2010 Budget2010 Budget

Bill Peduto, Finance Chair

City Council Budget Office

Bill Urbanic, Director

December 21, 2009

On November 9th the Mayor introduced a $453 Million Dollar expenditure budget that was balanced with the use of a tuition tax. At the objections of members of Council, the Controller and eventually the ICA board the Mayor resubmitted a compromised budget that utilizes a few increased revenue line items and a few one time stopgap measures that balanced the budget. The use of sources such as the debt service reserve, trust fund sweeping and increase in delinquent collection provide a one time shot and cannot be counted on as future sources at budgetary relief.

As we move forward, we will create a structural deficit that will eat into the fund balance as soon as 2011 unless we receive new recurring sources of revenue expenditure relief from further shared services and real state-wide pension reform. We cannot do this without the assistance of Harrisburg in 2010.

400,000,000

420,000,000

440,000,000

460,000,000

480,000,000

500,000,000

520,000,000

540,000,000

560,000,000

2010 2011 2012 2013 2014 2015 2016 2017

Expenditure

Revenue

Debt Reduction

Expenditures vs Revenue2010-2017

• The amount of the structural deficit will exceed $7 Million in 2011 and will grow annually. At this rate the fund balance will be depleted by 2015. This is without investment in the Pay-go budget which is essential in containing our debt service.

Fund Balance2010 - 2015

(20,000,000)

(10,000,000)

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

2010 2011 2012 2013 2014 2015

Fund Balance

Fund Balance Depleted by 2015

• A sustaining source of revenue must come from the non-profit sector or an amount that assists in reimbursing the city for hosting from a regional or state revenue source. The non-profit community provides benefit to the 2.3 million residents of the entire region but only the 311,000 residents within the 54 square miles of the city pay for expense and loss of tax revenue by hosting them. This is no longer feasible with our current taxing structure. These must come from all of the non-profit stakeholders, not only the universities and their students.

• Additionally, merger and shared services with the authorities, the School Board, County and other municipalities must be a priority for the city in 2010 and must be matched with incentives by the state.

• Last, real pension reform must take place in 2010. The current system punishes older cities like Pittsburgh and gives aid to newer, wealthier communities. This system must be changed statewide if urban job centers which are the state’s regional economic engines are to survive.

• I encourage the next Council and challenge the Administration to work with the next Council to address these issues with Harrisburg together.