- - - COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING - COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Thursday, May 19, 2005, 10:00 a.m. - - - Bill 050236 - An ordinance dissolving the 1600 North Broad Tax Increment Financing District and creating the Avenue North Tax Increment Financing District, being the approximately three acre site at 1600 through 36 North Broad Street, generally bounded by Cecil B. Moore Avenue on the north, Broad Street on the east, Oxford Street on the south and Carlisle Street on the west. Bill 050190 - An ordinance dissolving the Networks Tax Increment Financing District, being the area generally bounded by 16th Street on the west, Spring Garden Street on the north, Hamilton Street on the south and 15th Street on the east. BILL 040767 - An Ordinance amending Section 18 19-2604 of The Philadelphia Code, relating to tax rates, credits and alternative tax computation for the business privilege tax, by reducing certain tax rates, all under certain terms and conditions. - - - V A R A L L O Incorporated Litigation Support Services 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2 BILL 040789 - An Ordinance amending Chapter 19-2600 of The Philadelphia Code, entitled "Business Privilege Taxes," to provide for an exemption from the tax on gross receipts for certain new businesses, under certain terms and conditions. BILL 050001 - An Ordinance to adopt a Capital Program for the six Fiscal Years 2006-2011 inclusive. BILL 050002 - An Ordinance to adopt a Fiscal 2006 Capital Budget. BILL 050003 - An Ordinance adopting the Operating Budget for Fiscal Year 2006. BILL 050007 - An Ordinance amending Chapter 19-1200 of The Philadelphia Code, entitled "Parking Tax," by establishing a rate of taxation on parking transactions for Fiscal Year 2006 and thereafter and making such rate contingent on certain decreases in business privilege tax rates. BILL 050008 - An Ordinance amending Section 16 19-2604 of The Philadelphia Code, relating to tax rates, credits and alternative tax computation for the business privilege tax, by reducing certain tax rates and making such reductions contingent on an increase in the parking tax. BILL 050383 - An Ordinance amending Chapter 19-1200 of The Philadelphia Code, entitled "Parking Tax," by increasing the rate of taxation on parking transactions for Fiscal Year 2006 and thereafter. RES. 050022 - Resolution providing for the approval by the Council of the City of Philadelphia of a Revised Five Year Financial Plan for the City of 3 Philadelphia covering Fiscal Years 2006 through 2010, and incorporating proposed changes with respect to Fiscal Year 2005, which is to be submitted by the Mayor to the Pennsylvania Intergovernmental Cooperation Authority (the "Authority") pursuant to the Intergovernmental Cooperation Agreement, authorized by an ordinance of this Council approved by the Mayor on January 3, 1992 (Bill No. 1563-A), by and between the City and the Authority. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE L. BLACKWELL COUNCILMAN DARRELL L. CLARKE COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JACK KELLY COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN BRIAN J. O'NEILL COUNCILMAN JUAN F. RAMOS COUNCILWOMAN BLONDELL REYNOLDS-BROWN COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO 4 Whole - 5/19/05 - - - P R O C E E D I N G S - - -
Good morning, everyone. Good morning. This is the Committee of the Whole. I would ask the Council please come to order. I would ask Mr. Auerbach to please read the title of the bills before the committee today.
Bill Number 050236, an ordinance dissolving the 1600 North Broad Tax Increment Financing District and creating the Avenue North Tax Increment Financing District, being the approximately three acre site at 1600 through 36 North Broad Street, generally bounded by Cecil B. Moore Avenue on the north, Broad Street on the east, Oxford Street on the south and Carlisle Street on the west. Bill Number 050190, an ordinance 23 dissolving the Networks Tax Increment Financing District, being the area generally bounded by 16th Street on the west, Spring 5 Whole - 5/19/05 Garden Street on the north, Hamilton Street on the south and 15th Street on the east. Bill Number 040767, an ordinance 5 amending Section 19-2604 of The Philadelphia code, relating to tax rates, credits and alternative tax computation for the Business Privilege Tax, by reducing certain tax rates. Bill Number 040789, an ordinance 10 amending Chapter 19-2600 of The Philadelphia Code entitled, Business Privilege Taxes, to provide for an exemption from the tax on gross receipts for certain new businesses. Bill Number 050001, an ordinance to adopt a capital program for the six fiscal years 2006 through 2011. Bill Number 050002, an ordinance to adopt a fiscal 2006 capital budget. Bill Number 050003, an ordinance 20 adopting the operating budget for fiscal year 2006. Bill Number 050007, an ordinance 23 amending Chapter 19-1200 of The Philadelphia Code, entitled parking tax, by establishing a rate of taxation on parking transactions for 6 Whole - 5/19/05 fiscal year 2006 and thereafter, and making the rate contingent on certain decreases in Business Privilege Tax rates. Bill Number 050008, an ordinance 6 amending Chapter 19-2604 of The Philadelphia Code, relating to tax rates, credits and alternative tax computation for the Business Privilege Tax, by reducing certain tax rates and making such reductions contingent on an increase in the parking tax. Bill Number 050383, an ordinance 13 amending Chapter 19-1200 of The Philadelphia Code entitled parking tax, by increasing the rate of taxation on parking transactions for fiscal year 2006 and thereafter. And Resolution Number 050022, providing for the approval by the Council of the City of Philadelphia of a revised five-year financial plan for the City of Philadelphia covering fiscal years 2006 through 2001, and incorporating proposed changes with respect to fiscal year 2005.
Okay. Before we begin, I would like to make an 7 Whole - 5/19/05 announcement to explain how we will proceed today. We will first hear testimony on the two TIF bills, Bill Numbers 050236 and 050190. We will then recess the Committee of the Whole, and the Committee on Law and Government will then meet. When that committee has completed its work, we will then hold our caucus in chambers, and then begin to conduct today's Council session, up to and including consideration of the calendar. After the completion of the calendar, the Council session will be recessed, the Committee of the Whole will reconvene, and we will at that time consider all of the tax and budget-related matters before the committee. After the Committee of the Whole has completed its work, the Council session will then be reconvened to receive a report from the Committee of the Whole and to permit first reading of any bills reported from the committee. 8 Whole - 5/19/05 Finally, please note there is also a Rules Committee hearing scheduled this afternoon at 2:30. At this time we will now hear testimony on Bill Number 050190. I believe Mr. Fina will be testifying. Good morning, Mr. Fina. Welcome. Please identify yourself for the record and proceed with your testimony
Good morning, Council President and members of City Council. I have extra copies of my testimony, should anyone need a copy.
Have they been circulated to all Council members?
Thank you. Good morning President, Verna and members of City Council. I am Robert Fina, Senior Vice President of the Philadelphia Industrial Development Corporation, P.I.D.C., and I am testifying here today in support of Bill 9 Whole - 5/19/05 Number 050190, dissolving the Networks Tax Increment Financing District. In June of 2000 City Council approved Bill Number 000221 creating the Networks TIF District. This district provided Amerimar Enterprises the opportunity to borrow up to $15 million in TIF financing and invest almost $80 million of private funds for improvements of the former SmithKlineBeecham building located at 15th and Spring Garden Streets. At the time Amerimar anticipated repositioning this vacant 1 million square foot building as a state-of-the-art telecommunications and E commerce center to attract businesses into Center City. Since approval of the TIF district, the telecommunications market contracted substantially, and Amerimar is currently marketing the building for business office use and related uses without the TIF benefit. Consequently, they have requested formal dissolution of the Networks TIF District, which P.I.D.C and the 10 Whole - 5/19/05 administration support. I thank you for your time, and I am available to answer any questions you may have on this matter.
Thank you. Are there any questions from members of the committee? (No response.)
Do we have anyone else to testify on this Bill? (No response.)
Seeing none, we will now consider Bill Number 050236. Good morning. Thank you for your patience. Please identify yourself for the record and proceed with your testimony.
Good morning. I'm Stephanie Naidoff. I'm the Director of Commerce and City Representative. Good morning, President Verna and members of City Council. My name is Stephanie Naidoff. I am the City Representative and Director of Commerce, and 11 Whole - 5/19/05 I'm here today to testify in support of Bill 3 Number 050236, creating the Avenue North Tax Increment Financing District. The administration enthusiastically supports creation of the proposed TIF District in order to help make this important urban renewal project a reality. The southwest corner of Broad and Cecil B. Moore Avenues sits at a prominent intersection within the North Philadelphia community, and it sends a strong negative message while it sits in its current vacant state. Despite much hard work, previous efforts to develop a project on that site with a much larger scope, with deeper subsidies did not prove to be successful. Now, with an aggressive local development team, including Tower Investments, represented here today by Bart Blatstein, and Felder and Associates, represented by Darwin German, in conjunction with Beech Corporation, there is a real opportunity to achieve success with a 12 Whole - 5/19/05 smaller, more efficient design. Creation of this TIF will result in a two-story 92,000 square foot retail center, including a seven screen movie theater. In addition to removing the blighting influence of vacant land, the development of a movie theater and quality retail opportunities will energize the community and make a strong statement for North Broad Street. Construction of the project will create over 130 construction jobs and will be performed subject to an economic opportunity plan that has been approved by City Council's technical staff and the Minority Business Enterprise Council. Further, the project will support over 180 permanent jobs. The developer has committed to cooperate with Beech Corporation to identify local labor for the project's operations. Finally, this $5 million investment by the city will leverage a $14 million private investment in North Philadelphia, 13 Whole - 5/19/05 plus a $2 million grant from the Commonwealth of Pennsylvania. At this point I would like to introduce the development team, Bart Blatstein and Darryl German for Fred Felder, the developers, and Ken Scott for Beech Corporation, who will provide a more detailed description of the project, their public commitments and their need for this TIF. At the completion of their testimony Bob Fina and Sam Rhoades of the Philadelphia Industrial Development Corporation will review the technical specifics of the ordinance and project plan. Thank you for the opportunity to testify on this important bill. I'll be happy to remain for any questions.
