Respond to Councilman -- Finish what you were laying out to Councilman DiCicco. What is this new-found mechanism to hold the government responsible and accountable to implement this plan?
Well, I think some kind of an implementation committee -- I mean, committee that would be set up that...
Implementation committee. Go ahead. An implementation committee. Another committee. COUNCILMAN DiCICCO: Mr. Schwartz, another committee for another year? This is typical Philadelphia, you know. We just don't have the guts, if you will...
Chutzpah. COUNCILMAN DiCICCO: ...to take... Thank you, Councilwoman Tasco, but I won't 541 Whole - 5/12/04 - Operating Budget repeat that for the record. I read your lips quite clearly. ...to take the initiative to make the bold, dramatic steps to get something done. (Mr. Schwartz began speaking simultaneously with Councilman DiCicco, not reportable.)
I'm talking about -- COUNCILMAN DiCICCO: And I've said this and I -- If we do not do something, we will continue down that path of a slow but sure death as a City. There's no reversing it. We have come to that realization in the eight years that I've been here, even with the incremental wage taxes, which I know you didn't support back in 2002. But we've seen some gains in those collections. Some people say it's only because of salaries that have been increased. But we did send a signal. Even with our best efforts that we've done to date, 542 Whole - 5/12/04 - Operating Budget nothing has really been a dramatic, a dramatic way in which we've addressed tax reform, until this Commission report was put forth. There's just... For me it's very simple. We either do it or we don't. Because we could sit her until the cows come home and debate on all these other issues. We're either going to do it or we're not. And I do understand where Councilman Nutter and Councilman Kenney are coming from. As the Chair of the Commission, it was shocking for me to hear your testimony the other day, after having -- and as my colleague, Councilman Nutter, so eloquently described, your public statements over the last few months, the day of the hearing to -- It does seem like it's a submarine job to me --
Well -- COUNCILMAN DiCICCO: -- with no 24 disrespect to you, but that's what it sounds like. 543 Whole - 5/12/04 - Operating Budget
Well, it may sound like that. COUNCILMAN DiCICCO: And if it walks like a duck, quacks like a duck --
-- the whole -- this Commission discussed as the framework for this, it is entirely consistent with the nature of that discussion. It was the center of that discussion. What could we do to be sure that it was affordable? I would also say that I -- COUNCILMAN DiCICCO: Sorry to interrupt. If the discussion was centered around what you're saying -- and I believe that -- a decision was made to put forth a list of bills or recommendations for tax reform. It's good that you discussed these 544 Whole - 5/12/04 - Operating Budget things, and we appreciate that. But your ultimate decision was a tax reform package.
Yes. And I -- COUNCILMAN DiCICCO: What's happened to go back --
I am acknowledging -- COUNCILMAN DiCICCO: -- into that discussion again?
I am acknowledging we're back to the first thing I said. COUNCILMAN DiCICCO: We're back to square one.
And I would take some responsibility -- No, I don't think we're that far back. COUNCILMAN DiCICCO: Well, to me it is.
I mean, I am acknowledging that there was not a discussion of legislation.
Point of 545 Whole - 5/12/04 - Operating Budget information.
It was a requirement of the Commission, Mr. Chairman. It was required in the legislation that you put forward in the Charter change. It was required that you put forward legislation.
No, no, no, no. 19 There was not a discussion of the particular bills here by the entire Commission. This issue was not --
They were 546 Whole - 5/12/04 - Operating Budget printed. They came --
You gave us three volumes, they're in the bills, you gave me a disk, the bills got introduced. It was a requirement of the work.
And what you discussed or what you didn't discuss, that's your business. You Chaired the Commission.
I just have one question. When Councilman Kenney read you the point about the tax reform has to go forward in spite of any cuts -- and you said you believe that -- what did you expect?
I mean, if you said, well, if we want to go forward and there has to be -- might have to be cuts and expend -- So what did you expect when 547 Whole - 5/12/04 - Operating Budget you had to make the cuts?
