Unions may hold city budget relief hostage ...

[eldondre]

15% of jobs for a 9 county metro are encompassing upwards of 5 million** people is still important. Considering the suburbs account for 85% of the regions population and a much larger share of land, its a matter of course that a plurality of jobs are located there. However, Center City continues to be the largest single job center in the region, even though job sprawl has increased dramatically over past decades. Whatever problems with the city's economy, and there are many, I still don't see our suburbs prospering as they have without the anchor of the downtown.

the metro area is around 5.6-5.7 million. at any rate, what's most troubling about the city's economy is when you start stripping away government and non-profit jobs. the city has actually lost private sector jobs over the past ten years but it'sbeen offset bygrowth in non-profits. I'd argue that the city has a disproportionately low percentage of private sector jobs and that this directly contributes to job sprawl.

[thoth]

the metro area is around 5.6-5.7 million. at any rate, what's most troubling about the city's economy is when you start stripping away government and non-profit jobs. the city has actually lost private sector jobs over the past ten years but it'sbeen offset bygrowth in non-profits.

True, although growth in "non-profits" as a whole is not automatically bad. Expanding university systems and health care entities are still valuable. However, on the whole I agree that our hemorrhaging of private sector, white collar jobs is extremely troubling.

I'm curious about the trend of creeping tax rates in the suburbs as municipalities struggle to deal with rapidly expanding infrastructure. Also, my understanding is that PA statewide has burdensome business taxes and has generally had stagnant job growth over the past decade+.
ww.philly.com/.../20090316_Compared_to_burbs__city_tax_burden_has_ea sed.html
Pa. tax burden has risen 49 percent in 10 years - Pittsburgh Tribune-Review

[thunda]

The unions need the employer to be healthy in order for the unions themselves to be healthy. It is in the interest of the city unions for the city to thrive. Anything else and they cut their own throats. Whether they recognize that is another question, though.

Given union behavior, I'd say that, no, they don't recognize this.

Less than 15% of the total office space in the Delaware Valley is actually situated in Philadelphia. That means out of the white-collar workforce, which provides most of the payroll tax income within the Tri-State area, most of the DelVal workforce is located in the suburbs, not the city.

Center City has about 28% of the region's office space, not 15%. Also, it doesn't include Penn, Drexel, Temple, Fox Chase, and other major employers in the neighborhoods. From the CCD's State of Center City 2009:

In 2008, Center City maintained its 28% share of the region’s office space, after dropping from a 41% market share in 1993. In this regard, however, the region is exhibiting office densities closer to sprawling Atlanta than to east coast competitors Boston, New York or Washington, D.C.

So it's not a great market share, but still twice as high as the 15% you quoted. It's worth noting however, that had Center City maintained it's 41% share through the growth periods in the 90s and 00s, it would now have 53.3 million square feet of office space instead of 39.7 msf. That's roughly equivalent to a Comcast Center opening every 18 months.

[eldondre]

True, although growth in "non-profits" as a whole is not automatically bad. Expanding university systems and health care entities are still valuable. However, on the whole I agree that our hemorrhaging of private sector, white collar jobs is extremely troubling.

no, it's unsustainable though. eventually that growth will peter out and there's nothing to replace it. it's only bad in that it's masking some ongoing problems but it's nto a bad thing at all.

I'm curious about the trend of creeping tax rates in the suburbs as municipalities struggle to deal with rapidly expanding infrastructure. Also, my understanding is that PA statewide has burdensome business taxes and has generally had stagnant job growth over the past decade+.
ww.philly.com/.../20090316_Compared_to_burbs__city_tax_burden_has_ea sed.html
Pa. tax burden has risen 49 percent in 10 years - Pittsburgh Tribune-Review

PA definitely needs some reform, and it's one reason why we shoudl probably electe a Republican governor. We probably need to reduce the corp income tax rate by at least 30%. you're last link probably belongs in that other thread about taxes, people are against them because costs and taxes have both outpaced their incomes, particularly in PA. obviously the state isn't spending the money well otherwise things would be better. I don't buy ardo's argument. yes education needs to be funded, but I find it hard to believe there aren't less important things that can be cut. for now, I've love to see the state sell off the right to sell wine to raise cash.