Thank you very much. Mr. Blatstein, et al, if you will just come to the witness table. Good morning.
Please identify yourself for the record and proceed with your testimony.
Thank you. Good morning, President Verna and members of City Council. I am Bart Blatstein, President of Tower Investments. I'm here today as one of the principals of the Avenue North development. Let me first advise you that my partner, Fred Felder, could not be with us today. In his place is Darryl German. He intended to be with us this past Monday but is currently out of the area, due to a prior business commitment. I'm here along with representatives of Beach Interplex, our community partner. 15 Whole - 5/19/05 While many of you are knowledgeable of Tower Investment's work along the Delaware waterfront, Manayunk and Northern Liberties, I'm here today to speak with you concerning Avenue North. The site is at the southwest intersection of North Broad and Cecil B. Moore Avenue. The Avenue North development blends the needs of the North Philadelphia community by bringing a new 60,000 square foot of retail development to the neighborhood, along with a seven screen movie theater. The retail two-story movie theater complex fronts along Broad Street. This is the TIF District. In addition, behind the complex towards 15th Street is a multi-story 800-bed residential facility that will help meet the student housing needs of the Temple community. The housing component is not part of the TIF, and there is no contractual or financial relationship with Temple University 16 Whole - 5/19/05 for the housing development. In all, the community retail, movie and residential elements of the project approximate over $70 million. As you are aware, this property was acquired, with the approval of City Council, in the late 1990s. It has been conveyed by the redevelopment authority to Beech Interplex on a long-term lease. In return, Beech has leased the premises to us as the developers of Avenue North. As the developers of Avenue North, we are subject to terms and conditions of the Redevelopment Authority, approved by City Council. Beech has been a tremendous help in the development and planning of this development. Their long-term working relationships within the community were invaluable when this development received its land use and zoning approvals last summer. Beech continues to work hand in hand with us, along with the Redevelopment Authority, concerning community outreach, 17 Whole - 5/19/05 construction, participation and local employment. I must say that I am most proud of our ability to bring us a first-rate multi-screen move theater back to North Philadelphia. We believe that while traditional national firms have stayed away from many urban areas, including North Philadelphia, we are confident that this mix of retail, entertainment and housing joined together will be successful with your support. I am here today to answer any questions you may have about this most exciting project.
Thank you very much. Thank you, Mr. Blatstein. Are we going to hear from the other witnesses? Do they have testimony?
Yes. I don't have written testimony. I'm Kenneth Scott, the Vice President of Beech Interplex. And I just wanted to officially put my testimony on 18 Whole - 5/19/05 the record, that we're in full support of this project. We have been working on this project for over ten years and have gone through two other developers. To see this dream come to fruition and the job creation for the community is amazing. So, we have our full support behind this project of Beech Interplex and the local Cecil B. Moore community. Thank you.
As much as I support this project, there's no way we're going to let you leave without answering any questions. Thank you, Madam President. Can you talk to me briefly about where we are, as it relates to, in specific terms, about employment opportunities, both 19 Whole - 5/19/05 in construction and long-term for the site, what you're doing to ensure that we get the appropriate support, as it relates to the neighborhood.
Sure. Right now, you know, we have goals set for minority participation at -- the total is about 40 percent. Currently on the construction site there's two site contractors and Justic Steel is a minority firm, along with a majority firm. The numbers right now are over 50 percent minority participation on site. Long-term employment goals are, we are looking at a couple hundred jobs in the retail and through the housing sector.
What are we doing to ensure that the appropriate people are prepared and ready?
Well, one of the things, this past Saturday we just held a job fair to take applicants. We're also referring people to the apprenticeship programs and working with 20 Whole - 5/19/05 O.I.C. and the African American Chamber and the N.A.A.C.P. and the North Philadelphia Chamber of Commerce, to provide training opportunities so people will be prepared for these jobs, long-term, after construction employment and during construction employment.
All right. As it relates to your construction efforts, what are you doing? I mean, are you working with any groups or individuals to ensure that we get the appropriate support?
Yes. We're working with the Redevelopment Authority and M.B.E.C. along with the Chamber and Beech Interplex to monitor monthly meetings and monitor these employment goals.
All right. If anyone is interested in an opportunity, be it retail or employment, who should individuals call?
Retail Tower Investments. Employment opportunity, Beech Interplex, Ken Scott. 21 Whole - 5/19/05
But I would also like to add, Council President, that without the leadership of the district Councilman Darrell Clark, this project would never be in the ground. He's just a very special man. We all thank him.
Are there any other questions from members of the committee? (No response.)
Good morning again, President Verna and members of City Council. My colleague, Sam Rhoades, will distribute additional copies of the project 22 Whole - 5/19/05 plan which is an exhibit to the ordinance 3 because we have amended it. There are two slight -- two small changes that we had to amend the project plan. And by procedure we must distribute them to you now. So that's what will happen. And I will refer to them in my testimony. Again, I am Robert Fina, Senior Vice President of the Philadelphia Industrial Development Corporation. I am appearing today to testify on Bill Number 050236, creating the Avenue North Tax Increment Financing District. Also with me is my colleague, Sam Rhoades. C is staffed to the Philadelphia Authority for Industrial Development, PAID, which under the state TIF Act is responsible for recommending the creation of a TIF to the School District and City Council, as well as preparing and submitting the project plan. The School Reform Commission has agreed to participate in the creation of a TIF district, as expressed in the project 23 Whole - 5/19/05 plan, and as an exhibit to the bill. , City Council staff, and the Redevelopment Authority. C has reviewed the plan and incorporated comments from the Controllers Office and PICA. The proposed TIF of approximately two acres is located at 1600, 1636 North Broad Street, bounded by Cecil B. Moore Avenue on the north, Broad Street on the east, Oxford Street on the south and Carlisle Street on the west. The proposed TIF district is presently vacant land owned by -- owned for the past eight years by the Redevelopment Authority. The Redevelopment Authority will lease the property to Beech Interplex, Inc. which will sublease to Broad Retail Associates LP, an affiliate of Tower 24 Whole - 5/19/05 Investments, and Felder and Associates. Beach's involvement is to assure community participation in the project. As you have heard, the project consists of 92,000 square feet of retail and cinema uses. 9 million will be secured by the developer, including the $5 million to finance the TIF note. The remaining $2 million will be provided by the Commonwealth's Redevelopment Assistance Capital Program. Incremental increases in real estate, city sales and Business Privilege Taxes shall be pledged to repayment of the TIF note, up to a term of years. 18 You will note that use and occupancy 19 taxes that accrue totally to the School 20 District are not being utilized to secure the TIF note. The project is expected to create 133 construction jobs and approximately 184 full-time equivalent permanent jobs. The TIF district currently does not 25 Whole - 5/19/05 generate any tax revenue to the City or the School District. When the project is completed, it is estimated it will provide $800,000 in tax revenue in its first year and $19 million over the 20-year term of the TIF. 5 million. The TIF creation date is July 1, 2005. Tax increments that are authorized but not required to pay the debt service on the TIF note will be applied to prepayment of the principal of the TIF note, subject to the lender's prepayment restrictions and/or return to the city and the School District. The amount of the TIF note was determined based on projected market conditions. Should the developer's net income exceed those expectations, then 50 percent of such excess shall be applied to prepayment of the TIF note and/or returned to Whole - 5/19/05 the city and the School District. As I indicated earlier, there are two minor technical changes to the project plan that we had originally circulated. First, construction employment during the TIF term is reduced from 178 jobs to 133 jobs. This reduces the wage tax during the term from $312,000 to $234,000. Second, the Business Privilege Taxes originally were incorrectly calculated. Correcting this error increases Business Privilege Tax receipts over the term of the TIF note by $184,000, approximately $95,000 per year. 9 million to $19 million. 1 million.
In closing, I would like to note that today's hearing is required by the Pennsylvania Tax Increment Financing Act to 27 Whole - 5/19/05 create the TIF district, and the Act requires City Council to wait at least three weeks for final consideration. Therefore, City Council will not be able to approve the bill before its regularly scheduled meeting of June 9, 2005. Thank you for hearing my testimony. Mr. Rhoades and I would be happy to answer my questions.
Thank you very much. The Chair recognizes Councilwoman Tasco.
Good morning. Thank you. On page... On the executive summary you talked about the remaining $2 million will be... I'm sorry. The incremental increases in real estate, city sales and Business Privilege Tax will pledged for repayment of the TIF. Would you explain that to me, please?
