News Brief | City's budget deficit could grow to $850 M

The City of Philadelphia will face a budget deficit of at least $650 to 850 million over the next five years, Mayor Michael Nutter said yesterday.

Nutter had warned in mid-September that Philadelphia would face a deficit of at least $450 million due to fall off in business-privilege taxes and increases in pension costs. He gave an update on the city's finances yesterday.

To address the situation, exempt and non-represented city employees will not receive bonus payments.

Nutter also asked all independently elected officials, including City Council, to cut their office budgets by 5 percent and has requested that all departments find additional savings in their budgets.

"Let us be under no illusion as to the size of the challenge we face," Nutter said in a statement. He added, "There is no level of governmental or financial institution that is not affected by the current financial crisis and there is essentially no market for municipal borrowing."

Five insurers who backed $1.9 billion of city and related-agency debt have been downgraded or put on credit watch, according to the Nutter press statement. As a result, the debt has become more expensive.

Nutter said he will put forth a "comprehensive plan" to deal with the financial crisis by the end of October.

Please note All comments are eligible for publication in The Daily Pennsylvanian.