COUNCIL OF THE CITY OF PHILADELPHIA2 COMMITTEE OF THE WHOLE - - - Room 400, City Hall4 Philadelphia, Pennsylvania Monday, April 18, 2011, 10:18 a.m.5 - - - RES. 110161 - Five-Year Plan BILL 110135 - Capital Program 2012 through 2017 BILL 110136 - FY 2012 Capital Budget BILL 110137 - FY 2012 Operating Budget BILL 110138 - Wage Tax Bill 12 13 COMMITTEE MEMBERS PRESENT:14 Anna C. Verna, Chair15 Marian B. Tasco, Co-Chair Jannie C. Blackwell16 Blondell Reynolds-Brown Darrell L. Clarke17 W. Wilson Goode, Jr. Bill Green18 William K. Greenlee Curtis Jones, Jr.19 Brian J. O'Neill Frank Rizzo20 Marian B. Tasco 21 - - - 22 23 24 25 2 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371
Good2 morning. Sorry for the delay.3 This is a continued public4 hearing of the Committee of the Whole. I5 would ask Mr. McPherson to please read6 the bills.7 MR. McPHERSON: Resolution No.8 110161, Five-Year Plan;9 Bill No. 110135, the Capital10 Program, Fiscal 2012 through 2017;11 Bill No. 110136, the Capital12 Budget for 2012;13 Bill 110137, the Operating14 Budget for 2012; and15 Bill No. 110138, the wage tax16 bill.17 And we're taking testimony18 today on Bill No. 110137, the Operating19 Budget for Fiscal 2012.20 (Witnesses come forward.)21
Good morning.24 COUNCIL PRESIDENT VERNA:25 3 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 Please identify yourself for the record2 and proceed with your testimony.3
19 And joining me here today are20 representatives from those divisions, and21 they'll be able to answer questions. 2 billion for2 Finance; that's an increase of about3 $41 million over our FY '11 estimated4 obligations. 9 million. 20 Our proposed budget includes21 about a billion in Class 100 Funds;22 that's an increase of almost $43 million23 over estimated FY '11 obligations. 5 million in Class 20011 funds is an increase of $730,000 over12 FY '11 estimated obligations. 17 The increase is due to a18 $450,000 increase in the Defenders'19 contact and a $280,000 increase in the20 core budget, and that's due mostly to a21 $350,000 increase in our contract with22 ACS Government Solutions to administer23 and collect code violations and alarm24 fees. 5 million in Class10 500 funds for contributions. 4 million for Community College,16 which is unchanged from FY '11; $250,00017 to Fund City Year; and $500,000 for the18 Mayor's Reward Fund. 11 COMMITTEE OF THE WHOLE - Bill 1101371 disabled-owned business participation in2 City contracting. For this year, to3 date, we have an overall 46 percent4 participation rate in contracting5 opportunities. 8
Thank9 you.10 Mr. Dubow, why are you11 proposing to increase the Defenders'12 Association contract by $450,000?13
That money is for14 benefit costs for the Defenders. As you15 know, we fund all of their costs through16 the contract.17 One of the things that's been18 increasing for them is their health19 benefit costs, and that increase covers20 that.21
What22 services does ASC provide to your office?23
ACS provides24 collections for code violation and alarm25 9 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 fees.2
They get a5 percentage of the amount that's6 collected; I think it's a little under7 11 percent.8 And the increase here reflects9 anticipation that there will be increased10 revenue. And so, their percent would go11 up.12
What13 amount have you included in your revenue14 estimates due to this contract?15
$8.35 million. And16 that's up from about 7.4 in the '1117 budget.18
On19 of your detail, you're requesting20 $775,880 for AON Consulting for health21 care and pension expert services.22 Can you explain the scope of23 services they provide?24
Sure. AON provides25 10 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 expert services for us in connection with2 collective-bargaining, and they've3 provided advice on both health care and4 pensions.5
On6 of your detail, you're requesting7 an increase of $330,000 to the School8 District. This increase is due to9 wage-tax reductions of $60,000 and10 real-estate tax millage at $270,000.11 Can you explain why these12 adjustments are needed?13
Yes. Two things.14 When we decrease the wage tax, the school15 income tax decreases; and by law, we're16 required to compensate the District for17 that change. And you can tell it's a18 very minor change there.19 And the second part is, on the20 property tax, when we changed the millage21 rate, the split between the City and the22 School District change, that affects how23 the pilot from the Stadium District is24 allocated. So their allocation would go25 11 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 down, and we wanted to make them whole2 for that reduction.3
Isn't4 the Administration proposing to freeze5 the wage tax rate at the Fiscal 20116 rates? And if so, why are we required to7 give the District $60,000?8
