City of Philadelphia Achieves Record $1.19 Billion Fund Balance Amid Unprecedented Fiscal Uncertainty

PHILADELPHIA - The Parker Administration announced today that Fiscal Year 2025 (FY25) ended with a $1.187 billion fund balance, the largest in the City's history. This strong fund balance, highlighted in the City's FY25 Annual Financial Report, reflects the Administration's commitment to fiscal health. While the Administration recognizes that some budget items may not recur, the robust fund balance positions the City to proactively address both current and future challenges.

"As this fund balance demonstrates, nothing is more important to my Administration than our fiscal health," said Mayor L. Cherelle Parker. "Without fiscal health, we cannot accomplish any of our goals to make Philadelphia the safest, cleanest, greenest big city with access to economic opportunity for all."

The strong fund balance will help the City navigate future challenges such as:

• Changes in federal policies that create threats both to the billions of dollars in federal grants that the City receives and to the roughly one billion dollars in Wage Tax revenues received from educational, medical and government employees.​
• Budget impasses at the state and federal levels that could create a cash crunch for the City within a couple of months.
• Uncertainty in the economy that appears to be slowing the pace of job creation, which is particularly challenging for a city like Philadelphia that is reliant on a wage tax.​
• Labor costs from the three remaining labor arbitrations the City must conclude. The City's labor reserve is completely depleted and cannot fund the costs of the outstanding arbitrations.​

• Key Philadelphia Taxes Exceed Projections: Tax revenues, primarily Business Income and Receipts Tax (BIRT), Net Profits Tax (NPT), and Realty Transfer Tax (RTT), came in higher than expected. The BIRT and NPT are highly volatile and can swing dramatically from one year to another, and the RTT was likely elevated because deals were closed before the change in the tax rate went into effect in Fiscal Year 2026 (FY26).​
• City Reduces FY25 Obligations by $251 Million: Obligations are $251 million lower than the most recent FY25 year-end estimate. ​This is driven in large part by the $95 million Federal Funding Reserve reverting to the fund balance, as well as underspends in personnel costs, mainly caused by employee vacancies. The Parker Administration plans to reestablish the federal funding reserve and is taking steps to address the vacancy issue. It has added 1,238 General Fund positions since the beginning of the Administration, marking a meaningful reversal of this trend. ​
• One-time COVID Relief Funds That Have Been Spent: The $1.4 billion in ARPA funds the City received allowed it to avoid devastating cuts while making crucial investments and building a fund balance using other revenue streams. All ARPA funds were spent by the end of calendar year 2024 as required by federal law. FY26 marks the first fiscal year without this crucial federal support.