Philadelphia City Controller Alan Butkovitz has recommended that the Pennsylvania Intergovernmental Cooperation Authority accept the city's five-year budget plan while also warning against potential litigation from a new sugar-sweetened beverage tax.
Philadelphia city officials estimate that $416 million will be collected from the new tax over five years, before additional costs for collection, advertising and auditing. The City has indicated that the revenues from the Sugary Drink Tax will fund expanded pre-kindergarten, community schools and debt service for new infrastructure improvement bonding. Mayor Jim Kenney has also said the tax will pay for allocating $26 million toward the city's pension fund, which is currently less than 50% funded.
"While no litigation has been initiated, the outcome of such litigation could significantly affect the forecasted revenues and obligation amounts over the life of the plan," said Butkovitz in
The City Controller's analysis also emphasized that the five-year budget plan does not include any potential costs above $200 million in obligations for future labor agreements. He also cautioned that "unforeseen circumstances" such as litigation, severe weather and unexpected commitments to the School District of Philadelphia could hamper future finances.
"Any of these instances could drastically impact city operations and further erode the fund balance available for future appropriations," said Butkovitz. "The City would be responsible for identifying additional funds to cover any costs above the budgeted amount."
Philadelphia is rated A-plus by Standard & Poor's, A2 by Moody's Investors Service and A-minus by Fitch Ratings. PICA was established as an oversight board for Philadelphia by the Commonwealth of Pennsylvania in 1991.