Well, I think it's a matter of the level of cuts and where --
Whoa, whoa, whoa. I mean, we're not talking about -- You want to make it all or nothing, fine. It's not all or nothing. You look at a real budget and see what the real situation is.
Would you like to have a little bit of an expenditure, a middle bit expenditure or a lot --
I mean, at what point would cuts be acceptable, if you're 548 Whole - 5/12/04 - Operating Budget saying it's okay that we move this forward, in spite of the fact that there will be cuts?
I don't think anybody I know anticipated that we would have a budget that would cut departments facing us as a City...
And as Councilman Nutter says, a whole month, almost two months later, all of a sudden it dawned on you that there were going to be cuts?
Two months later -- 549 Whole - 5/12/04 - Operating Budget
Whoa, whoa, whoa. During the two-month period that we're talking about, I spent most of my time pushing the Administration to include as much of the agenda that I could push them to include, despite all of those cuts. That's the way I spent from March to May. Whether it was -- and single factor apportionment was one, and there were two or three others, and there were conversations along those lines. The only... The change occurred when, in fact, a decision was made that we would now operationalize the schedule of tax reductions over a five-, ten-year period. And you asked me what I thought the alternative was. Maybe you don't think it makes any sense. But that was my commitment. I sat here for seven years, you know, during -- I mean, in and out of the place, during which time a debate over building a new Convention Center was 550 Whole - 5/12/04 - Operating Budget occurred. And it was absolutely clear that until a Convention Center was built, that we would not have expansion of tourism. That took about five or six years. And I have been through other things in my life that have taken a long time. To me, what this plan does, is to provide benchmarks and schedules, whether they're enshrined in law or they're there. And if you're serious about it, you take those seriously; and I do.
Well, we are very serious about it. The only problem is, as you've laid it out, there's no 17 implementation date because you've got to have the perfect storm of fiscal environment before you can do anything. And as you well know --
I just don't accept -- 551 Whole - 5/12/04 - Operating Budget
I don't accept the reality that you're painting. You're saying a perfect storm. I don't think we need that. But at the other extreme, a $288 million additional contribution of the pension --
And Mr. Schwartz, what's the total amount of spending or the total amount of City budget over that same five-year period? You keep talking about $288 million. What's the City's budget presently?
No; I don't think that's relevant. I think the $1 billion we receive from Harrisburg and other levels of government are not affected. $930 million -- 552 Whole - 5/12/04 - Operating Budget
Fine. However you want to narrow it. However you want to narrow it down. But it is our City budget. It is what we ultimately end up spending. But even in the narrow case, if you want to have a billion and a half dollar discussion, what's a billion and a half times five?
Okay. $288 million. It's 7.5. $288 million, $7.5 billion of spending. So, I mean, if you're going to give the first part of the answer, give the second part of the answer as well. We don't need to jerk each other around here. Let me ask you this question. You mentioned earlier... You made reference on 553 Whole - 5/12/04 - Operating Budget a couple of occasions you work on... What is it called, the Citizen's Guide to the Budget?
I did a one-year report. I guess the work that I'm doing -- Last year I did the Tax Reform Commission.
Is it a part of any City obligation or City contract work 554 Whole - 5/12/04 - Operating Budget that you have?
I work with the City on... I've had a housing project involving helping neighborhood groups connect to various departments. And I do work in relation to the internet, and help neighborhood groups and citizens get contact with elected officials and one another around issues of concern to them. And I do a web site. And I do a neighborhood page for the City web site. Those are the two things I do for the City.
I'm sorry. Say that again. You help people connect to the government?
Yeah. Any given day we have about 1200 people on an e-mail list that connect to each other about how to solve problems like, there's trash in my block or what's going on with the schools. There's a web site called 555 Whole - 5/12/04 - Operating Budget phillyneighborhoods.org which is visited by about 10, 15,000 times a month, that provides people with access to information that's relevant to their understanding of the City government.
If someone's trash didn't get picked up, why wouldn't they just either call the Streets Department or call a Council member's office or someone?
