Summary
The City of Philadelphia’s five-year financial plan, approved by PICA, assumes $20 million in additional annual revenue growth to cover labor contract costs, including a four-year, $170 million contract with AFSCME District Council 33. However, PICA board members raised concerns about the risk of a recession, questioning why the city’s projections do not incorporate potential economic downturns. Finance Director Rob Dubow defended the plan, citing a slowdown in revenue growth projections starting in FY19, though he acknowledged that cost-cutting measures would be necessary if the economy worsened. Key financial risks include pension funding, which is only 45% funded with a $6 billion gap, and the implementation of the new sweetened beverage tax, which may not generate the projected $92 million annually. The report highlights increased pension payments consuming 15% of the city’s $4 billion budget, with uncertainty surrounding investment return assumptions. The approval of the plan ensures financial stability for now, but PICA warns that long-term risks remain unless proactive adjustments are made.