(1) It shall be the duty of the Council, at least thirty days before the end of the fiscal year, to adopt the annual operating budget ordinance for the next fiscal year. The consideration of the operating budget ordinance shall begin forthwith upon the receipt from the Mayor of his annual operating budget message and the proposed annual operating budget ordinance, both of which shall be submitted in printed form. The proposed budget ordinance shall be regarded as having been introduced immediately upon its receipt.

(2) The annual operating budget ordinance shall provide for discharging any deficit and shall make appropriations to the Council, the Mayor, and all officers, departments, boards and commissions which form a part of the executive or administrative branch of the City government, and for all other items which are to be met out of the revenue of the City. All appropriations shall be made in lump sum amounts and according to the following classes of expenditures for each office, department, board or commission:

(a) Personal services;

(b) Materials, supplies and equipment;

(c) Debt service;

(d) Such additional classes as the Mayor shall recommend in his proposed annual operating budget ordinance.

Expenditures for the repair of any property, for the regrading, repaving or repairing of streets, and for the acquisition of any property or for any work or project which does not have a probable useful life to the City of at least five years following the time the expenditure is made for it shall be deemed to be ordinary expenses to be provided for in the annual operating budget ordinance. Appropriations for the use of any departmental board or commission shall be made to the department with which it is connected.

(3) The Mayor's estimates of receipts for the ensuing fiscal year and of surplus or deficit, if any, for the current fiscal year may not be altered by the Council.

(4) In every annual operating budget ordinance:

(a) An amount at least equal to one-half of one per cent of the aggregate of all appropriations for compensation to City employees in the civil service shall be appropriated for the work of the Personnel Director and the Civil Service Commission;

(b) The amount appropriated to the Auditing Department shall be adequate to enable the City Controller to perform the duties of his office and of the Auditing Department. Should the Council fail to make an adequate appropriation to the Auditing Department, the City Controller may petition any Court of Common Pleas of Philadelphia County for a mandamus to the Council to perform its duty under this section;

(c) Provision shall be made for the payment of compensation to certified public accounting firms for consulting services which may be rendered to the Auditing Department with regard to the manner in which the affairs of the various offices, departments, boards, commissions and other agencies receiving appropriations from the City are audited by the Auditing Department;

(d) Provision shall be made for the payment of compensation to a firm of certified public accountants to make an audit of the expenditures of the Auditing Department. The Council shall, by separate ordinance, name the firm of certified public accountants to be engaged for this purpose.

(5) At least once in three years provision shall be made for the payment of compensation to a firm of certified public accountants to make an examination of the manner in which the Auditing Department performs its auditing duties. The Council shall, by separate ordinance, name the firm of certified public accountants to be engaged for this purpose.

(6) The annual operating budget ordinance may be amended after its passage to authorize the transfer of items but the aggregate of the appropriations made by it may not be increased and transfers of budget items may not be made during the last four months of any fiscal year, except upon the recommendation of the Mayor.

ANNOTATION

Sources: Act of June 25, 1919, P.L. 581, Article XVII, Sections 1 and 2.

Purposes: 1. This section requires the annual submission by the Mayor of a consolidated budget of all the operating expenditures of the City and its enactment by the Council at least thirty days before the end of the fiscal year. This will fix by one legislative act the expenditures for each ensuing fiscal year. To expedite the budget process, it is required that the Mayor, who is responsible for preparing the annual operating budget ordinance in the first instance, shall submit it in printed form and that the budget ordinance shall be regarded as having been introduced upon its receipt. The Mayor is to submit together with the budget ordinance his budget message which will justify in general terms his proposed budget. He may also submit with these two documents a detailed breakdown of the appropriations requested.

2. This section, by prohibiting the line type of budget ordinance heretofore customary, is intended to prevent the Council from assuming through its appropriating power the administrative functions of City government. All appropriations are to be made in lump sum amounts according to certain fixed broad categories and such additional categories as the Mayor may indicate. Appropriations are to be made by such categories to offices, department, boards and commissions which will, subject to the direction and control of the Mayor and the Director of Finance (Section 8-102), decide how money within any category is to be spent for the purposes designated by that category. How many persons are to be employed, how many automobiles are to be purchased, and similar questions of administrative policy will be determined within overall appropriation limits by the executive branch and not the Council.

3. Certain types of so-called capital expenditures are of a recurring nature and have in the past come out of capital funds. This has resulted in unnecessarily increasing the debt of the City. The Charter requires that such expenditures shall be met, as they should be, out of annual operating appropriations and thus out of current revenues.

4. Appropriations are guaranteed for certain important purposes. In view of the inadequate appropriations heretofore made for civil service purposes, a minimum amount is required to be appropriated annually to the civil service so that this work may be properly planned and staffed. For comparable reasons, the Auditing Department is guaranteed such funds as are to be adequate for its work; it was not deemed practicable to state an amount in terms of a percentage of the annual budget as in the case of the civil service. However, should Council fail to provide an adequate sum, the Controller is authorized to mandamus Council to give it to him.

The Auditing Department is given the right in the Charter to engage certified public accountants to advise it. Section 6-403. The requirement is imposed that provision shall be made to provide compensation for such services to make certain that the Department shall be able to exercise this right.

The budget must also provide funds for the auditing by independent accountants of the expenditures of the Auditing Department. The auditors for this purpose are to be appointed by the Council by separate ordinance.

5. At least once in three years Council is to provide funds and to name by separate ordinance a firm of certified public accountants to examine the manner in which the Auditing Department performs its duties. It was deemed too expensive and unnecessary to require that private certified public accountants must annually audit all the agencies of the City. Yet experience has shown that some amount of independent auditing procedure is necessary. A triennial audit of the way the Auditing Department is performing its functions, was deemed minimal to meet the need. In the course of such an audit, if the independent certified public accountants find it necessary to see the books of any particular agency, authorization is found for such examination. See Section 6-404.

6. Subsection (6) is intended to serve as a check on the present practice of transferring items of the budget at the end of the fiscal year. Some agencies, finding at the end of the fiscal year that they have surplus funds left under certain items, have from time to time requested and received authorization from the Council for spending those surpluses for other purposes. This sub-section prohibits such transfers during the last four months of any fiscal year except upon the recommendation of the Mayor.

7. Subsection (3) is intended as an aid to balancing the budget. It prevents a situation whereby the Council and the Mayor differ on receipts for an ensuing fiscal year, and surpluses and deficits for a current fiscal year. Under this sub-section, the Mayor's estimate would be binding upon the Council. With these estimates fixed and with appropriations determined, Council will know what amount must be raised to balance the budget.