Yes. Under the tax act, under the TIF act, only certain taxes are 28 Whole - 5/19/05 eligible to pay the TIF note, to pay the debt service on the TIF. The developer will borrow the money from a specific lender to be named in the future. That lender's debt service will be paid out of the incremental taxes, the new taxes on real estate, Business Privilege Tax, and the city's one percent sales tax. So, during the years those taxes will pay the 11 $5 million TIF note. 12
Taxes that are not 17 currently being paid to the City. In this 18 case there are no taxes being generated 19 from -- 20
You're talking about the taxes that this company would pay, his business -- their Business Privilege Tax.
Yes, the owner of the property and the businesses that are in the development. 29 Whole - 5/19/05
Okay. Based on the current rates that is calculated on the current rates we have -- we're paying now?
Yes. It's calculated on the current rates that are approved by the Finance Department.
Okay. Would any impact -- What would the impact be on the Business Privilege Tax, if there is any cut?
If there's a decrease in the Business Privilege Tax, there will be less taxes for the developer to pay that TIF note. That TIF note, the debt that he borrows for the TIF, the $5 million, would then be his obligation to pay, not the city's, not P.I.D.C.'s, not the Redevelopment Authority's. It would be the developer's obligation to pay that TIF note if the taxes do not materialize.
Thank you very much. The Chair recognizes Councilman Clarke.
Thank you, Madam President. Good morning. I noted that there was some discussions about clawback provisions, particularly related to some of the more recent TIFs. Is there a clawback provision in that? If it is, let us know that. And can you be can -- you give us some sense of what specifically that is.
Yes, Councilman. There is a clawback which... Basically, there's one basic clawback built into the actual TIF and any TIF, that if the -- as Councilwoman Tasco indicated, if the taxes do not materialize, it is not the obligation of the city to pay the TIF note, to pay the debt service. It is the developer's obligation. So that's somewhat of a clawback. So, if the 31 Whole - 5/19/05 development does not reach the estimated value, and the taxes are not generated, it is the obligation of the developer to pay those taxes. But we also added another clawback in this case. We said, if the developer based on his market projections, does better at this development than anticipated, some of those -- some of that money must go to pay the TIF note earlier or be returned to the School District in the city. So, we get 50 percent of his net income over a certain profit level to pay the TIF note prior to its due date, so that way the city will get its revenue and the School District sooner or the taxes are returned directly to the city and the School District.
Thank you. Mr. Fina, I'm assuming that the bill 25 has to be amended. The bill has to be 32 Whole - 5/19/05 amended?
Yes. We replaced Exhibit A in my testimony. It will indicate that amendment.
So Councilman Clarke will offer the amendment at the appropriate time. Thank you very much. Are there any other questions or comments from members of the committee? (No response.)
Seeing none, thank you very much. Do we have anyone else to testify on this?
I do want to note there are illustrations of the proposed development behind you to your left. Thank you.
They look very nice. Thank you. Do we have any other questions or comments? Anyone else to testify? Councilman Ramos. (No response.)
Councilman 33 Whole - 5/19/05 Ramos, sir, your light is on. (Councilman Ramos spoke briefly, away from the microphone, not reportable.)
Oh, I thought you were making lemonade. Yes. Yes, sir.
There was testimony earlier that I think it was 50 percent. The gentleman from Beech Interplex testified that there was 50 percent minority participation. Was that contracting or employment on the ground?
Councilman, I'll allow my colleague, Sam Rhoades, to answer that question. We have those statistics.
Ken Scott is also here from Beech Interplex, Inc. that could respond to that question.
I'm Sam Rhoades for the Philadelphia Industrial Development 34 Whole - 5/19/05 Corporation.
Mr. Rhoades, you're going to have to pull the microphone closer.
I'm Sam Rhoades with the Philadelphia Industrial Development Corporation. The economic opportunity plan that's included in the ordinance calls for... I believe it's 50 percent participation by minorities in the operations of the project.
I'm sorry. Does that mean -- Is that people who are contract subcontractors for the construction project or is it people who are on-site permanent employees in supervisory roles? I'm really more concerned about the construction side than I am about the permanent employee side.
I'm Kenneth Scott from Beech and I spoke earlier. My statement was that, yeah, we have set a goal -- total goal of 40 percent on the project. Currently on-site as of this morning 35 Whole - 5/19/05 we have over 50 percent participation on-site of construction.
How about in employment, employees physically on the site.
So, half the employees on the site are either minority or women?
Yes. And as a matter of fact, I even brought some photos. If you'd like, I'll share them with you.
And what phase are you in now? How many employees are there?
Currently... Construction workers, I believe we have about 36 Whole - 5/19/05 25, maybe.
Right now the employees that on-site are predominantly what trade?
Laborers, operating engineers. I think there's, what? Three cranes and a drill.
Do we anticipate the 50 percent number to be maintained as we get to 133?
Yes. That's our goal. 37 Whole - 5/19/05 Our goal really is 40 percent. Of course, you know, that's kind of a minimum standard that we're setting. But, yes. You know, we have monthly meetings, and that is our goal.
What's the end of your construction -- your proposed construction period? When will it be finished?
And your highest level of construction point will probably be what month?
Okay. Are you 38 Whole - 5/19/05 able to get back to us and report the progress on it?
Thank you. Are there any other questions or comments from members of the committee? (No response.)
Thank you. That completes the hearing on Bill 19 Numbers 050236 and 050190. As explained at the beginning of this hearing, the Committee of the Whole will now stand in recess until immediately after consideration of the calendar, this morning's session of Council. (Recess at 10:30 a.m.) 39 Whole - 5/19/05 (Reconvening at 12:45 p.m.)
May I have everyone's attention, please. The Committee of the Whole is now reconvened. I would ask Mr. McPherson to please read the title of the bills before the committee today. MR. McPHERSON: Bill Number 050236, an ordinance dissolving the 1600 North Broad Street Tax Increment Financing District; Bill 12 Number 050190, an ordinance dissolving the Networks Tax Increment Financing District, being the area generally bounded by 16th Street on the west, Spring Garden Street on the north; Bill Number 040767, an ordinance 17 amending Section 19-2604 of The Philadelphia Code relating to tax rates, credits and alternative tax computation for the Business Privilege Tax; Bill Number 040789, an ordinance amending Chapter 19-2600 of The Philadelphia Code entitled Business Privilege Taxes, to provide for an exemption for the tax on gross receipts for certain new businesses; Bill Number 050001, an ordinance 40 Whole - 5/19/05 to adopt the capital program for six fiscal years, 2006 through 2011; Bill Number 050002, an ordinance to adopt the fiscal 2006 capital budget; Bill Number 050003, an ordinance 6 adopting the operating budget for fiscal year 2006; Bill Number 050007, an ordinance 8 amending Chapter 19-1200 of The Philadelphia Code entitled parking tax, by establishing a rate of taxation on parking transactions for fiscal year 2006 and thereafter; Bill Number 050008, an ordinance amending Section 19-2604 of The Philadelphia Code, relating to tax rates, credits and alternative tax computation for the Business Privilege Tax by reducing certain tax rates.
Excuse me, Mr. McPherson. The noise level is much too high. Anyone having private conversations, I suggest you do it in the corridor. Please proceed, Mr. McPherson. MR. McPHERSON: Bill Number 050383, an ordinance amending Chapter 19-1200 of The Philadelphia Code entitled parking tax, by increasing the rate of taxation on parking 41 Whole - 5/19/05 transactions for fiscal year 2006 and thereafter; and Resolution 050022, resolution 4 providing for the approval by the Council of City of Philadelphia of a revised five-year financial plan for the City of Philadelphia, covering fiscal years 2006 through 2010.
We completed the hearing of Bill Numbers 050236 and 050190 this morning. All other bills before the committee have had extensive public hearings, except Bill Number 050383 relating to the parking tax. We will therefore begin with testimony on this bill. Is there anyone here to testify on Bill Number 050383? If anyone is here, please approach the witness table. I think we have a list of witnesses. MR. McPHERSON: Is the Revenue Commissioner here? (No response.)
There's somebody. Oh, what a minute. He's coming up. 42 Whole - 5/19/05 MR. McPHERSON: He works for Darrell. Rob Zuritsky and the parking association.
Good afternoon. Welcome. Please identify yourself for the record and proceed with your testimony.
