Oversight board approves Philly five-year financial plan

The state board overseeing Philadelphia’s finances has approved the city’s five-year financial plan, overruling recommendations from its own staff and the city controller that it reject the fiscal blueprint.The city is required to submit a five-year plan every year to the Pennsylvania Intergovernmental Cooperation Authority. The PICA staff review of the plan concluded it didn’t set aside enough money for potential wage and benefit costs and thus didn’t mean the “reasonable” standard required under state law.

Workers in the city’s two civilian unions haven’t had a new contract or raises since 2009, and the staff told board members there’s a serious risk that, when the city eventually settles with those employees, the tab will be far more than set aside in the five-year plan.

Board chairman Sam Katz said he agrees the city may not have enough in the plan to cover contracts for its two AFSCME district councils.

“Is it a reason to disapprove? Certainly not to me,” said Katz, noting that labor contracts often have unpredictable consequences.

Katz said it’s important for Mayor Michael Nutter to resolve those contracts. He said organized labor has come together to exercise a powerful influence on the next mayoral election.

“And that influence will be, in this context, only bought with one set of promises that have to do with how we pay people,” Katz said. “That’s a tough place for the city of Philadelphia to be.”

City Controller Alan Butkovitz had also recommended rejection of the plan because it projected the city coming too close to a zero fund balance in a few years. But city officials convinced the board increased revenues should take care of that problem.