I think there's a9 little left over from the annualization10 of State-funded wage-tax cuts, and that11 flows to the District on its income tax.12
On13 of your detail, you are14 requesting in Class 500 two new items:15 $250,000 for City Year and $500,000 for a16 Reward Fund.17 Can you explain why these funds18 are need and how the Reward Fund will be19 utilized?20
Yeah. City Year is21 actually not new; it's something we've22 been doing for a number of years to help23 that organization provide its services,24 and we just thought it -- we should25 12 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 actually show it in the budget. We wind2 up doing it during the year, so that's3 been added to the budget this year.4 The Reward Fund, I think the5 details of exactly how it would work are6 still being finalized. But essentially,7 it would provide incentives for people to8 provide information that would lead to9 the capture of alleged criminals.10
It was not, but I16 think we provided funding for it17 through -- there was a Class 50018 contribution.19
On20 of your detail, you show a21 reduction of $11,867,000 in anticipated22 workforce savings. Can you explain what23 these savings are and how you arrived at24 this amount?25 13 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371
Yeah. When we --2 we -- a couple of years ago, as we were3 looking at collective-bargaining, we4 included about $25 million -- well, not5 about. $25 million in savings from all6 of our employees, so from the four unions7 and from exempt and non-represented8 employees.9 As we either come to10 agreements, as we did through the award11 with the FOP, we'll make reductions as we12 did with non-reps and exempts in the13 City-administered health plan. We kind14 of moved some of the $25 million into15 actual savings achieved, and then the16 remainder is still shown as savings yet17 to be achieved.18 So I'll take one step back.19 When we originally did the $25 million,20 we allocated it based on the payroll by21 union. So as we take out the potential22 of FOP savings and the exempt and23 non-reps, 'cause we've achieved those24 savings, this is the part that was25 14 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 allocated based on payroll to2 Firefighters 33 and 47.3
Why4 is it that you expect these savings from5 the General Fund only?6
As opposed to in7 Water and Aviation also?8 COUNCIL PRESIDENT VERNA:9 Mm-hmm.10
That's a good11 question. We should go back and look at12 that.13
On17 of your detail, it shows that the18 Community Development Fund is being19 charged the same in Fiscal 2012 for20 pension obligation bonds as it paid in21 Fiscal 2011 while, at the same time, the22 2012 pension payment is being reduced by23 $120,000.24 Can you explain why only one25 15 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 payment is being reduced?2
I think it's3 probably because the pension payment4 itself may be based actually on5 experience of members; whereas, the6 Pension Obligation Bond may just be split7 on the number of members.8
But9 the Aviation -- both payments are10 increasing.11
Right. And there12 could be a different alignment between13 the number of members and the liability14 for those members in Aviation and15 Community Development. It's probably16 different for each fund.17
Okay.18 The Chair recognizes Councilman Rizzo.19
On and 27, there's something that interests24 me. Due to the recent promotions and25 16 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 requirements of accounting -- and I'll2 read it -- accounting section3 supervisors, how's the work getting done4 in their absence? Who's supervising the5 employees?6
Due to the12 recent promotions and retirements of13 Accounting section supervisors, how has14 the work getting been done? In other15 words, Rob, who's supervising -- you16 didn't promote any supervisors.17
Right. No, it's a18 good question. The managers who are19 there are filling in and picking up that20 slack.21 And one of the issues we had22 and one of the reasons that, you know,23 when you look at the vacancies that we're24 going to fill, there are vacancies in25 17 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 Accounting, it's a place where we're2 understaffed and where we, you know, face3 some challenges.4 So that's -- I mean, it's a5 good point. So other people are filling6 in.7
Do you have8 anything in the budget to -- or do you9 have plans to see fill it?10
Let me see13 here. Also, I understand that part of14 the function of the department is the15 authorized appropriations process. In16 addition to the budget analyst, who has17 the authority to approve and deny these18 requests?19
I understand22 that part of the function of the23 department --24
