§ 2-300. The Annual Operating Budget Ordinance.

   (1)   It shall be the duty of the Council, at least thirty days before the end of the fiscal year, to adopt the annual operating budget ordinance for the next fiscal year. The consideration of the operating budget ordinance shall begin forthwith upon the receipt of the Mayor's annual operating budget message and the proposed annual operating budget ordinance, both of which shall be submitted in printed form. The proposed budget ordinance shall be regarded as having been introduced immediately upon its receipt.  9.2

   (2)   The annual operating budget ordinance shall provide for discharging any deficit and shall make appropriations to the Council, the Mayor, and all officers, departments, boards and commissions which form a part of the executive or administrative branch of the City government, and for all other items which are to be met out of the revenue of the City. All appropriations shall be made in lump sum amounts and according to the following classes of expenditures for each office, department, board or commission:

      (a)   Personal services;

      (b)   Materials, supplies and equipment;

      (c)   Debt service;

      (d)   Such additional classes as the Mayor shall recommend in the Mayor's proposed annual operating budget ordinance. 9.3

   Expenditures for the repair of any property, for the regrading, repaving or repairing of streets, and for the acquisition of any property or for any work or project which does not have a probable useful life to the City of at least five years following the time the expenditure is made for it shall be deemed to be ordinary expenses to be provided for in the annual operating budget ordinance. Appropriations for the use of any departmental board or commission shall be made to the department with which it is connected.

   (3)   The Mayor's estimates of receipts for the ensuing fiscal year and of surplus or deficit, if any, for the current fiscal year may not be altered by the Council.

   (4)   In every annual operating budget ordinance:

      (a)   An amount at least equal to one-half of one per cent of the aggregate of all appropriations for compensation to City employees in the civil service shall be appropriated for the work of the Personnel Director and the Civil Service Commission;

      (b)   The amount appropriated to the Auditing Department shall be adequate to enable the City Controller to perform the duties of the Controller and of the Auditing Department. Should the Council fail to make an adequate appropriation to the Auditing Department, the City Controller may petition any Court of Common Pleas of Philadelphia County for a mandamus to the Council to perform its duty under this section;  9.4

      (c)   Provision shall be made for the payment of compensation to certified public accounting firms for consulting services which may be rendered to the Auditing Department with regard to the manner in which the affairs of the various offices, departments, boards, commissions and other agencies receiving appropriations from the City are audited by the Auditing Department;

      (d)   Provision shall be made for the payment of compensation to a firm of certified public accountants to make an audit of the expenditures of the Auditing Department. The Council shall, by separate ordinance, name the firm of certified public accountants to be engaged for this purpose;

      (e)   For the first two fiscal years immediately following the effective date of this subsection, at least $1,000,000; and for all subsequent fiscal years, an amount adequate to enable the Board to perform the functions assigned to it by this charter, shall be appropriated for the work of the Board of Ethics. Should the Council fail to make an adequate appropriation to the Board of Ethics, the Board may petition any court of Common Pleas of Philadelphia County for a mandamus to the Council to perform its duty under this section; 10

      (f)   At least $500,000, or such greater amount as shall be determined by Council, shall be appropriated to the Police Advisory Commission created by Executive Order No. 2-17 or to any successor body or bodies performing the duties of a civilian police oversight entity, provided that if more than one such body exists at the same time, Council shall allocate the appropriation required by this subsection to such body or bodies as it deems appropriate. 11

      (g)   An amount equal to at least one-half of one percent (0.5%) of the City's total General Fund appropriations in such ordinance shall be appropriated for expenditure out of the Housing Trust Fund as established pursuant to the Act of July 14, 2005, P.L. 280, No. 49, 53 Pa. C.S. § 6001, et seq. and Chapter 21-1600 of The Philadelphia Code ("Housing Trust Fund"), for expenditure for the same general purposes as provided for under such laws. Such appropriation shall be in addition to any appropriation the source of funding of which is the receipt of recording fees authorized for expenditure pursuant to such laws. Such amount shall not be subject to a transfer pursuant to paragraph (6) of this Section unless the Director of Finance certifies that without such a transfer there will be a material disruption in City services or that the appropriations are needed to fund emergency programs necessary to protect the health, safety or welfare of City residents and that it would be fiscally imprudent to seek emergency appropriations pursuant to Section 2-301(a). 11.1

   (5)   At least once in three years provision shall be made for the payment of compensation to a firm of certified public accountants to make an examination of the manner in which the Auditing Department performs its auditing duties. The Council shall, by separate ordinance, name the firm of certified public accountants to be engaged for this purpose.

