Summary
Philadelphia’s new police contract, which grants officers a 3.5% annual raise over three years, will consume nearly all of the city’s $200 million labor reserve, leading to financial concerns. PICA staff noted that if pending labor contracts for other city unions match the police deal, the city will have little financial cushion for four of the next five years. Finance Director Rob Dubow acknowledged the possibility of service cuts, stating, “I don’t think we’ll get through this process without some pain.” PICA board members unanimously approved the city’s modified five-year plan but warned that eliminating reserves could leave the city vulnerable to economic downturns or unexpected crises. Labor leaders pushed back, arguing that past administrations’ mismanagement of pension funds created the financial strain, and workers should not bear the burden of cost-cutting measures. The city is now exploring potential department-level savings, with additional budget adjustments expected.