-- is the2 authorized appropriations process, if I'm3 reading that correctly. In addition to4 the budget analyst, who has the authority5 to approve and deny a request?6 Is that not clear?7
Mike Kauffman.16 I'm the Director of Accounting.17 The other people that can18 authorize adjustments are the Grant19 Accounting Unit. And what they do is,20 they'll review to make sure that there's21 the appropriate grant-related material22 attached to an authorization that comes23 through before we'll post it.24
Okay. Let25 19 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 me read on, then.2 Prior to the promotion and3 vacancies of accounting section4 supervisors, training was performed by5 supervisory level, which, normally,6 that's the case. Now rank-and-file7 employees are responsible for conducting8 training.9 Is that a change in the policy,10 or is that just because of the problem11 with the lack of supervision?12
I think what13 happened is that originally, when we went14 to this -- to a new system, the famous15 system in our accounting system, we were16 able to put this process in17 electronically. And when we first18 started it, it was done at a supervisory19 level.20 However, we -- upon further21 review of that particular job, we didn't22 feel that it had to stay at a supervisory23 level; it could be done by someone who --24 one of the accountants could do that.25 20 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371
Okay. Now,2 let me just go back to the timeline and3 filling those positions, those4 supervisory positions.5 Mr. Dubow or whoever. The6 vacancies.7
We're currently8 trying fill that. We recently asked to9 have the tests issued by our Human10 Resources Department so that we'd be able11 to fill that position.12
Timeline.13 They get blamed for everything, Human14 Resources.15
Oh, timeline?16 We would hope that within the next three17 months. We're coming up into our annual18 report season, if you will, and we want19 to have that position in place so that20 when we begin to do our annual report,21 that person will be able to assume22 responsibilities and do those tasks23 related to that job.24
Terrific.25 21 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 Thank you. Thanks for your good work.2 Thanks, Madam Chair.3 COUNCIL PRESIDENT VERNA:4 You're welcome.5 The Chair recognizes Councilman6 Green.7
Thank you,8 Madam Chair.9 Madam Chair, I'm going come10 back. I have a call I've been waiting11 for. I apologize.12 (Pause in proceedings.)13
I apologize.16 COUNCIL PRESIDENT VERNA:17 That's all right.18
I have a few22 questions.23 First, I want to say that24 working with your staff and the25 22 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 Department of Revenue, which is, I think,2 under the Department of Finance, and3 other people, we've done -- my staff and4 Councilwoman Quiñones-Sanchez's staff has5 done a lot of good work defining what is6 potential small-business tax relief,7 100,000 and under, figuring out exactly8 how much that would cost and a way to9 implement it.10 And also, I think we've figured11 out and agreed to how much it will cost12 to do single-sales factor apportionment,13 which would achieve policy goals -- both14 of which would achieve policy goals.15 And we went into those16 discussions saying that we agreed on and17 would hope to come out of -- would hope18 would come out of those discussions. And19 just getting to know the people on the20 Revenue Department team and your team21 better through my staff and the good work22 they've done, I wanted to just commend23 that process.24 Now that we're at the end of25 23 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 that process, I think there's a2 disagreement about what actions should be3 taken. And, you know, I hope that we can4 resolve that in the next couple of weeks.5 But just the work that the staffs have6 done together, I think, was great, and I7 appreciate you making those resources8 available and I wanted to start with9 thanking you for that.10
The 313 percent budget reduction scenario14 provided for Finance included five items15 $350,000 in savings. I have questions16 about several of the items.17 There's a $55,000 reduction18 described as "Decreased and insurance19 cost rule renewals" --20
-- "will22 need to be at FY '11 levels."23 Is this Class 280 reduction24 noted on of the Finance Office25 24 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 detail, and can you please describe this2 reduction?3
It is a cut we4 took, and I'm going ask Barry Scott, our5 risk manager, to come up and talk about6 the cut and what it means.7 (Mr. Scott comes forward.)8
Good job,22 Barry.23 The next item listed is almost24 $93,000 in additional revenue due to25 25 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 increased reimbursement from the2 Philadelphia Parking Authority.3