[PhillyRunner]

Updated versionsummary of the bill passed by the full Senate.

I'll give them a little credit - I found the intro summary helpful in deciphering some of the rest of the document.

[MayfairMeat]

Philadelphia

Allows a first class city to defer pension payments in lieu of being subject to
the Level III distress provisions. In order to be eligible for deferral, the 
city must adopt a revised collective bargaining plan for new hires by 
September 9, 2009. The plan may cost no more than 80% of the existing plan.

Establishes contribution rates for new hires.

Allows the city to defer a portion of its minimum funding obligation as follows:

1. For 2010, deferral of up to $155,000,000.
2. For 2011, deferral of up to $ 80,000,000.

[PhillyRunner]

The one thing I found confusing is that I didn't think Philly was yet at the Level III distress, which entails a takeover by the state system.

[eldondre]

state house dems to hold city hostage
State House Dems: No Vote on City Budget Bill Until After Labor Day | Philly | 08/27/2009

[PhillyRunner]

Nutter Spokesman: House To Vote on Sept. 8

Mayor Nutter's spokesman Doug Oliver says the administration has a commitment from the leaders of the state House of Representatives that there will be a Sept. 8 vote on House Bill 1828, which would provide budget relief for the city.

I would like to think this will put sufficient pressure on the House to get this done, but with this city and state, who knows... I suppose the only thing that could derail the process at this point would be a concerted effort by the unions.

[PhillyRunner]

It's not often that I agree with the Inky's editorial team, but...

Editorial: Riding herd on pensions

Mayor Nutter went to Harrisburg seeking help to balance the city budget and came home with what looks like an even better deal for Philadelphia residents.

Not sure whether I'd give Pileggi as much credit as they do; but if this bill does get passed, it will represent one of the few times that politicians will have considered long-term sensibility, rather than short-term political interests.

[billy ross]

It's not often that I agree with the Inky's editorial team, but...



Not sure whether I'd give Pileggi as much credit as they do; but if this bill does get passed, it will represent one of the few times that politicians will have considered long-term sensibility, rather than short-term political interests.

I disagree. I generally believe that Pennsylvania has had its finances in order for a very long time now, unlike places like New Jersey and California. Unfortunately things like business formations and innovation are also very important, and there PA fell on its face. However, PA really got electric competition right, unlike hapless places like California.

[Hospitalitygirl]

I disagree. I generally believe that Pennsylvania has had its finances in order for a very long time now, unlike places like New Jersey and California. Unfortunately things like business formations and innovation are also very important, and there PA fell on its face. However, PA really got electric competition right, unlike hapless places like California.

Seriously...WHAT. do. you. smoke?

[billy ross]

Seriously...WHAT. do. you. smoke?

PA's income tax is a flat 3.07%, while even low tax Delaware's tops off at 5.3%. Don't even ask about New Jersey, California, and New York. PA's tax is a wage tax, so passive income and retirement income aren't taxed. Philly has been run by 'the Party' for far too long. PA is refreshingly bipartisan, and each party keeps the other from overreaching, sort of like the USA, but I wish that the USA had the same fiscal discipline as PA does. I know that PA doesn't yet have a budget one sixth of the way into the year, but it's hard to overspend when money hasn't been appropriated, isn't it? I'm mad at Rendell for wanting to raise the PIT to 3.57%. Thank God we don't have a moribund Republican Party in this state and they were able to put the kibosh on that idea.

Edit: PA's income tax is a Personal Income Tax. Thus passive income is taxed, but not pensions or social security.