   (6)   The annual operating budget ordinance may be amended after its passage to authorize the transfer of items but the aggregate of the appropriations made by it may not be increased and transfers of budget items may not be made during the last four months of any fiscal year, except upon the recommendation of the Mayor.

   (7)   Budget Stabilization Reserve. 12

      (a)   The annual operating budget ordinance shall provide for appropriations to a Budget Stabilization Reserve, to be created and maintained by the Director of Finance as a separate fund which shall not be commingled with any other funds of the City. Appropriations to the Budget Stabilization Reserve shall, each year, be made in the following amounts, provided that total appropriations to the Budget Stabilization Reserve shall not exceed seventeen percent of projected General Fund Revenues for end of the current fiscal year as of the first business day after February 14: 12.1

         (1)   Such amounts as remain unencumbered in the Budget Stabilization Reserve from the prior fiscal year, including any investment earnings certified by the Director of Finance; plus

         (2)   When, as of the first business day after February 14, the Projected General Fund Balance for the end of the current fiscal year equals or exceeds:

            (i)   three percent (3%) of, but is less than five percent (5%) of, projected General Fund Revenues for end of the current fiscal year, an amount equal to three-quarters of one percent (.75%) of projected Unrestricted Local General Fund Revenues for the upcoming fiscal year;

            (ii)   five percent (5%) of, but is less than eight percent (8%) of, projected General Fund Revenues for the end of the current fiscal year, an amount equal to one percent (1.0%) of projected Unrestricted Local General Fund Revenues for the upcoming fiscal year; or

            (iii)   eight percent (8%) of projected General Fund Revenues for the end of the current fiscal year, the amount that exceeds such eight percent (8%) threshold or (1.0%) of projected Unrestricted Local General Fund Revenues for the upcoming fiscal year, whichever is greater; plus

         (3)   Such additional amounts as the Council shall authorize by ordinance, no later than at the time of passage of the annual operating budget ordinance and only upon recommendation of the Mayor.

      (b)   For purposes of this section and Section 6-110 ("Budget Stabilization Reserve"),

         (1)   "General Fund" shall mean the General Fund established by the Director of Finance and so denominated in the annual operating budget ordinance.

         (2)   "General Fund Revenues" shall mean that portion of the estimated receipts of the City to be allocated to the General Fund, as estimated by the Mayor pursuant to Section 2-300(3).

         (3)   "Unrestricted Local General Fund Revenues" shall mean that portion of General Fund Revenues that is anticipated by the Mayor to derive from local taxes and fees, whether authorized by the Council or otherwise, so long as the expenditure of such revenues is unrestricted by law, other than local law. "Unrestricted Local General Fund Revenues" shall not include any revenues anticipated to derive from taxes authorized by Chapter 6 of the Pennsylvania Intergovernmental Cooperation Authority Act for Cities of the First Class (Act of June 5, 1991, P.L. 9, No. 6).

         (4)   "Projected General Fund Balance" shall mean the projected general fund balance as set forth in the City's Five Year Financial Plan for the five year period beginning with the upcoming fiscal year, submitted to an agency of the Commonwealth with responsibility for ensuring the fiscal stability of the City, as such Plan exists at the time Council adopts the operating budget ordinance; or, if no such Plan is submitted, as certified by the Director of Finance.

ANNOTATION

   Sources:   Act of June 25, 1919, P.L. 581, Article XVII, Sections 1 and 2.

   Purposes:   1.   This section requires the annual submission by the Mayor of a consolidated budget of all the operating expenditures of the City and its enactment by the Council at least thirty days before the end of the fiscal year. This will fix by one legislative act the expenditures for each ensuing fiscal year. To expedite the budget process, it is required that the Mayor, who is responsible for preparing the annual operating budget ordinance in the first instance, shall submit it in printed form and that the budget ordinance shall be regarded as having been introduced upon its receipt. The Mayor is to submit together with the budget ordinance his budget message which will justify in general terms his proposed budget. He may also submit with these two documents a detailed breakdown of the appropriations requested.

      2.   This section, by prohibiting the line type of budget ordinance heretofore customary, is intended to prevent the Council from assuming through its appropriating power the administrative functions of City government. All appropriations are to be made in lump sum amounts according to certain fixed broad categories and such additional categories as the Mayor may indicate. Appropriations are to be made by such categories to offices, department, boards and commissions which will, subject to the direction and control of the Mayor and the Director of Finance (Section 8-102), decide how money within any category is to be spent for the purposes designated by that category. How many persons are to be employed, how many automobiles are to be purchased, and similar questions of administrative policy will be determined within overall appropriation limits by the executive branch and not the Council.

