PHILADELPHIA — Mayor Cherelle L. Parker’s second budget address to Philadelphia City Council sounded in many ways like an ordinary mayoral speech, with Parker waxing poetic about heroic first responders, touting wins during her first year, and pitching new proposals on housing and tax cuts contained in her $6.7 billion proposal for the city budget that takes effect July 1.

But looming over Parker’s 90-minute speech on Thursday was a wild card with the potential to make this year’s city budget negotiations anything but ordinary: President Donald Trump, who has threatened to dramatically cut federal funding for local government.

“I know there is uncertainty in the air right now,” Parker said in Council chambers during her speech, which has traditionally served as Philly’s version of the presidential State of the Union address. “People don’t know what to expect from their government, and uncertainty can breed fear. I want the people of Philadelphia and our city employees to hear me: Your city is here to keep you safe and to safeguard your basic rights.”

The remarks were among the few comments Parker has offered on the national political dynamic since Trump took office in January. But she still avoided saying Trump’s name and didn’t dwell on the issue, focusing instead on her proposals to issue $800 million in bonds to fund her housing initiative and commence an effort to dramatically reduce the business tax over the next 15 years.

Parker’s address officially kicks off budget season in City Hall. Next, Council will hold a series of hearings from late March to early May, going department by department to probe the administration’s spending and taxing proposals.

Then, the administration will negotiate with Council over amendments to the proposal. They must reach a deal before the end of June, when the current fiscal year ends. Council’s last meeting of the session is scheduled for June 12. If lawmakers follow normal procedures, the deal must get preliminary approval in committee prior to Council’s meeting on June 5.

Councilmember Rue Landau, one of the body’s more progressive lawmakers, said she was hopeful Parker’s proposal would lead to more spending on issues like housing, street safety, and cleaning, before indicating she was skeptical of whether this is the right year for tax cuts given the potential of Trump cutting grants to the city.

“But, (the proposal) also raises questions,” Landau said in a statement. “Namely — how is the City going to balance proposed revenue cuts at this time as we face down pending federal funding cuts that will lead to a loss of services?”

Council chambers were packed with top administration officials and other dignitaries, including Republican Pennsylvania Attorney General Dave Sunday; Democratic State Sens. Vince Hughes and Anthony Williams; and labors leader Ryan Boyer of the building trades and Greg Boulware, president of the largest union for city workers.

Federal fears

Trump has threatened to cut funds to so-called sanctuary cities, which are local jurisdictions including Philadelphia that decline to assist federal immigration enforcement. And in the opening days of his administration, he briefly paused all federal grants and contracts before letting the money flow again while promising to follow up with significant reductions.

The Trump administration has already cut funding to the city for sustainability programs, City Finance Director Rob Dubow said this week. Those cuts so far haven’t added up to much, he said, but deeper reductions could be catastrophic for a city that received $2.8 billion in federal funding in the 2024 fiscal year.

Parker’s budget would create a $95 million reserve to help offset potential cuts, which she acknowledged later was a “drop in the bucket” compared to overall federal aid to Philly.

In an interview after her speech, Parker elaborated on how damaging federal cuts could be for Philly.

“We’re just a little old city of Philadelphia,” Parker said, “and so the potential impacts of federal cuts and what they could mean to the city of Philadelphia are grave and extremely concerning to this administration.”

The mayor added that her efforts to develop services for people experiencing homelessness and addiction in Kensington and other neighborhoods depend on federal aid.

“When I think about potential cuts to Medicaid and community development block grant funding, how do you think we will be able to treat the people we’re building a wellness ecosystem with?”

Housing bonds

Parker is making her modified campaign initiative to build or preserve 30,000 homes a top priority for her second year in office. The mayor still has not released details on what policies and programs will be involved in her plan, and she said that she will articulate her housing agenda on March 24.

But Parker on Thursday laid out how she plans to pay for it: by borrowing $800 million.

“This is going to be an historic unprecedented investment for Philadelphians,” she said.

Parker’s plan would have the city issue two batches of general obligation bonds worth $400 million each, with the first coming in 2025. General obligation bonds are paid back from the city budget, rather than a specific revenue stream.

“We plan on spending that money as quickly as possible,” Parker said. “I want shovels in the ground.”

Tax cuts on the table

Parker on Thursday cast her tax cut plan as “historic and unprecedented,” saying that she wanted to dramatically reduce the business tax in an effort to boost the local economy.

”This proposal will spur businesses to grow and new ones to locate here,” Parker said in her budget address.

The mayor is proposing that the city adopt a 15-year schedule for tax cuts. But during this spring’s budget negotiations, the administration and Council can only control what happens in the fiscal year that begins July 1. And Parker is proposing starting small.

Her budget calls for reducing the business income and receipts tax’s net income rate from 5.81% to 5.71% next year, and the BIRT’s gross receipts rate from 0.1415% to 0.141%. Those cuts would cost the city $9.2 million in a proposed $6.7 billion budget.

In the long term, Parker hopes the city will eliminate the gross receipts levy and cut the net income tax in half. The city will be able to do that, she said, once it able to take advantage of more than $400 million in annual savings after the pension fund becomes fully funded, which is projected to happen around 2032. If Parker runs for and wins a second term, that would be near the end of her tenure.

Parker also wants to resume the city’s long-standing policy of adopting small annual cuts to the much-maligned wage tax. For next year, her proposal calls for the wage tax rate to be cut from 3.75% to 3.74% for residents and 3.44% to 3.43% for people who live outside Philly but commute into the city.

Parker this year is also proposing eliminating the city’s 1% tax on construction and increasing the real estate transfer tax from 3.278% to 3.578% of the sale price or assessed value of a property. She framed both of those moves as part of her new housing initiative.

New spending on public safety

Parker proposed doubling down on spending to support crime-fighting citywide and her administration’s efforts to end open-air drug markets, framing her ask as a continuation of her first-year priorities.

One of the biggest expenses is nearly $300 million in proposed new funding over the next five years to continue construction and operations at the Riverview Wellness Village, her administration’s new city-run rehabilitation housing for people recovering from drug addiction. The recovery house is a key pillar of her plan to address the opioid crisis in Kensington.

Parker touted that her administration opened the facility in January, just a year into her term.

“We did not have time to wait,” she said. “We are in the middle of a humanitarian crisis, and we acted with urgency, focus, and a plan.”

The mayor also proposed directing $67 million to build and operate a new police forensics lab and announced the location publicly for the first time Thursday. The new facility will be located in University City at 4101 Market Street in a burgeoning life sciences corridor.

Officials have long said that replacing the city’s current crime lab, which is undersized and outdated, will allow for law enforcement to solve crimes faster and build stronger cases.

”We’re embracing technology to improve our performance,” she said. “The police department will move forward with a new forensics lab to assist the force with forensics investigations to help solve crime.”

Year-round schooling expansion

Parker also said her administration is planning to expand the so-called “extended-day and extended-year” program by adding 15 more schools — 10 traditional district and five charter. It wasn’t immediately clear which schools will be added.

On the campaign trail in 2023, Parker, a former teacher, made “year-round schooling” one of her signature policy proposals. For the current school year, she and Superintendent Tony P. Watlington launched a pilot program for 25 district and charter schools to provide before and after-care, remain open during winter and spring break, and offer six-week summer programs.

“Study after study shows that these programs matter greatly when it comes to children’s educational development,” she said.

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(Staff writer Jake Blumgart contributed to this article.)

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