Good afternoon. I'm Robert Zuritsky. I'm the President of the Philadelphia Parking Association. And members of Council, I am here again to ask you to vote against any increase in Philadelphia's already burdensome parking tax. Most of us understand that tax increases hurt the tax base that we are desperately trying to attract. Philadelphia has the highest tax burden of any city in the country. We earn this distinction year after year, even after the combined gradual reductions in the wage tax that were started 12 years ago. The result is that Philadelphia businesses are at a severe competitive 43 Whole - 5/19/05 disadvantage against companies based outside the city. The parking tax increase will only compound the problem. Philadelphia's existing parking tax of percent is already 7 the highest -- the fourth highest parking tax 8 in the country, when compared to cities with 9 a half million citizens or more. 10 City businesses will not sit still 11 if the tax burden for themselves and their 12 customers and employees continues to 13 escalate. All taxes are aggressive, 14 including the parking tax. 15 The city needs to attract jobs and workers. The Philadelphia Parking Association recently commissioned a study of the parking tax in Pittsburgh which has a population under 350,000, and found that Pittsburgh lost 1.3 million parkers last year due to their parking tax increase. If you calculate that each car had one and a half people, that means that Pittsburgh lost 2 million people coming into the city to do business, to go to sporting 44 Whole - 5/19/05 events, to go to hotels. Granted, Pittsburgh's tax increase was higher than what Philadelphia is proposing, but Pittsburgh's overall tax burden is lower than Philadelphia's. Because of this city's already heavy tax burden, any additional increase will have an immediate adverse impact on the economy -- on our economy and vitality. Last year Philly lost 10,000 jobs, second only to Detroit in the country. The Philadelphia Business Journal yesterday reported that the office buildings in town are already reducing their real estate taxes because of projected further reductions in occupancy. Philly is not in a good position, and any indication of a tax increase will trigger additional company flight, as well as worker flight. Yesterday's Inquirer had an editorial from Kevin Joyce. And I'll just read a little bit of it. He says that the city's office vacancy rates in Pittsburgh are 45 Whole - 5/19/05 increasing as businesses are deciding to move, 5,000 to 15,000 square feet at a time, from the city's core to suburban locations where parking is free and plentiful. These lease decisions are made for five- to ten-year periods, so the results are long-lasting. As occupancy rates decline, the values of our downtown buildings also decline, resulting in lower property taxes. The number of evening and weekend parkers decreased so sharply, the study said, that an estimated $17.5 million in revenue has been lost by entertainment, sports, retail. And retailers were hit hardest. He says since his departure from Philadelphia in the '70s, he has been marveled at the city's growth. It has become a major tourist destination and a hub for a large regional economy. However, he is concerned that Philadelphians don't make the same mistake that Pittsburgh made. When they are trying to attract -- They're chasing away the people that they are desperately trying to attract, 46 Whole - 5/19/05 the people that are spending money and shopping, eating in their restaurants and visiting their cultural sites. The higher taxes are aggressive tax that punishes the very people that we are dependent upon to fuel the economic engines of our city. So, again, we plead with this chamber to not -- to help the city continue to improve and not increase our taxes. Thank you.
Thank you very much. Any member have any questions? Councilman Kenney.
Thank you, Madam President. Mr. Zuritsky, you probably have opportunity to view parking rates around the region, around the city. And you probably keep track of some of that stuff, as a competitive business person. Would you tell me how much it costs to park your car at the Deptford Mall? 47 Whole - 5/19/05
How about the business areas and businesses located in Malvern and Route 202 corridor?
Zero. And what do you think that says for Philadelphia's ability to continue to compete?
I think that says a wonderful thing about Philadelphia. I think that everybody -- This is a value. The reason that you move your city into Philadelphia and that people are moving 48 Whole - 5/19/05 in to live in Center City and people still choose to work in Center City and enjoy the wonderful things that we have in the city is a testament. And people don't come into the city to park. No one does. Nobody goes to the King of Prussia Mall to park. So, the fact that people will come into cities -- And we're not different than any other major city in the country. You pay to park because space is limited, and that's the nature of big cities. It's a wonderful thing that we have -- that people see a value in this city and they're willing to pay to park, just like they're going to sporting events also. There's a cost involved in cities.
Do you have an idea, if this bill were to pass, approximately what would be the dollar amount, on average, that the rate would have to be raised? What would an average parker pay under this new construct of taxes?
I'm not sure which 49 Whole - 5/19/05 bill you're talking about. There's, I think, two or three bills now that involve parking taxes. And if all of them went into effect, I think there would be a percent increase 6 in the parking tax. 7 I think that parking tax rates could go up 7 percent. They could go up or 15 9 percent or they may not go up at all in 10 certain specific facilities. Every parking facility is a different market. And some places you're able to get increases and they would try to get increases. And this is something that -- it's just -- it's just another tax burden on the Philadelphian who wants to come in and do something in town. It's just like another wage tax or other taxes. It's taking money. It's making you -- It's making people make decisions about what they're going to do and where they're going to spend their money, at the Deptford Mall or come into town.
Do you believe 50 Whole - 5/19/05 that such an increase would make people angry enough to make a choice not to come into the Gallery, not to come onto Walnut Street, not to come into town to shop? And even more so, the problem -- Even additionally the problem that I believe will happen is that as restaurants get much better reputations in the suburbs that are in free parking areas, that people will make an additional choice to stay home or to stay in their own area in the suburbs, as opposed to coming in and spending the leisure dollars in Center City.
That's an excellent question. Will a dollar more to come in to park make someone's decision whether they come into town? I'd say yes. I think if you're going to have a business in Philadelphia, and you're going to employ 20 people, and you need to pay for their parking, if you lowered the Business Privilege Tax by that much (indicating small amount) but you increase a dollar per car per customer, that somebody -- 51 Whole - 5/19/05 that business has to pay, I think when you weigh your decisions, I think you do leave. And two years ago when I came here and testified, I was at an event. I was talking about the parking tax increase. I sat next to a gentleman who has a small accounting firm of people. 9 He told me that just the fact that 10 the administration was talking about an 11 increase in parking taxes, they had already 12 decided to move their business -- their 13 accounting firm of 15 people to Bala Cynwyd, 14 and they already moved. 15 And he said -- I didn't -- I didn't ask that specifically. He said, that was the last straw. You didn't pass the parking tax last year. Talking about raising taxes has an effect. And makes -- and has people's -- it forces people to make decisions.
I just believe that we are going to reward or this proposal is going reward the great investment that businesses have made in the city in office 52 Whole - 5/19/05 buildings and re-upping their leases, re-upping their leases in investment in restaurants, investment in high end retail, with a slap in the face of an increased parking tax. And I think that to do that to them, to put them at a further competitive disadvantage with the suburban malls and now the rising number of suburban restaurants, is just really a shame. And I will be voting against it.
Thank you. Any further questions or comments of this witness? (No response.)
Seeing none, The Chair recognizes Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam President. And good afternoon, Mr. Zuritsky. What is the total number of employees that the parking industry in 53 Whole - 5/19/05 Philadelphia employs? Do you have an idea?
We estimate about 2500 employees. COUNCILMAN DiCICCO: Full time?
Full and part time. COUNCILMAN DiCICCO: Full and part time. So, in addition to the fact that if this tax were to pass that we may see a reduction in people coming, that it would also have an impact on employment as well?
Yeah. The article 14 that was in the Inquirer yesterday actually responds to that. The head of the Parking Authority in Pittsburgh was forced to... I think he laid off -- I think it's in here. It's maybe 125 fewer employees working at private garages and the city garages. Again, they lost 1,300,000 people driving into the city. It's -- It's a staggering number, staggering. COUNCILMAN DiCICCO: What is the -- Is there an average stay that an individual 54 Whole - 5/19/05 who parks his or her car in a garage? Is it an hour? Is it two hours? Is there any way of... What I'm getting at is, if you talk about a dollar increase, I would assume that's on an hourly basis but not for the five-hour stay or whatever it may be.
We have different customers that park in our facilities. We call them early birds and monthlies. They come in. They're the workers, you know, who work in the stores and the restaurants and the hotels and the office buildings. And then you have daily customers that come and go. You have evening parkers. So, each segment is different. You know, you have people parking eight to ten hours and you have people that are coming in for a half an hour on an hour. If you're just talking about the people coming in for short visits, for a lunch or for a doctor or lawyer visit, we average hour and a half, hour and 40 minutes. So, again, the increase in the 55 Whole - 5/19/05 actual dollar cost could be $.75 to -- or $1 or more per visit. COUNCILMAN DiCICCO: What about that segment that come to the city for the -- the dining group, the people coming for dinners and the entertainment venues? Is there a number of hours that you can identify that they would stay?
Basically -- COUNCILMAN DiCICCO: I mean, that's going to be the bulk of the issue for me, anyway, and that impact, if there's a negative impact, as is being suggested and being reported, the hotel, restaurant and the entertainment industry as well. They're going to see a decline in participation, people coming to visit the venues, the hotel -- the entertainment and/or restaurant venues.
The report that we distributed that Martin Hack did, he got actual data from the Parking Authority which actually broke down how many cars they lost during the day and in the evening and 56 Whole - 5/19/05 weekends, mostly when the people were going to the restaurants and to the theater. And I -- I -- I think it's in the hundreds of thousands of cars that did not come down. And if you figure going to the theater, you're definitely coming with one or two or three people. And each one of them is spending money on dinner. And the amount -- the number of hours that they stay would probably be two hours to three hours, if they're having dinner. And the amount of dollars that are lost to the cultural institutions, the restaurants, it's -- it could be staggering. And that's really what this report says, is that the fallout... You're going to make a couple dollars more from raising the parking tax, but the fallout could be much greater, as we know when we raise taxes. It's a regressive thing. COUNCILMAN DiCICCO: I have a copy of that report. I apologize. I never really got to complete it. I started it, and 57 Whole - 5/19/05 then...
