Summary
The Revenue Prediction Precision issue brief evaluates Philadelphia’s ability to forecast revenues over a 20-year period, comparing its performance to 11 peer cities. The analysis finds that Philadelphia’s revenue projections have been among the most accurate, with a mean absolute percentage error (MAPE) of ±4.0%, outperforming the peer city average of ±5.2%. The report highlights the importance of revenue forecasting in maintaining a balanced budget, particularly given the City’s requirement to update its Five-Year Plan if fund balance projections decline by more than 5% of revenues. This accuracy reduces fiscal shocks and enables better long-term planning. While Philadelphia’s forecasting is strong, the report notes that rare large revenue shortfalls—such as those during the Great Recession and the failed Philadelphia Gas Works sale—can significantly impact fiscal stability. The study recommends continued investment in forecasting tools and building reserves to manage unexpected revenue fluctuations. Philadelphia’s approach provides a model for peer cities seeking to improve financial predictability and stability.