Global Crisis/Innovation Blog

You Must Be From Philadelphia, If Your Budget is Balanced:

How Mayor Michael Nutter Tackled the Deficit, And What Obama Could Learn

By Shlomo Maital


Philly Mayor Michael Nutter



 There is a huge number of Philadelphia jokes:  “You must be from Philadelphia, if… you can sleep soundly through gunshots in the neighborhood; … you visit New York and notice how clean it is… you can’t eat fries without Cheeze Whiz….you find street people greet you by first name.”

  Here is a new one.  You must be from Philadelphia…if your city budget balances.  It’s no joke. Mayor Michael Nutter, elected a few months before the US economy crashed in 2008, has done what President Obama, the Governor of Wisconsin California and other states, and many mayors, have failed to do – achieve budget balance.

   How?  Simple.  Read the numbers, diagnose the problem, and take prompt action before the problem becomes unmanageable.  Accept the political pain and protest, and do what is right.    

   Here is the Mayor’s story, in his own words, as told to the BBC World Service’s Adam Brooks (“Americana” program):  “In August  2008, my chief of staff and finance director,  told me, “Mayor, we have a problem, noticing that all of our revenue sources are starting to decline”.  We knew we had to take immediate action, to make sure we did not run out of money, so we took immediate steps to slow down spending. People were shocked.  We acted on the Thursday, before the weekend Lehman Brothers collapsed. In the following week, every day, a major financial institution went out of business or showed signs of weakness.  There was fear and uncertainty.  Nobody knew what was going on. In October we announced a projected deficit number:   $650-$850 m. and growing!   We needed to close the gap between income and spending immediately. We moved early and fast.  We did layoffs. We eliminated some services.  In the interim, we had 8 town hall meetings, each with 400-500 people, they screamed at us for 2.5 hours, how bad we were, how stupid we were, cutting services, raising fees,  people losing jobs…  it was a very bad environment. People were angry and scared, that is a toxic combination.  People love service, they hate paying for it.  Irrationality? Sure.  We found ourselves:  raising taxes, cutting services, this was a double hit, doubly toxic.  Worked? Yes!   Popularity has suffered.  The moment you try to change things, your popularity erodes.    What we’ve done can be done by other US cities.   Be strategic,  be willing to take a lot of grief, but you also have to lay out your vision for where you’re trying to go.  Where there is no vision, people perish. (The Book of Proverbs).   We made hard choices, strategic investments, showed where we can go: it worked.  A City has to be run like a business.  We have 22,000 employees, $4 b. budget!   I lose sleep over Washington, what they’re doing, what they’re not going, I  want to see more civility, more reality, less political rhetoric,  because after you get elected, you have the responsibility of governing…I want people to be more serious about their responsibilities as elected leaders, to take on the tough challenges, stop playing to the crowd, make hard decisions, and move on.!”

  Barack Obama, are you listening?