You can have mine. COUNCILMAN DiCICCO: I have it in my office in... actually in my briefcase, but it's one of those things I just never finished reading, but thank you. Thanks for coming out today.
Mr. Zuritsky, with the increased number of valet parking, is that skewing your numbers any way? Have you been able -- All of the finer restaurants now have valet parking. So, if you're losing parking spaces, are you taking in consideration that many people are now valet parking?
Valet parking is a funny thing. We don't do too much valet parking. 58 Whole - 5/19/05 The valet parking probably hurts our business. It does hurt our business because the cars are being picked up and they're typically being taken someplace else, supposedly to parking facilities. And sometimes they are, you know. But what happens is, if you think about it from the city's perspective, we're paying the parking tax on every car that comes into our facility. Every time that a car gets valeted, you know, the city is losing that parking tax. I mean, percent is -- I mean, is an 15 amazing margin. If I made 15 percent on all of my parking facilities as a margin, a profit margin, I think I'd be in better shape, I can tell you. But the city is our partner. I mean, the city makes a lot of money on the parking tax. It brings in, you know, $40 million, I think, last year. It's an incredible amount of money. The valet takes -- I think, takes 59 Whole - 5/19/05 away because they are not controlled and taxed as well as we are.
Are you telling me that if ABC garage -- I hope there's not one of those -- engages with a valet parking company, that we're not getting the 8 percent tax on that park, unless they're 9 doing what... There's speculation that 10 sometimes they park the cars in bus stops or 11 at meters and other locations. 12 But let's say that they're doing it 13 the right way. We still get the tax. 14
I think they are. I 15 mean, I know some of my, you know, competitors are here. And they have... I'd like them to come up. They have deals with valet companies. They charge the valet company a very small amount, you know, $2, $3, $4, and the valet company gets the rest. So, they are paying the parking tax on the $3. I know that. I mean, you know, I'm sure of that. But the rest of the dollars I don't think are taxed. So, that's where I think 60 Whole - 5/19/05 the -- I think what the Mayor had -- you know, is proposing, I think it's going to now tax that, those dollars as well. So, it is being lost from the tax rolls.
Okay. I appreciate that. I just wanted to make sure that when we talk about a decrease, we don't want to send a message out. It may be a decrease to you but there's a reason for the decrease because they're parked in other places.
Yeah. I don't begrudge the restaurants from doing what they have to do. I mean, they feel that they need it. If that's -- And they're doing well. That's good.
The only reason I brought it up is because everyone listening to this thinks that there's fewer people coming to Philadelphia, there's fewer people coming based on the fewer number of vehicles that you're reporting. But I just wanted the record to reflect the fact that there's other reasons for that occurring. 61 Whole - 5/19/05
And I don't want to belabor this. And I think I've gotten my answer. And I appreciate it.
I think the parking business has been fairly stable in Philadelphia. I mean, it was doing very well, you know, before 2001. Recently it's kind of -- it went down, and then it's been kind of stable. I think the reason that it's stable is because of the nightlife and the people living downtown. We're steadily losing jobs in Center City, 10,000 last year. It's staggering. That hurts our business. I mean, that is a direct killer of our business. The fact that there are more people living downtown and eating downtown and coming to the theaters is balancing things out, from my perspective. 62 Whole - 5/19/05
That's fine. I appreciate that. Thank you, Madam Chair.
You're welcome. The Chair recognizes Councilman DiCicco. COUNCILMAN DiCICCO: Thank you. I think the question was answered as a result of Councilman Rizzo's question. So, the valet parking tax, if that were enacted, has no real impact on your industry.
No. We -- We pay -- We pay parking tax. Allen does a lot more of this stuff, you know, in some of his garages. We pay the parking tax on the parking revenue. And you get $3 or $4.
Allen Blake with Central Park. If I could just address that. With our company we do have agreements with valet operators who do restaurant parking. They put the vehicles in our garage. They pay a lower rate to us which we're 63 Whole - 5/19/05 remitting parking tax on. I can't address any other additional fees that they are charging, whether there's being tax paid on that.
And at the same time, don't you have the liability of insurance?
So you have to pay insurance for the cars that come and pay $17, plus the cars that are valet parking that you're only getting $3 for. Is that as I understand it?
It doesn't seem very fair. COUNCILMAN DiCICCO: That's a business decision that the parking garage --
Yeah. I'm taking those cars later at night when I don't have the full capacity. And it makes sense for me to fill an empty space and get something out of it. 64 Whole - 5/19/05
It's better than getting nothing. $3 is better -- You're not going to get $17. At night our rates and the weekends our rates could be a half or a third of our all day rates during the week, because we're trying to attract that precious business at night. So, certain facilities may be closed if they weren't getting valet business. So, it's really -- It's just getting a little bit of extra business.
Catch 22. I didn't mean to interrupt you, Councilman. COUNCILMAN DiCICCO: No further questions.
I just heard the $3, and it just doesn't seem very fair.
I don't have any 65 Whole - 5/19/05 testimony, prepared testimony, at this time. So...
Okay. How about you, sir? UNIDENTIFIED PERSON: No, I don't.
Fine. Thank you. MR. McPHERSON: Is Ms. Kammerdeiner in the chambers, the Revenue Commissioner?
Is Ms. Kammerdeiner here? All right. Fine. Would you please approach the witness table. Gentlemen, thank you very much. Good afternoon. Please identify yourself for the record. Do you have any prepared testimony on... COMMISSIONER KAMMERDEINER: Yes. Copies were made, and I believe copies have been distributed before, but some additional were just made. I'm not sure where they are at the moment. They were taken by your staff. 66 Whole - 5/19/05
We're checking to see if they're at the table. Thank you. COMMISSIONER KAMMERDEINER: Should I wait?
All right. Ms. Kammerdeiner, you can now proceed. Thank you. COMMISSIONER KAMMERDEINER: Thank you. Good afternoon, Councilwoman Verna and members of the Committee of the Whole. I'm Nancy Kammerdeiner, Revenue Commissioner. And I am pleased to be with you today to present testimony regarding Bill Number 050383. This bill would amend Section 22 19-1200 of The Philadelphia Code, entitled parking tax. It would increase the rate of tax from 15 percent to 17 percent on parking transactions for fiscal 2006 and thereafter. 67 Whole - 5/19/05 The parking tax is imposed upon every person parking or storing a motor vehicle in or on a parking facility in the city. The tax rate is applied to the amount charged for the transaction. Since 1987 that rate has been percent, the taxes collected 8 by the operator of the parking facility and 9 paid over to the city, in accordance with the 10 provisions of Section 19-1200 of The 11 Philadelphia code, and the regulations of the 12 Department of Revenue. 13 In fiscal year 2004 the city 14 collected $41,748,000 from the parking tax, 15 and we project collections of $44 million in fiscal year 2005. Therefore, a two percent increase in the rate of tax would be expected to result in an increase in revenue of approximately $5.9 million per year. You will recall that in his fiscal year 2006 budget message and proposed five-year plan, Mayor Street recommended an increase, in the parking tax rate to 20 percent and linked that increase to a 68 Whole - 5/19/05 reduction in the rate for the gross receipts portion of the Business Privilege Tax. This proposal's before you with Bills 050007 and 050008 that are pending before this Committee of the Whole. As indicated by Chief of Staff, Joyce Wilkerson, in her testimony before this committee on February 16, 2005, research has shown that the gross receipts portion of the B.P.T. is an impediment to economic growth in Philadelphia. Accelerating the proposed reduction in this tax is an investment in economic development, if done in a way that does not cause deficits or service reductions that would undermine the value of tax reductions. The administration continues to believe that any increase in the parking tax, whether the five percent increase proposed in Bill Number 050007, or the two percent increase proposed in this Bill, Number 050383, should be directly linked to tax rate reductions, preferably in the B.P.T. gross receipts rate. 69 Whole - 5/19/05 This concludes my testimony, and I'd be happy to answer any questions you might have.
Thank you very much. Are there any questions of this witness? (No response.)
Are there any questions of this witness? (No response.)
Thank you very much. COMMISSIONER KAMMERDEINER: Thank you.
Councilman Nutter, did you indicate that you had some questions for the Revenue Commissioner?
Oh. Thank you. Thank you very much. COMMISSIONER KAMMERDEINER: Thank you. MR. McPHERSON: Next witness is 70 Whole - 5/19/05 Morton Hack.
Oh, I'm sorry. Do you mind? I'm sorry. Councilman Rizzo.
While the Revenue Commissioner is here, Mr. Zuritsky mentioned something. And I've had conversation about the valet parking loophole. An example, a valet parker charges bucks to park the car; the garage charges 12 5. Can you address how we're going to 13 collect the 15 percent on the $15? 14 COMMISSIONER KAMMERDEINER: There's 15 a bill that was introduced this morning that 16 addresses that question. 17 We had in Revenue thought that the 18 valet parking would be covered by the parking 19 tax; and, in fact, in audit several years ago 20 had identified a situation where it was not being paid. We had assessed that difference. This issue went to court, all the way up to... I believe it was Commonwealth Court. It may have actually gone to the Supreme Court. I don't have the details here 71 Whole - 5/19/05 with me. But as a result of the court decision, that portion which is over and above the cost of putting the vehicle in a parking facility, is not covered by the existing parking tax legislation. The change that we're proposing in the bill that was introduced this morning would specifically bring the valet charge under the parking tax. And it is our expectation that that would, first off, close that loophole and make the entire transaction taxable, and also would deal with this issue of fairness, in terms of how the tax is collected and how the charges are handled.
