Philadelphia’s budget has lowest cash balance the city has seen in years

Pat Loeb
July 04, 2020 - 4:00 am
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    PHILADELPHIA (KYW Newsradio)  The pandemic has not only canceled Philadelphia’s Fourth of July traditions, it’s played havoc with the city budget. It closed the fiscal year this week with the lowest fund balance in several years. 

    The fund balance — the amount of cash the city has on hand to pay for unforeseen expenses — is down to about $50 million, a slim one percent of its total budget.

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    “That is not a great amount to have,” said Marisa Waxman, the city’s budget director. 

    She says the city’s goal is to have six to eight percent on hand. And even that is below what experts say is sound, which is 17 percent or two months worth of expenses.

    “If you think about it compared to your household budget, having just one percent of your annual salary in savings puts you in a much more precarious position than if you had two months saved up,” Waxman said. 

    The city has an extra burden in that it must get its spending plan approved by the Intergovernmental Cooperation Agency, or PICA, for fiscal stability or lose state funding.

    But PICA has approved budgets with low cash balances before, and the five-year plan does project the balances growing back to six percent in the next few years. 

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    In addition, Waxman says the city has built in a new fund: a reserve for reopening and recession.

    It has set aside $80 million over the next two years that can be used in case a recession or reopening expenses deplete the budget even more.