[RussDiamond]

I disagree. I generally believe that Pennsylvania has had its finances in order for a very long time now, unlike places like New Jersey and California. Unfortunately things like business formations and innovation are also very important, and there PA fell on its face. However, PA really got electric competition right, unlike hapless places like California.

Wow billy, just wow.

If this were the year 2000, I'd agree with you on pensions. At that time, financial experts generally deemed PA's pensions to be solid plans. But with Act 9 of 2001 that got blown out of the water, even before the financial crush after 9/11. Seeing that the state went like pigs to the trough o/b/o teachers and legislators (in a political trade for votes in favor of stadium giveaways), many municipal pension programs followed suit and/or didn't make allowances for the post 9/11 crunch. At state, Rendell recognized this, but merely refinanced and kicked the can down the road so he wouldn't have to deal with it. And of course, now we're dealing with another crunch, worse than before.

This has created a friggin' tax time bomb that will explode over the next 3-8 years everywhere in the state unless someone honest just stands up and speaks the truth: we cannot afford the promises made in the past and they must be broken for the good of the Commonwealth.

PA did not get electricity deregulation right. Sure, it's not as bad as CA, but all it really turned out to be is a plan to keep the big players in full stranglehold all along without any serious planning for the future. Consumers got totally screwed thanks to Vince Fumo and others. One of the biggest lunacies was outlawing long-term contracts for energy generation. How on earth is a prospective competitor supposed to secure financing for a generation plant without a long-term contract for its product?

[raider.adam]

I disagree. I generally believe that Pennsylvania has had its finances in order for a very long time now, unlike places like New Jersey and California. Unfortunately things like business formations and innovation are also very important, and there PA fell on its face. However, PA really got electric competition right, unlike hapless places like California.

Philadelphia isn't the only city with a pension problem. It is a major problem for other PA municipalities too.

Also keep in note, PA didn't have any major budget fights until Rendell became governor. It is starting to seem he has tried to bring Philly budgeting to the state level.

Electricity regulations aren't government finance.

[caL]

It's not often that I agree with the Inky's editorial team, but...



Not sure whether I'd give Pileggi as much credit as they do; but if this bill does get passed, it will represent one of the few times that politicians will have considered long-term sensibility, rather than short-term political interests.

I agree. You gotta give credit to Pileggi. While democrats accused him of sitting on his behind to screw the city, he was preparing 80 pages of what looks like good amendments to Nutter's bill. Rare in politics.

Seriously...WHAT. do. you. smoke?

I'd love to take a few hits of whatever it is, especially after reading about council.

[billy ross]

I agree. You gotta give credit to Pileggi. While democrats accused him of sitting on his behind to screw the city, he was preparing 80 pages of what looks like good amendments to Nutter's bill. Rare in politics.



I'd love to take a few hits of whatever it is, especially after reading about council.

I was talking about the State of Pennsylvania. It would be either disingenuous or delusional to claim that Philly's City Council has a reputation for fiscal discipline or prudence. Note that the state of PA's historic beef with Philly is that Philly has been fiscally irresponsible. The logical corallary of that is that PA is fiscally responsible, which I believe to be largely true. While it seems that there are some serious pension problems across this state, they seem to be local pensions, not state-controlled pensions, at least not yet.

[billy ross]

Wow billy, just wow.

If this were the year 2000, I'd agree with you on pensions. At that time, financial experts generally deemed PA's pensions to be solid plans. But with Act 9 of 2001 that got blown out of the water, even before the financial crush after 9/11. Seeing that the state went like pigs to the trough o/b/o teachers and legislators (in a political trade for votes in favor of stadium giveaways), many municipal pension programs followed suit and/or didn't make allowances for the post 9/11 crunch. At state, Rendell recognized this, but merely refinanced and kicked the can down the road so he wouldn't have to deal with it. And of course, now we're dealing with another crunch, worse than before.

This has created a friggin' tax time bomb that will explode over the next 3-8 years everywhere in the state unless someone honest just stands up and speaks the truth: we cannot afford the promises made in the past and they must be broken for the good of the Commonwealth.