Well, tell me, then, what is the real number in increased revenue, based -- If you're collecting that piece from the valet parker, what exactly are we talking about? That number, did you say $5.9 million a year? That's not including that. COMMISSIONER KAMMERDEINER: That is 72 Whole - 5/19/05 not including that. And we expect to address that more directly when there's a hearing on the bill that was introduced this morning. I don't have the exact numbers with me now, and I wouldn't want to quote it just off the top and misstate it. But we do expect that there would be several million dollars in additional tax that would come from the valet transactions. And I would prefer to address that directly with the full testimony on that bill.
You're welcome. Thank you very much. COMMISSIONER KAMMERDEINER: Thank you.
Good afternoon. Welcome. Please identify yourself for the record and proceed with your testimony. 73 Whole - 5/19/05
Good afternoon, City Council members, Council President. My name is Martin Hack. I'm an independent consultant retained by the parking association to conduct a study on the effect of the parking tax increase.
First I'd like to begin by providing you a brief background regarding the study, the methodology and the findings. The study that was conducted focused on the effects of the parking tax increase, first in the City of Pittsburgh, understanding the implications of what the parking tax resulted in, and translating that into the effects of the parking tax increase in the City of Philadelphia. The study was written during March and April of this year and focused on the City of Pittsburgh because it's the most recent case study of a significant parking tax increase. In February of 2004 Pittsburgh 74 Whole - 5/19/05 instituted an increase from 31 percent to 50 percent in the parking tax rate. And this study focused on the time period of 2004 to the present. The study focused primarily on the effect of the parking volume and revenue, as well as the indirect effect for both the restaurants and other types of business within the City of Pittsburgh. 3 million transient downtown parkers were lost between the year 2003 and 2004. In 2003 the city estimated 17 million parkers, based on the tax revenues 18 which were collected. 3 million parkers lost within one year. The parking rates increased between and 67 percent. 75. During the evening the rate went up from $3 to about $5. And now for the private lots, the rates increased to about $20 and to about $10 for evening and weekend. The indirect effect of the parking tax increase resulted in store closures. Two department stores closed. 2 percent to percent. 12 The most dramatic impact of the 13 parking tax increase was the decline in 14 evening and weekend parkers in the downtown 15 area of Pittsburgh. 16 An estimated 467,000 evening and 17 weekend parkers were lost which represents 18 approximately 700,000 total visitors, assuming one and a half visitors per parked car. 5 million. 76 Whole - 5/19/05 What are the implications for Philadelphia? If you translate the effect of a 33 percent tax increase within this city, from to percent was the next step in 6 the study. 7 Effectively the conclusion is that 8 the parking tax increase being proposed will 9 have a regressive effect and may threaten the 10 renewed vitality of Center City. 11 The following conclusions were made 12 with regard to the impact within the City of 13 Philadelphia: First, an increase in parking 14 tax will result in higher parking taxes. 15 These higher rates may dissuade 16 future visitors from making Philadelphia and 17 Center City their destination of choice for 18 shopping, restaurants and other entertainment 19 venues. 20 The evening and weekend shopping and entertainment venues may be the most directly impacted as a result of the parking tax increase. Based on estimates of the retail sales reported by the Center City Council, 77 Whole - 5/19/05 and actually the Center City District, based on their projections of retail sales, if a 4 percent decline in retail sales is expected, 5 representing a $19 million loss in the local 6 sales tax and Business Privilege Tax. 7 Secondly, an office vacancy increase 8 may result which, based on the study, is 9 estimated to increase by 2 percent from 10 percent which is currently the office vacancy 11 rate, to 18 percent. 7 14 million in the taxes collected from real 15 estate, real estate collections. 16 As a result, the conclusion is that a proposed increase in parking tax, while it may increase the city's revenues by $12 million, is putting at risk approximately $24 million in other revenues, primarily from the retail and entertainment revenue taxes, as well as potential real estate tax assessment taxes. Thank you very much. This concludes my testimony. 78 Whole - 5/19/05
Thank you very much. Any are there any questions for this witness? (No response.)
Mr. Blake. Thank you. MR. McPHERSON: Harvey Spear. VOICE: Already spoke. MR. McPHERSON: Bret Mandel.
Please identify yourself for the record and begin your testimony.
Yes. MR. McPHERSON: Excuse me, Bret. 79 Whole - 5/19/05 Are you here testifying on Bill Number 050383?
No. 5 MR. McPHERSON: You're on the list for that one. That's what we're currently hearing.
Sorry. MR. McPHERSON: So, if you wouldn't mind waiting until we do the other bills, we're trying to get this one out because we haven't had any testimony on this bill in the past.
The next witness on this bill is... MR. McPHERSON: John DeBenedictis, someone from D.L.C. Parking Services.
We'll read a series of names, and then you can indicate whether you spoke for them. 80 Whole - 5/19/05 MR. McPHERSON: Jeb Hatfield. UNIDENTIFIED VOICE: Yes. MR. McPHERSON: Jeffrey Eckman. UNIDENTIFIED VOICE: Yes. MR. McPHERSON: Ben Rosen. UNIDENTIFIED VOICE: Yes. MR. McPHERSON: Richard Zahib. UNIDENTIFIED VOICE: Yeah. MR. McPHERSON: Tom Dunn. UNIDENTIFIED VOICE: Yeah. MR. McPHERSON: That was the quickest list. Okay. We're done on this bill.
Thank you very much. Is there anyone else who would like to speak on this bill with regard to parking? Anyone else? (No response.)
Thank you very much. We thank you all for your patience. This committee will stand in recess until 2:00. 81 Whole - 5/19/05 (A recess was taken from 1:30 p.m. to 2:45 p.m.)
When we recessed, there was testimony being taken on Bill Number 050383. Do we have anyone else to testify on that bill? (No response.)
Do we have anyone else to testify on Bill Number 050383? (No response.)
I'm really sorry to keep everyone waiting. We are in the process presently of considering our budget bills. But, however, we also realize that there are an awful lot of witnesses here regarding Bill Number 050216, concerning the predatory super stores. So, once the sponsor of the bill 21 comes down, I thought that perhaps we could have a spokesperson who will make it a little easier for all of us, so that we could go back to our budget bill. (Recess at 2:46 p.m.) 82 Whole - 5/19/05 (Reconvene at 3:10 p.m.)
We are now reconvening the Committee of the Whole. Councilman Nutter, is there a witness you want to call up?
I'd like to have the Budget Director. MR. McPHERSON: Could the Budget Director please come to the witness table.
Sergeant-at-arms, please. (Recess from 3:11 to 3:17 p.m.)
Now, we're back to Committee of the Whole. And we are listening to bill... Councilman Nutter has asked the Budget Director, Ms. Diane Reed, to come forward.
All right. Thank you, Madam Chair. Ms. Reed, good afternoon.
Good afternoon, Councilman. 83 Whole - 5/19/05 Diane Reed, Budget Director.
Okay. I'm going to need you to pull that microphone a little closer. Ms. Reed, you have two documents that were given to you by the sergeant-at-arms; is that correct?
Okay. And the one document you will not necessarily recognize, but do you recognize the document that reads, City of Philadelphia fiscal 1998 operating budget?
Yes. This document would predate my term of service, but I do recognize this kind of document.
Right. I understand. And while this particular document may predate your service, your recognition of the document, what is this a copy of?
The date on the 84 Whole - 5/19/05 document may predate your service in the government, but you have stated that you recognize the document itself. What do you know this document to be?
This is the General Fund tax revenue portion of the operating budget.
Okay. So, this is from what we often refer to as the budget in brief?
It either is or it isn't, Miss Reed. Why don't you go to the last page. Do you recognize that page?
Okay. And as you can tell, all of the other pages are the 85 Whole - 5/19/05 same. So, can we at least agree that this is from the budget in brief book either during the years that you've been here or previous budget years?
Okay. If you look at what is numbered down the bottom for fiscal 1998, the operating budget, it's listed as , letter C is wages and earnings, the current. That would be the wage tax; is that correct?
And if you turn the page to page -- what is numbered , item number 67, the PICA city account, would that be the PICA portion of the wage tax?
And would the addition of those two numbers represent the revenues generated by the wage tax?
About 324. 86 Whole - 5/19/05 No. I'm adding the wrong numbers together.
Would you... If you want to take a moment or you can take my word for it, that the number is nine hundred and sixty-three seven hundred and nine.
Okay. What I want to discuss with you are the trends in tax revenues during the period of time that the tax cuts have been in effect since former Mayor Rendell started them. And if you will, at least for the moment, accept that the numbers that we just discussed for FY'96 were added correctly, and 87 Whole - 5/19/05 you will find that there are two pages for each fiscal year in the first package representing copies of the budget in brief detail books for each year from FY'96 up through FY'05. If you want to look through the pack, that's certainly fine with me. I believe we've calculated correctly the total revenues generated by the wage tax during all of those years.
