Lower Revenues and Higher Expenditures Decrease Projected FY24 Fund Balance by $24M

 

The City of Philadelphia’s Quarterly City Managers Report (QCMR) for the second quarter (period ending December 31, 2023) of FY2024 projects a year-end fund balance of $504 million—$24 million lower than projected in the City’s FY2024-FY2028 Five Year Plan (5YP). Volatility in BIRT receipts drove the City to revise its revenue projections down $1M from the end of Q1 for a total projected shortfall of $68 million from adopted 5YP revenues. Obligations have increased by $182 million from the first quarter, for a total increase of $262 million over the adopted 5YP.

Bottom line: Despite a lower projected FY24 fund balance, the City’s finances are okay for right now. Spending increases from this quarter are largely one-time costs, cushioned by last year’s higher-than-expected fund balance. However, with revenues coming in $68M lower than anticipated and significant increases in spending, adequate reserves and continuous monitoring through the QCMR are essential to safeguard against unpredictable or unsustainable changes. As spending continues to outpace revenues, the next Five-Year Plan will need to be cautious about a dwindling fund balance in later years.

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