Well, as it happens, it's been extraordinarily helpful to people to be able to connect with one another around these concerns, and to connect with the Streets Department online. And many of them have gotten a lot of results from the work that we've done. And in fact, many of --
Well, wait a minute. If you wanted to connect to the Streets Department online, wouldn't you just go to www.phila.gov --
-- and check on 556 Whole - 5/12/04 - Operating Budget the Streets Department?
Well, except that until I did the neighborhood page for that page, there was no -- for that -- for the City's web site, there was no easy one-stop shopping there for all these neighborhood concerns.
All right. Let's go back for a second. The Citizen's Guide to the Budget --
-- this was an old project, but you don't do it any more.
All right. But presently you have a contract with the City of Philadelphia, based on internet issues 557 Whole - 5/12/04 - Operating Budget and neighbors connecting to each other.
And by the way, that was offered to me as a contract by the previous Director of MOIS, and had been in discussion even in the previous Administration.
Well, the specific contract with MOIS has been two years. The funding for it, the activity, was about three. But at the very beginning of the term, as Brian Anderson was leaving, he wanted us to do this as part of his revamping of the City's web site. There were other staff people there who were for it. So at that point it 558 Whole - 5/12/04 - Operating Budget became a question -- Even a letter of commitment was put out, and then it was a question of whether -- where the money would come from.
Okay. Does it cause you any, I guess, either concern or sense of any potential feeling of conflict to be in a situation where on the one hand you're on the Tax Reform Commission, you're advocating what you're advocating at that time, you're off the Commission and simultaneously performing contract work on behalf of the City?
Doesn't that put you in a potentially compromised situation at times?
Well, it's something I think about a little, but I -- I -- I don't have to speak, you know?
I don't have to speak. If I choose not to speak on something, I don't. In other words, 559 Whole - 5/12/04 - Operating Budget because --
Well, I understand that. But I mean, from time to time you must... I'm assuming because you love the work that you do, you must have some concern about the continuation of the contract. You must have to talk to someone from time to time about the contract.
Yeah. And I'd like to think that the basis -- And so far the basis of those discussions has been that work and how well it's going, and how many people we're serving, and the value that we're providing. There's been no other discussion about that.
Okay. Let's go back to some of the meetings and discussions about the current situation. Who specifically do you talk to or have you been talking with, with regard to the TRC work, 21st Century Review Forum, and then this interim period, as I've described it, between the press conference on the 15th and your testimony on the 10th. 560 Whole - 5/12/04 - Operating Budget When you talk to the Budget Office or people in the Administration, who do you talk to?
The regular conversation and for information is with Rob Dubow.
Okay. Do you ever talk about the budget with the Mayor?
(Pause.) No, not directly, no. Not really, since the 21st -- The last direct conversation I had with the Mayor was --
What do you mean not directly? Do you speak through someone?
Well, in other words, not in the same room. No. And even with 561 Whole - 5/12/04 - Operating Budget Joyce, I really don't have any connection this.
Okay. Let me ask this question: With regard to what your view is, do the couple things that have been mentioned that the Mayor has laid out, what would be the savings to the average Philadelphian by implementing the proposals that you're prepared to support?
You mean in the City budget or... You mean, in the City budget or for the average citizen?
You have proposed that there be a limited implementation of the many recommendations of the Tax Reform Commission. And so, in that context, for what you're prepared to support, those items are?
Let me just say, in the first year, which is what I was looking at, the City is short by about -- 562 Whole - 5/12/04 - Operating Budget
That was what was in my thinking. And there were two items that are not included in the Administration's response to the first-year agenda.
The first one is that the wage tax reduction in the Administration's plan is short of what we proposed. And I did inquire as to how much money, in turn --
The Administration doesn't have a proposal, as 563 Whole - 5/12/04 - Operating Budget it relates to the wage tax, other than pushing back the July 1 cut to January.
