Gas Works, neighborhoods top Street's budget agenda

Calling the beleaguered Philadelphia Gas Works the "greatest risk" to the city's financial stability, Mayor John Street presented a $2.95 billion budget for Fiscal Year 2002 to City Council yesterday. PGW, the city-owned utility that provides natural gas to 490,000 households, has been repeatedly hit by management fiascos, computer system failures and a 400 percent increase in the price of natural gas over the last year. "We simply cannot afford to fund PGW's cash-flow and operating requirements out of the city's general fund," Street said. "To do so will surely bankrupt the city." According to City Finance Director Janice Davis, the sale of PGW "is something that is being considered." Philadelphia posted its highest budget surplus ever in FY 2000 -- $295.1 million -- due to higher than expected wage tax revenues. But with increased spending and a dip in the economy, the city is projected to receive a $152.8 million windfall in 2001 and to break even in 2002. The city has already loaned PGW $45 million, and the $18 million of revenue from PGW accounted for in the FY 2001 budget may not arrive, according to City Controller and Penn Government professor Jonathan Saidel. "It's an albatross around our necks," City Council President Anna Verna said of PGW after Street's address. "If the price of natural gas keeps skyrocketing, I just don't know how our citizens are going to be able to pay for it." Street also proposed the allocation of $15 million to bolster the Philadelphia School District, which is expected to post a deficit of $80.2 million by the end of FY 2001. "We must be prepared to pursue more far-reaching and radical approaches to operating our schools," Street said. "We cannot have a world-class city with a second-class educational system." The tax cuts begun under former Mayor Ed Rendell would also continue for the seventh year, reducing the wage taxes by slightly less than one percent. By the end of FY 2002, wage taxes will have been reduced a total of 8.5 percent since 1995. Although most city departments were required to slash personnel costs -- saving $17.5 million annually -- other costs were added through new contracts for the teachers and firefighters, as well as debt service for two new stadiums. Street also allocated $32 million for neighborhood lot cleaning, tree removal and demolition. "Residents, more often than not, flee our city because our streets are not perceived as safe, our neighborhoods are blighted and our schools are deficient," Street said. "We must transform these conditions." Saidel said that continued payments to PGW could undermine the Neighborhood Transformation Initiative, which focuses on blight removal. Councilwoman Jannie Blackwell, who represents West Philadelphia, said she believes that the NTI can only help Penn and West Philadelphia. "I like the fact that he was talking about rebuilding neighborhoods," Blackwell said. "That's the most important thing for me right now." Business concerns were addressed by a reduction in the business privilege tax, and by setting aside $5 million for business attraction and retention. Still, some feel that more must be done. "What's more important to me is that the city has not had a city-wide economic development plan for a number of years," Saidel said. "Unless you have an overall plan, how do you know what you're doing?" Street is expected to address this issue next month at a meeting of the Greater Philadelphia Chamber of Commerce. City department heads will spend the next few months hashing out the details of the budget with Council, with a final vote expected at the end of March.