No. I mean, you can either give that answer or you can trust me and take my word for it.
I appreciate that. Thank you. Now, for a long time there's been this discussion about the connection between the tax reduction program and proposed or made cuts in services. And there has been a creation in the 88 Whole - 5/19/05 general public that the tax cuts have led to a decrease in tax revenue. So, I want to now discuss with you the numbers that go with the wage tax receipts from FY'96 through FY'05. And so, what I'd like you to do -- And you do know and agree that there had been tax cuts for the wage tax in place since FY'96, correct?
Okay. So, in the second document, could you put on the record what the wage tax receipts are year by year?
Nine hundred eighty-eight sixty-nine for '97. A billion for '98. A 24 billion 59 for '99. A billion 107 for 2000. 25 A billion 196 for 2001. 89 Whole - 5/19/05
A billion 158, '02. A billion 201 for '03. A billion 244 for '04. A billion 268 for '05.
Okay. So, from the document, isn't it true that for every year since the tax reduction program started, wage tax revenues have grown?
Okay. So, why is it that you say that the tax cuts have led to less tax revenue? 90 Whole - 5/19/05
The appropriate statement is really that -- that we are achieving less revenue than we would, given the growth in the tax base and the decrease in the rate.
Well, if that was your goal, then you would have left the wage tax rate at 4.96, right?
You'd have all kinds of revenue then. So, what was the point of reducing the wage tax?
The point of reducing the wage tax is that it put the city at a competitive disadvantage, certainly vis-a-vis the region and with respect to other large cities, who are competitors with us for business attraction.
All right. So, as we've gone through this exercise, it is not true that decreases in the tax rate have led to decreases in tax revenue.
Correct. We still received increases in tax revenue, but not at 91 Whole - 5/19/05 the same rate that we would have had we not changed the rate.
Well, do you think it was better to cut the rate and try to make us more competitive or leave the rate where it was and see what happens?
I think it was better to cut the rate and make us more competitive.
And further, I think it was wise to do it in small increments because it's easier to make adjustments on the management side.
And do we find pretty much the same trend to be the case with the Business Privilege Tax? Generally an upward trend in revenues at the same time that the rates were declining?
So, in that situation, even with Business Privilege Tax cuts overall, with the exception of a couple blip years, Business Privilege Tax revenues have grown while we were cutting taxes. 92 Whole - 5/19/05
Okay. So, can we stop saying that cutting taxes has led to less tax revenue? Can we end that discussion?
As long as we just, you know, describe it in a way that's appropriate because there is more tax proceeds -- there are more tax proceeds every year, but there is less revenue than there would have been without changes. So, just recognizing that fact --
But again, you argue against your own point, which is the purpose of cutting the taxes is to make us more competitive so that the city can grow. Otherwise, you just -- If revenue -- If pure revenue growth is the goal, you would either never cut the taxes or you'd suggest raising them. 93 Whole - 5/19/05 Now, we know ultimately raising them does lead to less tax revenue; isn't that correct?
We generally know that raising taxes can lead to less tax revenue as the market adjusts to the fact that they're in a higher tax environment. You might get a short-term boost in revenues, but ultimately you'll have less revenue.
Okay. All right. What's the -- So, what is the current -- And the administration has a proposal to cut taxes itself, doesn't it, further?
Further? Well, the proposal that the administration has is essentially revenue neutral because it has both a... you know, an increase and a decrease.
Right. That would be tax reduction... 94 Whole - 5/19/05
You're just going to shift it around to different payers, right? You're going to give people a Business Privilege Tax on the one hand --
Yes. We're reducing the business tax in exchange for the parking tax.
-- and an increase on the parking tax on the other hand, and let that be the end of it.
So even with that, you still believe that the B.P.T. should be lowered.
Yes. The B.P.T. is projected for, you know, decreases down to 2015, I think.
Right. So, lastly, when people say to you or if someone said to us that cutting the taxes leads to less tax revenue, what should 95 Whole - 5/19/05 we say? Are they right or are they wrong?
I think you have to give them a qualified answer. I think just to say yes or no is, you know, a half distortion.
Well, there is a yes or no answer to it. You can amplify it afterwards, but there is a yes or no answer. I think that's been borne out through this exercise. You cannot say that based on lower tax rates, you have less tax revenue. You cannot say that. You read the numbers in the record. Each one of them is greater than the year before, right?
Okay. So, when people say that, they are factually wrong.
Okay. Thank you. Thank you, Miss Reed. Thank you, Madam Chair.
Thank you. Are there any other questions from members of the Council of the Budget 96 Whole - 5/19/05 Director? (No response.)
The Budget Director's last statement addressed to Councilman Nutter's last question. What do you say when somebody says to you what Councilman Nutter said, that cutting taxes leads to more income? Can you ever say yes absolutely or do you have to say, it depends on circumstances?
My answer to the Councilman was that, yes, the proceeds from the taxes have increased every year.
That proves that the cuts that have been made to date have not been so great that they actually have, you know, impeded the flow of proceeds.
But does it prove that there's more money that the city received because of the cut than it would have received if there had been no cut?
Nobody really knows the answer to that question. You know, the number of jobs in the city have continued to decline. The tax proceeds have continued to go up on the wage tax. You know, the best conclusion people have been able to come to on that is that it is because salaries have continued to go up. We have -- We do see some data that we've been analyzing. We do see some increases over ten years in some creative 98 Whole - 5/19/05 class kinds of jobs, like management consulting and information technology. And that shows some, you know, new strengths in the wage tax base.
Can you tell us what the average salary was in 1996, as against what it was in 2005?
And wouldn't that be necessary to prove or disprove your thesis? Which I happen to agree with. I don't know how anybody can decide on the basis of tax revenue alone that a tax cut produced more money. It might have; it might not have. And I strongly doubt that it did in local government. At the federal level, it's a different effect that supply side economics plays than it plays locally. Federal government can pay all of its expenses by continually borrowing money, if it wanted to. But we can't do that. So, I don't think there is an answer to that 99 Whole - 5/19/05 question as of -- with the data you now have before you. I believe that had there been no tax cuts during that nine- or ten-year period, that the revenue that the city would have received which would have been much more than it actually got with the cuts. Now, disprove that for me. If you don't believe it, show me how you conclude otherwise.
Very difficult to argue what might have been. However, I think that there is consistent information that the wage tax has been perceived to be too high. I do know retrospectively from studies that we did at P.E.L., that when the wage tax was increased in 1976, the city lost a lot of jobs and residents because the real estate taxes were increased at the same time. And the city did not get that back. So, I would say that that's some evidence that in fact --
-- high rates of wage and 100 Whole - 5/19/05 real estate taxes do have an injurious effect.
But isn't the theory that supports Councilman Nutter's idea, isn't that a theory which says it's important to have the real estate taxes go up, and they will go up? And its just too bad if the result of that is to evict what we call the little old ladies in sneakers? Because that's what I hear from Bret Mandel in support of the tax cuts, when asked what would happen to people who couldn't afford real estate tax increases. Because Mandel's position was that what makes a city healthy is when real estate rates increase because it shows people are buying property and causing the prices to go up. Well, we think Philadelphia has hundreds of thousands of senior citizens that can't afford to pay more taxes and whose income will not go up in a way that will permit them to pay these increased taxes. So, we asked Bret Mandel what happens to the 101 Whole - 5/19/05 people. And he says, well, they can move or they maybe can get what they call these days reverse mortgages. Instead of leaving something to the family, they'll leave it to the mortgage holder. Now, neither of those two answers are satisfactory answers at all to the needs of Philadelphians. And that's why we question the thesis that Councilman Nutter gives us, that by cutting the taxes there's going to be more money. Because if that's the case, let's eliminate all taxes and let's see how quickly the city folds. And let's see how quickly the city employees, whom we also represent, come to us in big droves because they will get layoff notices. There won't be any money to pay them. And people in the community will complain because there will be no services. I think it's a ridiculous point of view to say just because you want to cut business taxes you adopt the theory saying, the more you cut taxes, the more income there 102 Whole - 5/19/05 will be. It depends. It depends on whether your tax drives out business. There's been no evidence that it has. Philadelphia was told -- we're told is a booming city. The downtown area of Philadelphia is booming like almost no other place in the country is booming. And there are many other side areas in Philadelphia that are booming with new businesses operating. So, I can't understand how the city could conclude that it may well be that cutting taxes is going to increase income. It might. But I suggest if it does, it's a rare case indeed where the tax is so high that it makes no sense. And the evidence is very crystal clear that the effect of that high tax has been to drive out businesses. The rest is just guesswork.
Well, Councilman, there have been several well established studies that show that there's a direct relationship between high wage taxes and low property 103 Whole - 5/19/05 values. And I think that someone could begin to illustrate that the increase in the value of real estate in the city does have a relationship to the decreases in the wage tax, aside from the fact that Philadelphia is just cheap and a great bargain, compared to some other jurisdictions.
