Mayor Michael Nutter's annual budget address to City Council was cut short on Thursday after a packed crowd of disgruntled municipal employees drowned him out with boos, forcing Council to recess the meeting.
Nutter later finished his speech in the Mayor's Reception Room.
"I have nothing but the deepest respect for the thousands of public employees who work on behalf of 1.5 million Philadelphians," he said, noting a fair contract must balance the interests of employees and taxpayers.
"Investing in public employees requires reasonable pay increases and health care benefits, but we must also have work rule changes including overtime reform and the authority to better manage our workforce with an alternative to just layoffs."
Nutter's proposed $3.75 billion operating budget for fiscal year 2014 earmarks $29 million for contract disputes with three municipal unions.
"That's a significant change in how we're budgeting for union labor contracts, which we're able to do because of anticipated economic savings," budget director Rebecca Rhynhart said.
Those proposed cuts along with a package of savings identified by FTI Consulting allow the budget to contain no new tax increases, service cuts or planned employee layoffs but a $99 million increase in expenditures – $18 million for discretionary spending and the balance for employee benefits and police officer salary hikes.
"The economy is showing signs of recovery and the city of Philadelphia has also been able to capture some savings and efficiencies," Rhynhart said.
Nutter also made a second pitch for a switch to the Actual Value initiative of property tax assessments, which was last year torpedoed by City Council members.
"At the heart of this budget is a reform that Philadelphia property owners have been denied for decades," he said.
"This city has operated under a broken property assessment system that no one could understand and for too long it has hurt countless taxpayers."
The overhaul is not expected to net any more revenue than it did last year.
"One of the pledges the mayor made through AVI was to collect the same amount in 2013 and 2014," finance director Rob Dubow said.
"I think one of the lessons learned last year is when you try to do other things, it gets muddied. This is about reforming property taxes, not collecting additional revenue."
Nutter's proposed operating budget for fiscal year 2014 earmarks $29 million for contract disputes with municipal unions D.C. 33, D.C. 47 and Local 22, but anticipates that they'll agree to work rule concessions, as well.
"The money is for awards that have the reforms we're looking for and those are in pensions, furloughs and overtime," Rhynhart said. "That's very important for the mayor and this administration."
The budget does not include funds for retroactive wage increases for firefighters union Local 22 because the administration plans to emerge victorious from the current court battle over their now-expired contract, according to Dubow.
Employees represented by those three unions have been working under expired contracts and without wage or benefit increases for four to five years.
The administration along with the budget released more information about their desired switch to the Actual Value Initiative of property tax assessments.
Nutter is proposing to set the tax rate at 1.3204 percent in order to collect the same amount of property tax revenue as last fiscal year, which amounts to $1.2 billion.
He's hoping to allocate 54 percent of that revenue to the embattled School District.
Dubow said the exact amounts by which residents' property tax bills will rise or fall depend on the relief measures arrived at by City Council, which will next week launch a series of budget hearings.
The administration is proposing a $15,000 homestead exemption and $30 million in relief measures for longtime owner-occupants, low income households and property owners whose taxes are raised by a certain percentage.
Mayor Michael Nutter's proposed fiscal year 2014 operating budget totals $3.75 billion
>> That's a $99 million increase in estimated spending – or 2.7% rise – over the budget for FY13.
>> $65 million of that increase is slated to go toward rising municipal employee pensions, health insurance and debt service costs.
>> $20 million of the increase is for salary increases awarded to the Fraternal Order of Police Lodge No. 5.
>> $18 million of the increase is earmarked for discretionary spending, including $1 million to extend Free Library hours and $3 million to create a citywide bike share program.
>> $26 million of the FY14 budget is being set aside as a fund balance for future labor union contracts related to AFSCME D.C. 33 and D.C. 47 and IAFF Local 22.
>> A total of $84 million is set aside in the city's five-year plan to pay future labor contracts.
As far as AVI, the administration is proposing:
>> A 1.3204% tax rate on Philadelphia real estate.
>> A .92% use and occupancy tax rate.
>> $15 million homestead exemption.
>> $30 million in relief measures for low income households, longtime owner-occupied properties and for those whose property taxes have risen dramatically.
>> $20 million of that will be targeted at residential properties.
>> $10 million of that will be targeted at small commercial properties. The city intends to seek grant money for those funds.
Nutter's proposed Fiscal Year 2014 capital budget totals $117 million.
>> That's $1 million less than the Fiscal Year 2013 capital budget, a .8 % decrease.
>> $26 million is slated to go toward capital improvements and core infrastructure, including the hiring of police, fire and street maintenance.
>> $16 million of that will come from funding dedicated to projects that was never spent.
>> $10 million of that the city will seek to borrow from PICA.