Federal cuts, staffing struggles, homeless services: Philly City Council probes Mayor Parker’s $6.7B budget proposal

President Donald Trump’s administration has terminated a $1 million environmental justice grant for Philadelphia’s Office of Sustainability, city officials said Tuesday, providing new details on what is so far the only federal grant canceled during Trump’s second term that directly affects the city government.

The grant is a drop in the bucket in the context of a city that spends more than $6 billion a year through its general fund budget and more than $11 billion across all funds, including self-sustaining funds like the aviation department, which oversees city airports. But Philadelphia received a total of $2.8 billion in federal funds in 2024, and Mayor Cherelle L. Parker’s administration is bracing for additional cuts.

The uncertainty over federal funding is likely to loom large over this spring’s city budget negotiations, and City Council members on Tuesday questioned whether Parker’s ambitious plans, including cutting taxes and borrowing $800 million for a new housing initiative, are the right strategy for the moment.

» READ MORE: Philly’s budget negotiations, explained in four charts

“We are starting this budget process with every finance expert citing uncertainty regarding the federal budget, and we have seen the Trump presidency emboldened by the work of the billionaire Elon Musk to quickly target and dismantle federal agencies,” Councilmember Kendra Brooks, a member of the progressive Working Families Party, said on the first day of Council’s nine weeks of budget hearings.

Brooks questioned “why the administration is asking Council to codify 17 years of tax cuts into law” — referencing Parker’s proposal to set a long-term schedule for city wage and business tax cuts — given the uncertainty of federal aid.

Meanwhile, Councilmember Isaiah Thomas, a more moderate Democrat who supports tax cuts, questioned whether the city was spending too much money given the federal landscape.

“We’re looking to spend a lot of money, a lot of spending this year,” Thomas said. “Looking at tariffs, looking at cost of goods, looking at what you want to do around housing — does it fit the moment that we’re in?”

Parker is hoping to toe a line that will allow her to prevent her agenda from stalling while also demonstrating that the city is prepared to handle whatever comes out of Washington. She has sought to steer clear of combative rhetoric that might draw Trump’s or Musk’s ire, and she included a $95 million reserve to deal with federal cuts in her proposal for the next city budget.

» READ MORE: Mayor Cherelle Parker pitches her $6.7 billion budget plan as Trump’s ‘grave’ threat to cut aid to cities looms

City Finance Director Rob Dubow on Tuesday acknowledged that amount wouldn’t do much to help the city weather severe cuts, but he said it could help temporarily continue individual grants facing elimination. He noted the mayor’s proposed budget also includes other reserves such as the $514 million fund balance, which is the amount intentionally left unspent in the budget to help the city navigate unforeseen shortfalls.

“We’re trying to do those things to steel ourselves against what may come, while also not abandoning needed investments … to keep the city moving forward,” Dubow told lawmakers at the hearing, adding that the city is “not being caught flat-footed.”

Trump has threatened to cut off all funds to so-called sanctuary cities, including Philadelphia, that decline to assist in federal immigration enforcement. And earlier this year, he temporarily froze all federal grants.

City Solicitor Renee Garcia said the chaos of the second Trump “is teaching me patience,” noting that federal funds appear temporarily frozen at unpredictable intervals and that many of the president’s attempts to cut various funding streams get tied up in courts.

“Sometimes at 8 a.m. we can’t draw down funds, but at 8 p.m. we can,” Garcia told Council. “They do something. There’s a lawsuit. There’s an injunction. The money starts flowing.”

Here’s what else happened on the first day of budget hearings.

The Parker administration has installed a new leader of the office of homeless services and vowed to clean up operations after the agency overspent its budget for several years in a row, but funding to the department is likely to face continued scrutiny from Council this spring.

The biggest question that went largely unanswered Tuesday is why the administration appears to be proposing a $5 million cut to the agency’s budget for the next year compared with its current $88.7 million allocation.

”I’m challenged to understand how we can deal with increases in homelessness by chopping the OHS budget,” said Councilmember Jamie Gauthier, a Democrat who represents parts of West Philadelphia.

Tiffany Thurman, Parker’s chief of staff, insisted “the budget was not cut” but did not elaborate.

Budget Director Sabrina Maynard said only that “there was some funding that was not needed,” and that she would follow up at a later time.

The decrease is entirely in the office’s fund for outside contracts, which makes up a majority of its budget. The OHS pays third-party agencies and nonprofits to house the homeless, and it was those contracting processes that led in part to the department overspending about $15 million in the aftermath of the pandemic.

Cheryl Hill, the office’s new executive director, sought to reassure Council that eradicating homelessness is one goal of the mayor’s $2 billion housing plan, which she unveiled to lawmakers Monday during a special session.

» READ MORE: Mayor Cherelle Parker unveils housing plan amid Trump’s federal funding cuts and Council skepticism

”We can end homelessness in Philadelphia, and that is our intent,” Hill said. “We’re looking at our processes. We’re looking at the services that we provide, and making sure they’re the right ones for the people who are unhoused in Philadelphia.”

Several Council members asked Parker’s top staff to explain why the city has a continued, yearslong short-staffing problem, which spans departments across the municipal government and is most acute in public safety agencies.

Administration officials said they have made incremental progress, bringing the government-wide vacancy rate from 19% last year to 17% as of this month. That’s still nearly 5,800 unfilled jobs across the workforce of more than 20,000, said Candi Jones, the city’s director of human resources.

Jones said the Parker administration’s efforts to recruit potential employees have led to an increase in applications for city jobs, jumping from 53,000 in 2023 to more than 60,000 last year. Administration officials said they have hosted two job fairs aimed at hiring federal employees who recently resigned or were laid off by the Trump administration.

Councilmember Jim Harrity, a Democrat who represents the city at-large, questioned why so many jobs remain open if tens of thousands of people have applied to work for the city.

Jones said that hiring is only slightly outpacing attrition, and that the city is losing about 3,000 workers per year to resignations and retirement.

”We’re looking at our tremendous recruitment efforts. We’re looking at new hires. But we are bleeding out,” Jones said. “Our recruitment efforts are not for naught. We are getting there. But we also have to, where we can, address our separations.”

City unions have said that Parker’s unusually strict policy requiring all city employees to work in person five days a week — which the mayor implemented last year after surviving a court challenge — is an impediment to recruitment and retention.

Many of the vacancies are concentrated in the city’s public safety agencies, most notably the prisons department, which has a 42% vacancy rate, according to a recent report by the Pennsylvania Intergovernmental Cooperation Authority. The vacancy rate is 30% in the sheriff’s office, and 16% in the police department.