The city’s budget deficit, now set at $5 million, could become a $36 million problem for Mayor-elect Thomas M. McGee if the city is unable to set the tax rate by year’s end.
Peter Caron, the city’s chief financial officer, wants the Legislature to grant a one-time exemption from state law that requires the city to have a balanced budget before sending out the tax bills.
“If we are unable to set the tax rate and mail out the third quarter tax bills by the end of the year, the city will not receive the $31 million in real estate taxes by Feb. 1 and we will be unable to meet payroll,” Caron told the City Council Tuesday. “Without the Legislature’s approval, we would have to borrow a significant amount of cash that would probably cost $100,000 in interest.”
While Caron and City Council President Darren Cyr insist the request of the Legislature is not unusual, neither could recall the last time the city needed the exemption.
“It hasn’t happened in my time on the job and I’ve been here since 1998,” said Caron. “Getting approval to send the tax bills is not a big deal, but the budget deficit is.”
Despite new sources of revenue implemented in the last few months, including a trash fee, meals tax, and payment from medical marijuana clinics, the money hasn’t reached the city’s coffers.
The trash fee is expected to generate about $2 million annually, the meals tax should raise to raise $700,000 and the two medical marijuana clinics slated to open in the city could raise as much as $400,000 per year. But so far the city has not seen the cash.
Earlier this year, PFM Group, a Philadelphia financial advisory services firm that specializes in advising municipalities, put the deficit at $8.6 million and recommended the city not issue raises after union contracts expire, freeze hiring, contract EMS services to a private company, and eliminate three dozen jobs.
Mayor Judith Flanagan Kennedy, who recently lost her bid for a third term, said Caron is the CFO and knows all of the tools available to act in the best interest of the city.
“If he believes this is in the city’s best interest, I have no reason to disagree,” she said.
Through a spokeswoman, McGee declined to comment.
The City Council will hold a hearing on the home rule petition on Tuesday, Nov. 28.
