The clock is ticking for Philadelphia as Pennsylvania House members are set to amend and vote tomorrow on a bill to help the city balance its fiscal 2010 budget. However, the measure may not pass the legislature in time to avoid layoffs of 900 police officers and drastic service reductions.

House members plan to amend HB 1828, which would send the initiative back to the Senate.

The upper chamber does not plan to meet again this week after today's formal session, according to Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi.

"We understand the time pressures, and we will look to move quickly if the House sends the bill back to us, but at this point we don't have any plans to be in session for this week beyond [today]," Arneson said.

Meanwhile, the Pennsylvania Intergovernmental Cooperation Authority, which oversees Philadelpia's finances, plans to vote Friday on the city's alternative budget, called "Plan C," unless lawmakers pass HB 1828 before then.

The bill would boost the city's sales tax to 8% from 7% for five years and allow it to defer $235 million of pension contribution payments this year and next.

Approval of the initiatives would stave off Plan C, which includes roughly 3,000 layoffs and $250 million of spending cuts in fiscal 2010. The alternative budget would also reduce the city's five-year operating budget by $700 million.

Fitch Ratings analyst Christopher Hessenthaler said its negative watch on the city's rating is pending the outcome at the state level and how Philadelphia addresses the legislative fallout.

"We're certainly aware that Plan C is out there and that it involves pretty draconian cuts and service reductions, but the flip side to that is management would be doing that in order to balance its budget absent the pension deferrals and the sales tax," Hessenthaler said. "So, we certainly would be looking at what the city is doing and making a decision based on that."

Fitch and Standard & Poor's rate the city BBB-plus, with Standard & Poor's extending its stable outlook. Moody's Investors Service rates Philadelphia Baa1 with a negative outlook.

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