This is Cathy11 Paster, First Deputy Finance Director.12 The revenue does not actually13 show in the Finance Department's budget;14 it's a General Fund revenue.15
Okay, that's16 great.17 There's a $120,000 reduction18 described as a "decrease in lump-sum19 payments, elimination of temporary20 positions in Executive Division."21 How much of this 120K is for a22 decrease in lump-sum payments?23
Actually, you know,24 the... We'll have to get back to you on25 26 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 that.2
Okay, that's3 fine. So the questions are: Does the4 Department have the ability to reduce5 these payments? And if so, you know, are6 they included?7 (Indiscernible; parties talking8 over each other.)9
Right. As we10 looked at that, we thought we really11 didn't have the ability to do that, but12 we'll get you the split.13
And that's the one15 thing on the list that we wound up not16 doing. All of the others, I think, we17 took.18
Oh, okay.19 Including -- there's a temporary position20 in the Executive Direction section?21
The final25 27 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 item is the 50K decrease in miscellaneous2 contracts?3
Like last8 year, I've been asking departments about9 new or unfilled positions to be filled in10 FY '12. The Finance Office budget detail11 shows variance vacant and new positions12 that are proposed to be filled in FY '12.13
Unlike many15 other departments, Finance's FY '1216 Budget does not have a vacancy allowance,17 which is used both to account for18 unfilled positions not being filled at19 the start of the fiscal year and also for20 turnover in the course of the fiscal21 year.22 Starting with the currently23 unfilled positions, will Finance be able24 to fill out of its eight positions by25 28 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 July 1st?2
That's our goal.3 We want to get them all filled so we have4 everyone onboard.5
You don't6 expect any attrition during the course of7 the year?8
We don't expect a9 lot of -- we don't expect attrition to be10 big enough to provide, you know, much --11
Is there12 anybody currently in DROP scheduled to13 leave from the Finance Department during14 the course of the next fiscal year?15
Okay. So18 would it be fair to say if you know19 people are going to retire, if you know20 people are going to be in DROP, that we21 should create a vacancy allowance in the22 Finance Department?23
Well, no, because24 if we know that they're going to retire,25 29 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 we can start the hiring process to get2 someone onboard so that there's not that3 gap.4
And is it --5 are you saying it is realistic that all6 eight currently-vacant positions will be7 filled by July 1st, that there are tests8 for them, that there's a list that you've9 interviewed already?10
I'm saying that's11 our goal. I mean, obviously, you know,12 things slip, but that's our goal.13
Does every14 position have a -- has the test been15 taken or created for every position?16
Some of them are17 exempts. And I think for maybe all but18 one, the test has been -- there's a test19 that's been taken, maybe two.20
Two, okay.21 So there is potentially some vacancy22 allowance.23
Right. And I don't24 think it's much, but there's some25 30 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 potential.2
Right.3 Well, I think $50,000 may keep the pools4 open for another week. So, you know --5
Like last12 year, I'm asking all departments about13 contracted services and I have questions14 about several of Finance's contracts.15 As noted in the testimony, the16 Administration plans to increase by17 $350,000 the City's contract with ACS18 State and Local Solutions for19 administration and collection of code20 violation and alarm fees. You note that21 the additional fund will only be paid to22 ACS if it collects additional revenue for23 the City.24 How is that contingency25 31 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 structured in the contract?2
Under the contract,3 ACS gets a percent of the collections. I4 think it's a little under 11 percent.5
And is that6 cheaper than how we've been collecting7 them to date?8
It's consistent.9 We're just projecting an increase in10 rev -- and, actually -- well, actually,11 it's cheaper because their rates come12 down, the percents come -- we negotiated13 a new contract with a lower rate.14
So this15 is -- ACS currently does the16 collection --17
Okay. And24 so, would this be all of the code25 32 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 violations and other issues issued by2 BAA? Is that the --3
Okay. So6 the budget brief indicates no increase7 from FY '11 to FY '12 in burglar alarm8 license fees and for false burglar alarm9 fees -- or fines.10 Does the Administration expect11 an increase in alarm-related revenues12 based on ACS's additional work?13
