Sweet Spot

Finally, in seeking to lock in spending that will define his term in office, the mayor has found a way to confront one of his thorniest challenges.  As a candidate, Kenney found support from the municipal unions that will look to the city budget for wage and benefit increases in future years.  

Saying "no" to his political supporters will be a lot easier if, as mayor, his budgetary hands are tied paying for increased debt service and other non-discretionary expenditures.  Of course, that is something the city's municipal unions may not want to join the mayor in raising a glass of soda to drink to that.

So, on to the consideration of the proposed city budget.  If it is adopted, we may see some worthy new programs initiated to attempt to drive down the city's shamefully high poverty rate.  We could also see Philadelphia government resume reductions to its overly burdensome wage and business taxes.  But, let's pour one out (for now) in memory of the idea of taking a zero-based budget approach to city spending.  I guess we'll have to take a swig of something stronger than a sugary drink to give us the municipal fortitude to take on that challenge.