There is some good economic news for the city of Philadelphia.
The Quarterly City Managers Report shows Philadelphia could potentially have a year-end fund balance of $389.9 million. That’s $256 million higher than projected in the city’s revised five-year plan.
Harvey Rice, of the Pennsylvania Intergovernmental Cooperation Authority, said the good news comes from the city not filling all of its budgeted positions, as well as better numbers for the Business Income and Receipts Tax and Real Estate Transfer Tax.
The positive fund balance could be offset by future economic downturns, Rice warned.
“People need to be cautiously optimistic and wary with inflation and what economists are telling us that we might be entering into a recession,” he said. “We should make sure that we continue to maintain higher fund balances and put some money in the budget stabilization reserve fund for the future just in case we do go into a recession so that we can still maintain the level city services going forward.”
That reserve fund helped the city when COVID-19 struck and there initially wasn’t federal money to cover tax losses.
“Philadelphia faces many challenges,” Rice said, citing a high poverty rate and rampant gun violence.
Both of those issues, coupled with the need for more school funding every year, puts a strain on the budget, he said.
PICA plans to keep a close eye on the city’s finances and expects to have a clearer picture when the fiscal year ends on June 30. For now, Rice is hopeful that the projected numbers will become reality and that there could even be a bigger surplus when all the revenue and expenditures are tallied.