      3.   Certain types of so-called capital expenditures are of a recurring nature and have in the past come out of capital funds. This has resulted in unnecessarily increasing the debt of the City. The Charter requires that such expenditures shall be met, as they should be, out of annual operating appropriations and thus out of current revenues.

      4.   Appropriations are guaranteed for certain important purposes. In view of the inadequate appropriations heretofore made for civil service purposes, a minimum amount is required to be appropriated annually to the civil service so that this work may be properly planned and staffed. For comparable reasons, the Auditing Department is guaranteed such funds as are to be adequate for its work; it was not deemed practicable to state an amount in terms of a percentage of the annual budget as in the case of the civil service. However, should Council fail to provide an adequate sum, the Controller is authorized to mandamus Council to give it to him.

      The Auditing Department is given the right in the Charter to engage certified public accountants to advise it. Section 6-403. The requirement is imposed that provision shall be made to provide compensation for such services to make certain that the Department shall be able to exercise this right.

      The budget must also provide funds for the auditing by independent accountants of the expenditures of the Auditing Department. The auditors for this purpose are to be appointed by the Council by separate ordinance.

      5.   At least once in three years Council is to provide funds and to name by separate ordinance a firm of certified public accountants to examine the manner in which the Auditing Department performs its duties. It was deemed too expensive and unnecessary to require that private certified public accountants must annually audit all the agencies of the City. Yet experience has shown that some amount of independent auditing procedure is necessary. A triennial audit of the way the Auditing Department is performing its functions, was deemed minimal to meet the need. In the course of such an audit, if the independent certified public accountants find it necessary to see the books of any particular agency, authorization is found for such examination. See Section 6-404.

      6.   Subsection (6) is intended to serve as a check on the present practice of transferring items of the budget at the end of the fiscal year. Some agencies, finding at the end of the fiscal year that they have surplus funds left under certain items, have from time to time requested and received authorization from the Council for spending those surpluses for other purposes. This subsection prohibits such transfers during the last four months of any fiscal year except upon the recommendation of the Mayor.

      7.   Subsection (3) is intended as an aid to balancing the budget. It prevents a situation whereby the Council and the Mayor differ on receipts for an ensuing fiscal year, and surpluses and deficits for a current fiscal year. Under this subsection, the Mayor's estimate would be binding upon the Council. With these estimates fixed and with appropriations determined, Council will know what amount must be raised to balance the budget.

 

Notes

9.2	Amended by approval of the voters at the election held on May 17, 2022, and certified on June 6, 2022. See Bill No. 220001 (approved February 25, 2022); Resolution No. 220009 (adopted February 24, 2022).
9.3	The phrase "in his proposed annual operating budget ordinance" was changed by the Code editor to read "in the Mayor's proposed annual operating budget ordinance" to be gender neutral consistent with the broad Charter change set forth in the May 17, 2022 referendum. See Bill No. 220001 (approved February 25, 2022); Resolution No. 220009 (adopted February 24, 2022).
9.4	Amended by approval of the voters at the election held on May 17, 2022, and certified on June 6, 2022. See Bill No. 220001 (approved February 25, 2022); Resolution No. 220009 (adopted February 24, 2022).
10	Added by approval of the voters at the election held on May 16, 2006, and certified on June 5, 2006. See Bill No. 040769 (approved December 15, 2005); Resolution No. 040817 (adopted December 1, 2005).
11	Added by approval of the voters at the election held on May 15, 2018, and certified on June 4, 2018. See Bill No. 170716 (approved March 6, 2018); Resolution No. 170743 (adopted February 22, 2018).
11.1	Added by approval of the voters at the election held on November 2, 2021, and certified on November 22, 2021. See Bill No. 210507 (approved August 26, 2021); Resolution No. 210524 (adopted June 17, 2021). See Charter subsection A-200(21) for effective date.
12	Added by approval of the voters at the election held on November 9, 2011, and certified on November 28, 2011. See Bill No. 100303 (approved April 27, 2011); Resolution No. 100314-A (adopted April 14, 2011).
12.1	Amended by approval of the voters at the election held on May 16, 2023, and certified on June 5, 2023. See Bill No. 220733 (approved March 1, 2023); Resolution No. 220743 (adopted February 16, 2023). See Charter subsection A-200(25) for effective date.