Mayor Nutter announced that the city budget gap is likely to grow beyond the previous $1 billion estimate

“Unfortunately, I have to tell you here tonight that things have gotten worse.” - Michael Nutter at the John Perzel Community Center in Northeast Philadelphia last night.

Doesn’t it seem like the news just keeps getting worse?  In early September, the mayor made an announcement that the his Five Year plan projections, which City Council had approved last spring and which included many wonderful funding increases for things like arts, the parks and education, were coming up way short on the expected revenue side of things.  At the time, the gap was about $450 million and was due to things like lower than expected tax revenue and a poorly performing pension fund that would require greater than expected city contributions.  Whoa, we all thought, $450 million!  Tough, but manageable.

About a week later, Finance Director Rub Dubow said it could get a lot worse with the stock market at the beginnings of a nose dive.  The poorly performing pension fund could push costs even higher.  By October 8th, the budget gap had expanded to “somewhere between $650 million and $850 million over five years.”  It was at this point that Nutter began talking about having to make some pretty serious cuts.

He delayed the announcement of those cuts by a week, having originally planned for an October 30th announcement.  After all, why harsh the Phillies buzz?

By the time Nutter made the announcement of his cuts, the gap had grown to about $1 billion over 5-years and required at least $100 million in cuts for the current fiscal year alone.

That’s right.  $1 billion… One BILLION dollars (cue Dr. Evil pinky to mouth).  Really, can’t get any worse than that, right?

Wrong:

Citing the recent dismal performance of the city’s pension fund, and startlingly low real estate transfer-tax collections, Nutter said the city’s five-year deficit would be larger than the $1 billion estimate he made Nov. 6.

…

The city has collected $88.6 million in real estate transfer taxes so far this fiscal year, more than $28 million less than last year. The numbers are so anemic that Dubow and Nutter fear the city will not even meet its revised austerity budget figures.

The fall has been just as cruel to the city’s pension fund, which lost 12 percent of its value in October alone. The worse the pension fund performs, the more the city has to pay out of its budget to ensure that retirees get their pension payments.

So the news just keeps getting worse.

What’s the upside?

If anything, it’s that Philadelphians seem unflappable in the face of a crisis.  Sure, we’ll kick and scream about the cuts that are being made to our libraries and fire stations.  Out of frustration, we’ll throw out not-so-helpful suggestions about which highly paid city employees should be fired so that their salaries can go back into the pot.  Some of us will even threaten to pack up and move to South Jersey where, for the privilege of having to drive everywhere we go and mow a lawn every other week for 5 months out of the year, we will blissfully pay property taxes that are 5 to 10 times higher than the ones we pay here.

But once we get through the shock, the “we’re all in this together” attitude, forged by 25 years of rooting for teams that mostly didn’t come close to winning the big championship or by decades of being spat on by the nation’s financial capital to the north and seat of government to the south, comes out.  And once we all start to realize that we need to start thinking creatively and ambitiously, the ideas will come.

This suprisingly thoughtful comment* on the Daily News’ Clout blog is an example:

We must now see real reform dealing with healthcare costs, the size of city government, and tax reform, to name a few. We should, for example, shift more of a burden on the property taxpayers and cut the size of city council by 4 members. Institute a job-creating program giving any new business a 10 year tax abatement on all city taxes, except the wage tax. Give an increased tax credit to any new job created in the city. A strategic combination of incentives to bring jobs into this city and reform government should be viewed as an opportunity!

Though I’m not endorsing any of these ideas, just the fact that such ideas are out there and that a BIG crisis needs BIG ideas, can give us hope that by the time we come through this, we’ll have a city that is leaner, more efficient, more inviting to economic activity and better able to care for the least fortunate among us, all at the same time.

So whaddy say Philly?  Whatcha got?  Continue to bring the ideas in the comments.

* Who would have thought that I would get inspiration today from a Philly.com commenter?
(h/t to It’s Our Money for the links I used to follow the growing budget gap!)