Philadelphia Mayor Michael Nutter has proposed a 2016 budget proposal that aims to tackle rising pension and healthcare costs.
The proposed $3.95 billion 2016 fiscal year budget represents an increase of 2.3% or nearly $90 million from the city's current spending plan. Nutter said the vast majority of the new expenditures, around $78 million, will be geared toward addressing rising employee benefit costs including pension, healthcare and arbitration awards.
The pension system, which has more than 65,000 participants and less than 30,000 active members, was 43.9% funded on a market basis at the end of 2014, according to city officials.
Nutter said during his March 5 budget address that new Pennsylvania Gov. Tom Wolf is planning to funnel nearly $400 million in new tax revenues into Philadelphia's underfunded pension fund. A proposed sale of Philadelphia Gas Works, which would have enabled a deposit between $420 million and $630 million into the pension fund, was rejected by the City Council last October
Nutter, whose eight-year run as mayor expires at the end of 2015, also announced in his March 5 budget address he is proposing a 9.34% property tax mileage rate increase to raise $105 million for the Philadelphia School District. He is also proposing $169.6 million in new capital investments including $22 million to purchase new voting machines by May 2017 and $20 million toward paving roads.
"My proposed FY 16 budget recommends key investments that will strengthen our communities, with a particular focus on public safety and workforce development," said Mayor Nutter. "This budget also faces an issue that we have been working on for a long time: public education."
Nutter's capital budget plan also earmarks $7.8 million to construct a new jail in northeast Philadelphia. This would replace the House of Correction, the city's oldest jail that was rebuilt in 1927 after originally opening in 1874.
Philadelphia is rated A2 by Moody's Investor's Service, A-plus by Standard & Poor's and A-minus by Fitch Ratings.
