Lower Revenues and Obligations Increase Projected FY24 Fund Balance by $8M


The City of Philadelphia’s Quarterly City Managers Report (QCMR) for the third quarter (period ending March 31, 2024) of FY2024 projects a year-end fund balance of $537 million—$8 million higher than projected in the City’s FY2024-FY2028 Five Year Plan (5YP). Volatility in Real Estate and Realty Transfer Tax receipts drove the City to revise its revenue projections down $7M from the end of Q2 for a total projected shortfall of $76 million from adopted 5YP revenues. Due to a shift in some Pension Fund obligations from the General Fund to the Grants Revenue Fund, obligations have decreased by $40 million from the second quarter, for an increase of $222 million over the adopted 5YP.

Bottom line: Because FY23 had such a high fund balance and the City is anticipating lower FY24 spending than last quarter, the City’s finances look slightly better than they did last quarter. The FY24 fund balance is higher than both last quarter’s projection and the Adopted Budget but shows a significant decline ($445M) from FY23’s ending fund balance. Revenue projections for the Real Estate Tax and Realty Transfer Tax were lowered due to ongoing assessment appeals and less market activity, emphasizing the need for continuous monitoring via the Quarterly City Managers Report (QCMR). The FY25-29 Five-Year Plan will need to be cautious in its revenue projections and safeguard sufficient reserves to weather the expiration of ARPA funds, new labor contracts, and unpredictable challenges that may arise.

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