Copyright phillyvoice
Philadelphia closed the 2025 fiscal year with a $1.19 billion fund balance — the largest in the city's history, Mayor Cherelle Parker said Tuesday. The fund balance, shown in the city's annual finance report, can be attributed to higher tax revenues, lower personnel costs and the use of COVID-19 funding, the Parker administration said, adding that the surplus leaves the city in a strong position to weather uncertainty about state and federal funding. "While we are pleased to have the highest fund balance in the City's history, we know we will need those dollars to help handle the risks we face," Budget Director Sabrina Maynard said in a statement. The extra dollars will be used to safeguard against federal grants that might not be redistributed under President Donald Trump and potential reductions in wage tax revenues from workers in education, medicine and government, the city said. The surplus also could help mitigate a potential "cash crunch" caused by the Pennsylvania budget impasse. The surplus also will be used to cover upcoming labor arbitration costs. The city has "completely depleted" its labor reserve fund after negotiating multi-year contracts with the labor unions representing police officers and the city's blue- and white-collar workers. City officials do not expect to end the 2026 fiscal year with a surplus as high as fiscal year 2025, which ended June 30. That's due to several non-recurring factors. The city's wage obligations were $251 million under budget because of vacancies, and $95 million from the federal funding reserve was moved to the fund balance. Philadelphia also will no longer receive COVID-19 funds in 2026. Revenues from several taxes exceeded projections, including the Business Income and Receipts Tax, the Net Profits Tax and the Realty Transfer Tax. But city officials said BIRT and NPT revenues are volatile from year to year. The transfer tax also likely was boosted by property tales that were finalized before a new tax rate took effect in July, city officials said. The Annual Finance Report will be audited by the City Controller's Office. The audit is expected to be complete by the end of February.
