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More budget challenges ahead

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Facing a $300 million budget shortfall last spring, local leaders called for a rescue package – asking the city and state for $180 million in additional recurring revenue and the unions for $133 million in labor savings.

But there is not much to show for it. The District has gotten little recurring revenue besides $28 million from improved local tax collections. On the labor savings, they have nothing: Negotiations with teachers’ and principals’ unions plodded on into February without a settlement. 

The budget gap this year was closed largely through a combination of layoffs, spending cuts, and $140 million in one-time revenues and devices – including a $50 million contribution from the city, $45 million from the state, and spending down the District’s remaining $39 million in reserves. 

To balance next year’s budget, the District must come up with a way to replace that $140 million as well as cover $75 million in new expenses arising from naturally occurring increases in items like utility and pension costs. But in a late-January interview, District Chief Financial Officer Matthew Stanski was not prepared to put a dollar figure on the size of a potential budget hole. 

City and state officials – they would add union leaders – have shown little urgency to resolve the crisis. 

Although the state legislature passed a bill last June allowing the city to extend a 1 percent sales tax surcharge and devote $120 million annually to the schools, City Council has balked. It wants to split the revenue between education and pensions. And although Council wants to hike the cigarette tax, Harrisburg hasn’t passed the enabling legislation.

Stanski said that District officials have yet to decide whether to include the $120 million in next year’s revenue projection.

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Dale Mezzacappa

@dalemezz
Dale is a contributing editor at the Notebook. She has reported on education since 1986, most of that time with The Philadelphia Inquirer.

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