Once approved by voters in May, this legislation would empower the City to make larger deposits into, better fund its Budget Stabilization Reserve
PHILADELPHIA – Today, Councilmember Katherine Gilmore Richardson’s (At-Large) legislation, Ordinance No. 220733 and Resolution No. 220743, amending The Philadelphia Home Rule Charter to change the requirements for contributions of the Budget Stabilization Reserve, was passed out of City Council. The measure now heads to Philadelphia voters for the May 16, 2023 election.
Budget Stabilization Reserves, also known as Rainy Day Funds, work by storing surplus or additional revenues and using them to address unexpected contingencies, emergencies, or revenue shortfalls. They are not designed to correct chronic underfunding of services.
“I would like to thank my colleagues, Mayor Kenney’s Administration, and the Pennsylvania Intergovernmental Cooperation Authority (PICA) for supporting my legislation that will not only strengthen Philadelphia’s Rainy Day Fund, but ensure that our City is more financially prepared for any economic downturns or unexpected emergencies,” said Councilmember Gilmore Richardson.
“If there’s one thing that we’ve learned from the COVID-19 pandemic, it’s that we must put measures in place to protect Philadelphia’s workforce, service delivery, and borrowing capabilities. By working to make larger deposits into our Rainy Day Fund, we are doing just that.”
The legislation would make the following changes to Philadelphia’s Rainy Day Fund:
- Determine the threshold for deposits by using projected year end General Fund balance for the current year as of Feb. 14 (Q2) instead of the projected year-end General Fund balance for the upcoming fiscal year;
- Cap the Rainy Day Fund at 17% of projected General Fund revenues for the end of the current year as of Feb 14 (Q2);
- Make the start date for the updated threshold be FY25; and
- Use the following scale to determine when deposits are made and the size of deposits:
|
Projected year end General Fund Balance as a percent of projected General Fund year end revenues for the current year as of Feb 14 (Q2) |
BSR Appropriation in upcoming Fiscal Year budget (% of unrestricted general fund revenues) |
|
3 or lower |
0 |
|
3 – 5% |
0.75% |
|
5 – 8 % |
1% |
|
8%+ |
All funds above 8% go to BSR – not to be less than 1% |
The challenge that the City has traditionally faced with making deposits in its Rainy Day Fund is that the City’s reserve policy is currently dependent on projections for the upcoming fiscal year. Previous studies have ranked Philadelphia 16 out of 18 when comparing its Rainy Day Fund balance to other cities such as Houston, Chicago and Los Angeles.
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Councilmember Katherine Gilmore Richardson is the youngest woman in Philadelphia to be elected citywide and the youngest Black woman ever elected to Philadelphia City Council. As an at-large councilmember, she has championed issues such as increasing transparency and accountability in city government, fighting for good-paying jobs on behalf of Philadelphia workers, creating safer neighborhoods for our children, and advancing environmental justice. Stay updated at PHLCouncil.com, on Facebook & Instagram @CouncilmemberKGR and on Twitter @CouncilwomanKGR.