So if you look at14 the original budget from last year,15 they've gone up -- that's where it's a16 budget-to-budget increase. So that's17 what's being captured in the additional18 amount.19
We're not20 exactly clear on what revenue is21 anticipated to increase as a result of22 this additional collections --23
-- from25 33 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 which buckets and category?2
Yeah. Look at page3 15 in the budget in brief. And the4 increase is in lines 78, 79 and -- well,5 78 and 80, mostly in 78 from sweep6 collections.7
It's an8 increase not over what we anticipate9 collections --10 (Indiscernible; parties talking11 over each other.)12
-- if collections20 don't come in, we don't spend the money.21
Right. So22 would this include fees or fines for23 Dumpster violations?24
Yes, yes, it would.25 34 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371
I don't see2 that -- is that -- was that the sweep3 fees?4
So how much7 of that is -- could I get a breakdown of8 how much that is related to the fees and9 then how much of that is related to fine10 collection?11
Okay. On13 of the Finance Budget details,14 there's a $2500 professional services15 contract listed for FY '11 and FY '12,16 with the provider noted as "to be17 selected" and the scope of work "capital18 consultant."19 What is this work?20
I'll ask Rebecca21 Rhynhart.22 (Ms. Rhynhart comes forward.)23
Rebecca24 Rhynhart, Budget Director.25 35 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 Actually, on the 2500, I2 actually need to look into what they're3 doing or what they would do. So I could4 get back to you on that.5
Yeah, I don't8 believe so. Actually, I need to check on9 it; I'm not familiar enough with it.10
Again, I don't13 -- I don't believe we have them under14 contract; that's why I think I would be15 familiar with them. So if I could get16 back to you.17
Okay.18 Without, you know, publicly mentioning19 the name of the provider, has someone20 been identified for this contract?21
Okay, fine.24 If you would just get back to us.25 36 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371
The4 Five-Year Plan resumes BPT and wage-tax5 reductions in FY '14, including gross-6 receipts reductions, which I believe were7 demonstrated to be far less damaging to8 the local economy and job creation than9 the net income proportion of the10 business-privilege tax but again11 delays -- and I think that was12 demonstrated during the hearing as well.13 But again delays implementation of the14 Cohen tax credit.15 Following the hearings on16 Councilwoman Sanchez and my BPT reform17 last year, we understood there to be18 agreement that any further BPT reductions19 should be in the net income tax and not20 the gross-receipts tax.21 I'd like to go through, for the22 record, the cost of the BPT reductions in23 the last three years of the plan and the24 amounts related to gross-receipts tax25 37 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 reductions.2 Based on the backup detail3 provided by the Administration, the BPT4 rate changes will result in: revenue5 reductions of $3.882 million in FY '14,6 of which $2.8 million, or 72 percent, is7 from gross receipts; $15.447 million in8 FY '15, of which $12.123 million, or 789 percent, is from gross receipts; and10 $21.478 million in FY '16, of which11 $16.481 million, or 77 percent, is for12 gross receipts.13 These figures are based on the14 Administration's charts, and I'd like for15 the Finance Office to confirm the numbers16 in writing to the Chair.17
I'm not19 asking you to do that off the top of your20 head.21
With respect23 to that, continuing gross-receipts24 reductions, as you know, based on the25 38 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 work done by our respective staffs,2 numbers we agree on take $15 million in3 tax away from the City of Philadelphia4 from people who have no nexus here to5 otherwise pay any taxes. And the rate is6 so low that it is comparable to gross7 receipts rates in the suburbs currently.8 I'm wondering what analysis the9 Administration did to reach the10 conclusion that pursuing the course of11 reducing gross receipts instead of net12 income makes sense and why we would want13 to give up $15 million in revenue from14 people who take advantage of our market15 but otherwise pay no taxes here.16
A couple of things.17 First, I think, you know, we still18 disagree on the impact of gross receipts19 because --20
Can I answer?25 39 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371
