In Lean Times, Philadelphia Mayor Makes Cuts

Tax receipts in the City of Philadelphia are below projections, prompting Mayor Michael Nutter to propose cuts in city payroll and his own salary. Nutter says taking these steps now will reduce the impact of the deficit going forward.

ROBERT SIEGEL, host:

Now, news from the front line of the recession. The city of Philadelphia is seeing its tax receipts come in well below projections. Happens its pension costs are also above projections. So, Mayor Michael Nutter has proposed cuts, cuts in the city payroll, including a couple of hundred layoffs, five day furloughs for city employees who make over $50,000. He is taking a 10 percent pay cut. He's also closing 68 swimming pools, three ice skating rinks, 11 library branches. He's adding only 200 police to the streets after promising twice that. And he is deferring some tax cuts that he has campaigned on. Mayor Nutter joins us from Philadelphia. Welcome to the program.

Mayor MICHAEL NUTTER (Mayor, Philadelphia): Thank you so much.

SIEGEL: Let me ask you first if these cuts are based on revenue short falls right now, how likely is it that if the recession proves to be a long one and a deep one that you'll have to make still deeper cuts?

Mayor NUTTER: Well, it's a situation that of course we monitor on a regular basis but we also - I also believe that by taking these steps, we will lessen the impact that the present $108 million deficit for the current fiscal year or the $1 billion anticipated deficit over the five year plan will result in some amount of savings. And you know, of course while no one knows how long this financial crisis is going to last, I have to believe that, you know, over the course of the next 18 to 24 months, things should start to turnaround and we will be in a position to have somewhat smaller government but also a more efficient, more productive government because we're still in the process of making the constant changes that I've talked about during last year's campaign to reform Philadelphia's government. I've been in office for about 10 months now.

SIEGEL: When local governments cutback, it's a no win situation. People may complain about reduced services. On the other hand, if they don't complain then they're going to wonder what were those few hundred people doing on the payroll in the first place. How will you answer that one?

Mayor NUTTER: Well look, change is always very, very difficult and you know, I think we need to stay focused on - it's a couple hundred people, these are real life folks who are hard working, they come to work, they're doing their job and at the same time we cannot continue to provide the same level of service that we've been providing based on the dollars that we have. So, I mean I recognize that people may complain and I respect that but we don't have a whole lot of choices here and I think we're going to do - I know we're going to do our best to better educate the public as to what's going on, why, why we're doing the things that we're doing and how much stronger we're going to be as we move out of this situation. But you know, there will be some complaining and I understand that.

SIEGEL: Are there capital projects that the cost of borrowing or simply the impossibility of borrowing are now deferring or canceling?

Mayor NUTTER: Well, we're actually - the voters just approved a flowing of a bond to pay for our capital projects but it has been very difficult for instance our tax anticipation notes, the temporary notes that we normally every year this government and many others flow for the past couple of months. Virtually, no one has had access to the capital markets for any borrowing regardless of your credit rating even triple A rated governments have not had access to capital which is you know, quite honestly, one of the many things that the Federal government can do after putting together $700 billion Bailout package for financial institutions and banks. Cities and municipalities and states need the same kind of relief and I am certainly hopeful, certainly excited about Senator Obama being elected but certainly very hopeful that cities and municipalities will be next in line in terms of federal action and response.

SIEGEL: What you've had to do this week. This can't be what you had in mind when you ran for mayor as wanting to do I assume.

Mayor NUTTER: No, this was not how I planned to spend October, November making the kind of announcements that we've made today. But when you're faced with the enormity of the fiscal crisis, the unprecedented nature of what's in front of us and the suddenness with which this has come upon us, you know you just - you deal with the hand that you are dealt. And we have great people in the government, I have a great team around me and we will get through this storm and we're going to be stronger and better when we come out the other side.

SIEGEL: Well, Mayor Michael Nutter of Philadelphia, thank you very much for talking with us today.

Mayor NUTTER: Thank you.

SIEGEL: Yesterday, Mayor Nutter announced a package of cuts to deal with declining tax revenues for his city government.

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NORRIS: One idea for dealing with California's growing budget crisis is a temporary freeze in home foreclosures. We'll hear more about that coming up on All Things Considered.

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