PA did not get electricity deregulation right. Sure, it's not as bad as CA, but all it really turned out to be is a plan to keep the big players in full stranglehold all along without any serious planning for the future. Consumers got totally screwed thanks to Vince Fumo and others. One of the biggest lunacies was outlawing long-term contracts for energy generation. How on earth is a prospective competitor supposed to secure financing for a generation plant without a long-term contract for its product?

Most people I know in Philly keep their gas heaters turned off for as long as possible and instead use electric space heaters to take the edge off. With PGW finally lowering rates that practice may not make as much sense this heating season; we'll have to see. Not only is our electricity almost free here, but there are not even any hints of brownouts. I understand that our presently undermarket electricity costs are poised to go up to market rates starting in 2011 (ditto for our ridiculously cheap water rates), but it was clever of Pensylvania to lock in cheap and plentiful electricity for 15 years and rebuff Enron at the same time. Please note that this was before anyone knew the difference between Enron and L Ron Hubbard. I still remember the commercials showing the fast-talking Texans in 10 gallon hats trying to sell us on a con game. How prescient we were here to reject those schemes! Compare that with the idiot Norwegians who were dissatisfied with the cash flow from their local hydroelectric plant so they sold bonds backed by the revenue from the hydro plant and invested it in AAA subprime American mortgages. Talk about killing the goose to get to the golden eggs faster! Or the county in Alabama (Jefferson County, home of Birmingham) which sold $3.2 billion in bonds for its sewer authority and is now bankrupt (Even PGW couldn't manage to accumulate a debt of $3.2 billion!). Meanwhile the fools in California froze the retail price of electricity but let the wholesale price fluctuate, thus bankrupting their electric companies which were forced to sell their electricity below cost and causing brownouts. How about Orange County, California, which also went bankrupt through making bad investments? How about New Jersey, which sold off the cash flow from its tobacco money (which was found money!) then sued when the revenues fell short of projections so it couldn't meet its bond obligations on the bonds it sold which were backed by the tobacco money? What a sad joke. It's like the lottery winner who is bankrupt with nothing to show for their winnings a few short years later.

[raider.adam]

I was talking about the State of Pennsylvania. It would be either disingenuous or delusional to claim that Philly's City Council has a reputation for fiscal discipline or prudence. Note that the state of PA's historic beef with Philly is that Philly has been fiscally irresponsible. The logical corallary of that is that PA is fiscally responsible, which I believe to be largely true. While it seems that there are some serious pension problems across this state, they seem to be local pensions, not state-controlled pensions, at least not yet.

I wouldn't say that is a logical corollary at all. You are making an assumption on relativity and not absolute.

For example, assume we qualify a person with 5 speeding tickets as an irresponsible driver. That person could accuse another driver with 2 DUI's as irresponsible. It doesn't absolve the first person of their faults, but we could say one is not bad as the other (but neither are good).

That has been the problem with your defense of Pennsylvania. You frequently say it is not bad because NJ and California are worse. That is not a sufficient defense.

[eldondre]

I'm pretty sure I didn't just get a birthday card from PECO congratulating me on my free electricity. our prices are lower than new england but higher than, say, texas. the state is refreshingly bipartisan for city dwellers though I suspect the rest of the state doesn't have such low standards for their political system, or maybe they do, I don't know. It is important to recognize the stupidity of rendell's pension act. he was a much better mayor than governor I think. Pennsylvania's debt has climbed substantially in recent years and the governor has helped make us the 11th most taxed state. On the whole, I think his greatest achievement is the slots parlors and, if he fixes it, transit funding. OTOH, his penchant for big projects (aka convention center) continues to mar his performance. let's faceit, without that convention center, the budget problem would be a whole helluva lot smaller. PA-better than Russ says it is, worse than billyross says it is. that's my informed take. ; )