No, but there's a -- there's a regular schedule of wage tax reduction. And what I looked at is, if we simply follow --
I am aware of that. Whoever put them in. Right now there is a regular schedule of wage --
I understand that, but we don't need to talk about that --
-- nor is it a part of the Mayor's proposal. 564 Whole - 5/12/04 - Operating Budget
No. The TRC proposal included our own schedule for wage tax reduction.
So the question of whether the TRC plan had an imprint on this was whether or not the Administration, and Council accepted that schedule as the basis for what you're going to put into this year's law. And the answer is -- Whatever you do, the answer is, the Administration's proposal does not include that. That to me --
It does not correspond to what the Tax Reform Commission said that the schedule ought to be.
It's about... A small -- small difference in percentage. I 565 Whole - 5/12/04 - Operating Budget don't remember exactly.
All right. Well, why don't we make sure, as we're going through this --
Why don't we make sure what proposals are being proposed for the first year.
The other one that was far more significant, it seems to me, is the permission of partnerships, to deduct the cost of their employees from paying tax. And as I understand it, we are -- the business taxes were less familiar to me than the others, so I've had to play some learning here. But I think we were -- we are proposing that there's a -- that 50 percent of that be done in the first year. And I did ask --
Is the average Philadelphian a partner in a -- 566 Whole - 5/12/04 - Operating Budget
No. I think we were talking about a three-tiered program. And frankly, the cuts -- You're talking about jobs. The reductions in taxes for business would have been extremely, ironically, given my history, extremely important to me. We did not make a significant set of proposals beyond the wage tax reduction, in the wage tax field for individuals. And the other recommendations we made all revolve around real estate taxes. And those recommendations, it seems to me, are being pursued by the City-wide assessment. And they include the land tax. And as I testified here, I favor moving this year on the land tax incrementally.
Those are the things 567 Whole - 5/12/04 - Operating Budget that were in our first year.
Let's get back to the question. So for the average Philadelphian, excluding the schedule that is already in place for wage and business taxes, because I don't think you get to take any credit for that, the proposals that are out there support the Governor's tax reduction plan which will happen or not happen, aside from whatever we do, single factor apportionment probably won't affect many average --
-- many average Philadelphians. Property tax assessment, to clean that up, which actually won't go into effect for two years, and the land value tax, what's the financial impact in the pocketbook of the average Philadelphian as a result of those proposals?
Not -- Well, the land tax ultimately will be helpful to a lot of people, and the assessment reform that we 568 Whole - 5/12/04 - Operating Budget would --
But -- But the proposals, in fact, lead to a minimal kind of benefit. The major benefit in the first year really, it seems to me, is for the business taxes. And that, I think, if you did both of the thinks -- Well, even the single factor apportionment, I think, is significant.
-- with a lot of law firms kind of downsizing and moving out -- 569 Whole - 5/12/04 - Operating Budget
Why don't we conclude with this: So now that it's clear that, notwithstanding what all the reports say, that you have a ten-year plan, your view is that you would do things on a year-by-year basis. What, from your perspective, in your mind's eye, what should happen to the 10 bills proposed by the Tax Reform 11 Commission? 12
I don't even -- I 13 would say -- I -- I haven't looked at the exact number. I would pass many of them. Those are the two bills that I... I -- The bills that, in fact, mandate legally the -- the schedule of reductions are the ones that I have the most problem with. And then there are a couple of bills that do reflect specific issues where --
You know, I might even agree with members of Council and disagree with the Administration, that they 570 Whole - 5/12/04 - Operating Budget ought to be passed.
I promise this will be my last question. Is your concern that, for instance, the wage tax bill, 040009, is what you're really concerned about that if this bill were to pass, and it has a schedule, is it your concern that the members of this body, in the face of information that may indicate a need to either stop the next year's cuts or take some other action, is it your concern that City Council members just won't have the guts to do that?
No, it's not my concern. It's not a matter of guts, Councilman, because it would be rational. My concern -- Let's go back to the first exchange -- is that we have a $288 million additional pension requirement which I think is significant, as I look at it from the --
And we are already cutting departments after department, to a level that people are coming in here --
-- the first part of your testimony, about the spending over the last four years.