Proposed Charter Change Question
(Bill No. 100303)
Ballot Question:
Shall The Philadelphia Home Rule Charter be amended to provide for a mandatory Budget Stabilization Reserve, more commonly known as a “rainy day fund,” and to provide for restrictions on deposits to and withdrawals from such Reserve?
Seventy’s Position:
The Committee of Seventy endorses this ballot question. Economists widely consider the creation of a rainy day fund to be an important financial planning tool to help safeguard governments during periods of recession, diminished tax receipts or emergencies. For this reason, many large cities and states, including Pennsylvania, have already established rainy day funds.
One of Seventy’s key policy objectives is to promote more effective local government. At a 2006 hearing concerning rainy day fund legislation, Seventy endorsed the creation of a rainy day fund, but expressed reservations about the absence of tight controls on usage and funding mechanisms in the then-proposed bill.
We are pleased those concerns will be largely addressed here through certifications required of the Finance Director coupled with the mandated approval by two-thirds of Council members or by the Pennsylvania Intergovernmental Cooperation Authority or another state agency responsible for ensuring the city’s fiscal stability.
These stringent controls will guarantee that the fund reserve will be used only when most urgently needed.
Seventy recognizes that it may take some time for rainy day funds to accumulate during the current period of minimal economic growth. While this would prevent drawing on these funds in the near term, we hope that, in times of greater prosperity, the eventual reserve will be sufficient to meet severe budget challenges or emergencies.
For these reasons, we endorse the approval of this proposed amendment to the Home Rule Charter.
Plain English Statement:
This proposed Charter change would create a “rainy day fund” for the City. A rainy day fund is like a savings account. It is intended to better prepare the City to meet future, unforeseen fiscal emergencies. The City would make deposits when a fiscal year is projected to end with a surplus; the City could make withdrawals only for certain purposes. Money in the fund would be invested as other City money is invested; all interest earned would remain in the fund.
The proposed Charter language details each of those provisions. Deposits would be required when a fiscal year is expected to end with a surplus of at least 3% of that year’s General Fund budget. The amount deposited would be three-quarters of one percent of projected annual revenues. If recommended by the Mayor, City Council could require additional deposits.
The City could withdraw funds for only two reasons. The Finance Director could find that a withdrawal is required because City revenues were at least one percent (1%) less than expected. Or the Finance Director could find (if approved by a state oversight agency or two-thirds of City Council) that a withdrawal is required to prevent a significant disruption to City services or to fund emergency programs. In any case, Council must enact a budget transfer ordinance before any funds could be withdrawn.
Ballot Question Submitted to the Voters By: Bill No. 100303 (approved April 27, 2011).
Plain English Statement Prepared As Required By Section 201.1 of the Pennsylvania Election Code.
City Bond Question
(Bill No. 110480)
Ballot Question:
Should the City of Philadelphia borrow ONE HUNDRED ELEVEN MILLION TWO HUNDRED NINETY-FIVE THOUSAND DOLLARS ($111,295,000.00) to be spent for and toward capital purposes as follows: Transit; Streets and Sanitation; Municipal Buildings; Parks, Recreation and Museums; and Economic and Community Development?
Seventy’s Position:
The Committee of Seventy does not take a position on bond issuances.
Plain English Statement:
This ballot question, if approved by the voters, would authorize the City to borrow $111,295,000.00 for capital purposes, thereby increasing the City’s indebtedness by $111,295,000.00. Capital purposes means, generally, to make expenditures that will result in something of value with a useful life to the City of more than five years, for example, acquisitions of real estate, or construction of or improvements to buildings, property or streets.
The money to be borrowed would be used by the City for five identified purposes, namely, Transit; Streets and Sanitation; Municipal Buildings; Parks, Recreation and Museums; and Economic and Community Development, all in specific amounts identified in Bill No. 110480 (approved September 14, 2011). City Council would have authority, by ordinance, to change the intended allocation of these proceeds.