Mayor Jim Kenney is sworn in as mayor by Kevin Dougherty, a state Supreme Court judge and John Dougherty's brother.

Mayor Jim Kenney is sworn in as mayor by Kevin Dougherty, a state Supreme Court judge and John Dougherty's brother.

Office of the Mayor

Jim Kenney’s first budget pins education goals on soda tax

This post has been updated.

Jim Kenney’s goals for educating Philly’s children rest almost entirely on his proposed soda tax, pinning a campaign promise on a measure that Philadelphia would be by far the largest city in the country to enact.

Kenney is set to unveil his $4.17 billion budget to City Council today and he’s expected to announce that major initiatives he campaigned on — increasing access to pre-kindergarten, reducing the wage tax, establishing community schools and investing in rebuilding neighborhood centers — hinge almost entirely on City Council agreeing to a three-cent-per-ounce sugary drinks tax, of which Big Soda is not a fan.

Other portions of Kenney’s education-related proposals raise questions about how the mayor plans to implement ideas he campaigned on, namely that his universal pre-K initiative would bring the number of pre-K seats in Philly to 29,000 after three years. That’s 13,000 seats short of the estimated 42,000 3-to-5-year-olds in Philly, however his administration says the initiative is targeting 3 and 4-year-olds specifically. In addition, about 10,000 families already opt for private pre-K.

On top of that, Kenney’s budget — which increases spending by about $110 million compared to last year’s — doesn’t include any new funds earmarked specifically for the School District of Philadelphia. Last year, the District asked the city for $103 million to plug budget gaps left as state funding dwindled. The administration says the school district didn’t make a request for city funds this year.

Kenney’s Budget Director Anna Adams outlined major priorities of the administration, specifically adding “quality” pre-K seats, establishing 25 “community schools” and paying debt service on $300 million in bonds to subsidize the costs of sprucing up the city’s dilapidating community and recreation centers.

“All of those things,” she said, “are expected to be paid for through a sugary drinks tax.”

City officials project that the tax, which some experts say could disproportionately affect the poor, is set to bring in an additional $95 million a year in revenue to the city that’s already exhausted other tax hike options including property, sales and cigarettes. That cash will also help pad increasing pension costs that now account for about 15 percent of the city’s budget. Berkeley, Calif., is the only city in America to have levied a sugary drinks tax so far and, similar to Kenney’s proposal, it puts the tax directly on distributors.

However, Berkeley’s tax is one cent per ounce and was branded as a health initiative, not a revenue one. And City Council show down a sugary drinks tax twice under the Nutter administration.

Adams also noted the city will borrow some $400 million to turn its efforts into reality, and the city hopes to increase revenue by improving how the city collects delinquent taxes, an effort she said will bring in $69 million in additional revenue through 2021.

Now for how that cash will be spent: Funding for pre-K will start off at $26 million a year through fiscal year 2019, well below the $60 million that many were under the impression Kenney would propose to spend in the first year on the efforts. He’s said since last fall that he hoped to have pre-K for all 4-year-olds by the end of his first term.

That spending will, however, increase to $60 million annually beginning in fiscal year 2019. The school district is currently the largest contractor of pre-K in the city with 9,000 of the 14,000 total “quality” seats. Kenney’s chief education officer Otis Hackney couldn’t yet specify the cash would be split between pre-K providers.

In total, the city’s funding will subsidize 6,500 additional pre-K seats over the next three years. The rest of the difference will be made up by state and philanthropic funds, expected to contribute at least 5,000 additional seats. Deputy Mayor for Policy and Legislation Jim Engler noted that not all children are expected to voluntarily enroll in pre-K, and the administration will evaluate if more funds should be spent on adding seats after the first three years.

Similar to the pre-K initiative, funding for community schools — education centers that offer other services to families and neighborhood residents — will increase over the next several years. In the coming year, the city will spend just $4 million on its community schools initiative but that will increase to $10 million annually beginning in fiscal year 2020. Hackney said 25 schools identified for conversion will be notified before the end of this school year.

By far the largest spending increase (and largest increase to the debt the city will take on in coming years), is Kenney’s big, half-a-billion-dollar plan to improve some of the city’s long-neglected recreation centers and libraries. The city will chip in nearly $350 million in funding that will be raised through three separate $100 million bonds. The city is banking on philanthropic, state and federal funding to make up the difference.

News had leaked out for days prior to Kenney’s address that he’d be pouring large amounts of resources into community centers and that he’d be proposing a soda tax to pay for new initiatives. He told the city all about his plans to better education in the city while on the campaign trail.

But perhaps the biggest surprise in Kenney’s inaugural budget plan is no recommendation to set aside cash for school district, especially as lawmakers in Harrisburg still have yet to come to a consensus on last year’s budget, let alone the one coming this year.

Administration spokeswoman Lauren Hitt said funding to the school district increased by some $400 million annually over the course of the last five years in order to cover basic operations. She also noted that the district ended last year with a surplus of $88 million — even though that cash was on-hand at the end of the 2015 fiscal year and wasn’t reserved to cover budget gaps in 2017.

“We’re looking at a different approach,” Finance Director Rob Dubow said, noting Kenney’s other education-related initiatives. “The school district hasn’t asked us for anything and those are conversations we’ll have with the district.”

Other items of note in Kenney’s first budget

  1. The city will toss in an additional $250,000 to fund new initiatives that work with “Vision Zero,” the idea that traffic accidents are preventable and local officials can do more to decrease the amount of traffic deaths per year to zero. The first year will include mostly studying the landscape and establishing new groups to monitor progress.
  2. Additional funding to the city will come from new efforts to streamline overtime in the city. The administration wants overtime costs from the police department alone to be reduced by $10 million this year.
  3. Kenney will ask lawmakers to fund an additional 800 body cameras so that all officers are outfitted with the technology by 2019. He’ll also ask for new investments in vehicles, including $10 million for new fire vehicles and $8 million for new Streets Department vehicles.
  4. The Kenney administration also wants to reduce the wage tax over the next five years. The wage tax is currently 3.91 percent for residents and 3.48 percent for non-residents. That will decrease over five years to 3.73 percent and 3.32 percent, respectively.
  5. Here’s the relatively small investment that could make a big difference on your street: Kenney’s administration hopes to invest an additional $21 million in street resurfacing. Say goodbye (maybe!) to at least some of your potholes.
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