I let you ask your3 whole question.4 You know, we -- study after5 study have shown that gross-receipts tax6 has a very negative impact on business in7 Philadelphia and that reducing that rate8 has a positive impact.9 That said, I think one of the10 things that we also agreed on is that11 through these discussions that, you know,12 we haven't concluded we would determine13 kind of what that best approach to14 business tax reduction is, and I thought15 that we were going to do that as part of16 this budget process, and we haven't17 concluded that process yet.18
Okay. I19 guess based on the last meeting that the20 group had, I thought that it had been21 concluded. If you're saying it hasn't22 been concluded, I'll ask questions about23 that offline.24
Okay, 'cause I25 40 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 think we left that with our saying that2 we would go off and do some analysis that3 looked at taking the money that we had4 for gross-receipts reduction in the plan5 and seeing what would happen if we6 applied that to the ideas we could come7 up with, and that that was going to be8 our next discussion.9
Okay, great.10 Turning to the plan reductions11 in wage tax, I'd like to confirm the cost12 of the reductions in the nonresident13 rate.14 By our math, the reduction in15 the nonresident rate costs $6.7 million16 in FY '14, $13.7 million in FY '15, and17 $21 million in FY '16.18 What is the -- do you happen to19 know the analysis of the cost of the20 nonresident reductions?21 Oh, that's the nonresident22 reductions? Can you just please confirm23 that those are the numbers?24
Yes, we can confirm25 41 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 that.2
Okay. With3 respect to the Cohen low-income taxpayer4 credit, which the Administration proposes5 to delay until FY '17, how much would6 that credit cost per year?7
I can get you the8 breakout by year. Over the course of the9 plan, the amount's about $50 million.10
It's11 $50 million if we were to begin in this12 year. Is that what $10 million a year or13 --14
It was -- I think15 it was starting in either '13 or '14, so16 it wouldn't have started in '12. It was17 in '14. So it was up from '14, '15, and18 '16, and it would be a $50 million cost.19
Well, I think it22 grows each year, so -- but we can get you23 the breakout by year.24
Okay, that's25 42 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 great.2 The proposed budget includes a3 $330,000 increase in the City's4 contribution to the School District,5 bringing the total contribution to6 $38.93 million. This is section 11, page7 52.8 Can you... is the City legally9 required to increase its contribution?10
For a portion of11 the contribution, yes; and for a portion,12 no.13 The portion which is the14 smaller portion that compensates for wage15 tax reduction we're legally required to16 increase.17
Yeah. When the20 wage-tax rate goes down, the school21 income tax rate goes down too. And under22 State law, we're required to compensate23 the School District for the loss in the24 school income tax.25 43 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 There's a second portion this2 year --3
I think it's in Act6 46, yeah.7 There's a second portion that8 we're proposing this year, which is when9 the millage rate changed, the split on10 millage between the School District and11 the City changed so that the City's12 portion was higher. That changed the13 stadium pilot so that the School District14 would have gotten a smaller portion of15 the pilot, 'cause they were getting a16 smaller portion of the property tax.17 We're proposing to hold them18 harmless from that change.19
What does20 "revenue-neutral" mean to the21 Administration in the context of property22 tax changes?23
Well, what we24 would -- our proposal for the property25 44 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 tax is that the amount of revenue we2 collect this year remain -- will -- I3 guess it's more of a projection -- will4 be maintained as we go forward because5 we'll be capturing value that we have not6 captured over the last almost ten years.7
I think the8 definition set forth in policy papers by9 then-candidate Nutter was that it was10 collecting the same amount of money11 after -- in dollars after the shift as12 before the shift. And that's sort of, I13 think, a common-sense understanding of14 what "revenue-neutral" means in that.15 Would you agree that if you are16 taking additional dollars from the17 private sector, that that is a tax18 increase?19
No. If that's your20 definition, then anytime we collected21 more business-privilege taxes, that would22 be a tax increase even that was a result23 of increased business activity.24
So --25 45 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371
And we've had, you2 know, years where there were dramatic3 increases even when we were reducing4 rates.5
So -- okay.6 So under the scenario that you previously7 testified about, what is the property tax8 revenue the School District would receive9 in FY '13?10