Well, you know, we get these contradictory statements from the administration. On the one hand the taxes are too high; on the other hand, Philadelphia is a very cheap city to live in. Which is the case? Are people attracted by our overall low tax rate or are they driven away by the overall high taxes? And which is the case in Philadelphia? Do we have a high tax rate or a low tax rate? Because you tell us both things. You tell us that for real estate purposes the tax rate is much too low. Don't dare go out in the communities and tell people that, because they're bitterly complaining about the real estate 104 Whole - 5/19/05 increases in taxes the last couple of years. They think they're already far too high. Yet Councilman Nutter's theories that he supports on the elimination of these business taxes seems to go in the direction of saying we've got to raise the real estate tax. And I see no evidence to warrant it. And I think we're doing a great disservice to the people of Philadelphia by threatening long-time residents, that for Philadelphia to prosper they've got to be driven out of their homes or got to the late age in their lives --
The Chair recognizes Councilman Nutter for a point of order.
Thank you, Madam Chair. Just want to make sure, before we get too far through this record.... As the 105 Whole - 5/19/05 Councilman well knows, I respect his comments, but I at least want to make sure that I interject at the moment. The Councilman is quite aware that I've made no mention whatsoever of increasing any tax. And specifically, I have not even made any mention with regard to the real estate tax at all. Revenues on the real estate side are going up because we have a tremendously hot real estate market. We have not touched the real estate tax rates in this city since 1991 which is before I arrived in this City Council. The fact that anyone's real estate tax bill might go up is a function of increased assessments because of increased value. So, I just want to make sure that the record is very clear. I've made no 22 mention of real estate taxes. I've not talked about real estate taxes. I've not talked about increasing any taxes. And I respect the comments and the 106 Whole - 5/19/05 point that the Councilman is trying to make, but I needed to insert that at that moment. Thank you, Madam Chair.
Thank you. Councilman Cohen, I assume you're finished.
Well, I just think that Councilman Nutter better follow what Bret Mandel is testifying to because he says clearly Philadelphia's rate of real estate tax is far too low, and what will show that Philadelphia is a strong economic force will be when real estate taxes go up. And Mr. Mandel is here, and he'll be able to testify, I hope, later at the hearing, and we can hear directly from him. But one thing has an impact on the other.
Thank you, Councilman. The Chair recognizes Councilman Kenney.
Thank you, Madam President. I'll be brief. Ms. Reed, what was 107 Whole - 5/19/05 your last job? What was your position?
Did you have a relationship at all with the Pennsylvania Economy League?
Prior to that I was the Executive Director of the Eastern Division of the Pennsylvania Economy League.
I was at the Economy League from the first day -- from Osage Avenue day until May of '94.
Did you at any time ever add -- or did you -- You were aware of the Pennsylvania Economy League's position on business and wage tax cuts over the last few years we've been having this discussion? I mean, do you...
Not detailed knowledge, 108 Whole - 5/19/05 but I do receive their materials. I was receiving their materials.
Do you agree with that? I mean, I would argue they're probably one of the strongest advocates for accelerated tax cuts that we've heard in this Council. It's my estimation, anyway. Do you disagree with their position?
I don't know specifically what exactly they were advocating. I do know that the... you know, the experience that we've had this past year kind of indicates that the taxes are decreasing about as fast as we can, you know, absorb change on the expenditure side, and that should be an important consideration.
Are you familiar with a recent letter from the Mayor relative to... Are you familiar with the recent letter we received from the Mayor which was reported in the Daily News today, relative to Council's request and the Mayor's responses to those requests to put back services?
You, as the Budget Director, I'm sure you'd be pretty familiar with that. And does it seem to you that the things that the Mayor is agreeing to or at least seems to agree to in his letter is pretty much everything he originally cut out of the initial budget submission? And with the exception of the Fire Department -- and I know there's ongoing discussions there -- it seems that just about everything... As a matter of fact, one of the put-backs was an increase from what we were suggesting for the libraries from 3.5 to 4. I mean, it seems that in the major areas, with the exception of the Fire Department, the response to the administration that Council's request has been pretty much putting back everything or almost everything that was taken out.
There are specific proposals that I think the administration has agreed to. 110 Whole - 5/19/05
So, where was the big -- Where was the big controversy? Why the big controversy? Why the big doom and gloom about not adhering to the initial cuts recommended by the administration, when now as of yesterday the administration sends us a letter and says, oh, by the way, you know what? We won't give the library 3.5; we'll give them 4. We'll put back some of the other stuff we said we were going to take out. We were going to put back some of the other stuff that said, if we didn't take this out, the world was coming to an end. Our bond rating would collapse. We wouldn't be able to do business. We wouldn't be able to pay bills. And now, all of a sudden, this stuff comes back here like it was a game.
Well, those are offset by some new revenues which, you know, hadn't been contemplated before.
Without the new revenues, 111 Whole - 5/19/05 it wouldn't be possible to do that.
It's amazing. It's amazing how that happened. I mean, we start out this process with all these cuts which amount to, I think, .04 percent of the entire budget. I mean, a really big number when it comes to a $3.5 billion budget. And where does it get cut out of? It gets cut out of the fire service, libraries, rec centers, mini City Halls. What do these all have in common? They all have in common that people get angry about it. And people get angry about those basic service cuts. It's easier to tie tax reduction to the big bad service cuts that now seem to be very easy to put back. Never mind. We were just like -- It sounds Like Emily Latella. Remember her from Saturday Night Live? She used to do the editorial comments. And then when she would get through, she said, never mind. We'll 112 Whole - 5/19/05 just put it all back. I mean, why this big tempest in a teapot if, in fact, you had the capacity to put it back from day one?
Well, actually, we did request decreases in every city department, including those of the independent elected officials. So, everybody was sharing in the pain on that.
In addition to other kinds of initiatives that we have, which were also trying to bring the total cost of government down.
So, the cuts that have been really controversial, though, I mean, is that an incorrect percentage of the budget? I think it was .04 percent, represented in those cuts that people were complaining about the most? That people were coming to our offices, writing us letters, sending us e-mails, meeting after meeting that we had to 113 Whole - 5/19/05 attend amongst Council members, meeting after meeting that Council members had to attend in the district, numerous budget hearings where we had people come in to complain about libraries, and where kids were going after school, and what the Fire Department wasn't going to be able to do and do. And all of a sudden now, like, voila, it's back. And where's the -- What happened? I mean, we went through months of this -- months of this soul searching and hand wringing and finger pointing. And all of a sudden, at the whim of the Mayor, it's back. And we may have the fire service back before we're done. What's this game? UNIDENTIFIED VOICE: Drop it. Drop it. Drop it. Drop it.
I don't get it. To me... I mean, you're part of this process. You're in those meetings. You know what's coming out and what's going back. So, we sit here like goofs. And at the last minute now: Here it is. Here's the 114 Whole - 5/19/05 money. We found it. Gees. What a good process this is, isn't it?
Well, really, since... I mean, as I understand it, that since Council was interested in some of these restorations, the only way that could be accomplished were with some new revenue sources.
Aside from that, we probably will not be able to spend the money if we -- if these -- you know, if these increases are restored -- or I mean, if the cuts are restored.
I even understand the administration seriously looking at the proceeds from the P.I.C.A. borrowing to do the library. Oh, how did that happen? We could never have done that before. We had hearing after hearing talking about how that could never happen. All of a sudden now, oh, maybe that's a possibility. This game is really old and really 115 Whole - 5/19/05 boring and annoying. And I don't know why we got to go through it every year, other than some egotistical game we're playing back and forth that, I'm in control -- that the Mayor's in control of this process. And that's what this actually looks like to me. But it's really, really very disgusting and annoying to have to expend all that energy, to sit here now and read a letter, and to listen to other conversations that says, you know what? All those Draconian cuts we had to do, they're all coming back. How about that? It's amazing how things work.
We really won't be able to spend anything that's restored if we don't have offsetting revenues because they're just -- we would experience a deficit. And I don't think that would be good for the city's fiscal health.
Madam President, I'm done banging my head against the wall. Thank you. 116 Whole - 5/19/05
Thank you. The Chair recognizes Councilman Goode.
Thank you, Madam President. Good afternoon, Madam Director. I agree with Councilman Nutter. I'm glad he clarified the record, with regard to the fact that the city is not receiving less revenue. I can tell you that I know people who are laid off from the city. And having voted for tax cuts, I thought it was very unfair that they thought that they were laid off because the city had less revenue, which it did not. So, there's one other thing I want to clarify for the record. When you use the term "revenue neutral," what do you mean?
That there's no net change in the amount of revenue that would be collected, with one increase offsetting the other decrease.
I don't think it's a good or a bad thing. It's just an opportunity to look at the issue.
But generally when it's used, it's used as meaning a good thing. I mean, in other words, if you were a business, you would not want your year to end revenue neutral. If you're making an investment, you don't want that investment to be revenue neutral. In the end, it's a budgetary term usually used by people in government who want to make sure that they can pay the bills with the tax revenue that they have. But you would not use the term revenue neutral when considering an investment. You would not want an investment to be revenue neutral.
This was a slightly different situation, in which we could decrease an unpopular business tax by increasing a tax that's paid by a more general group. Not popular either, but, you know, it's a trade-off. 118 Whole - 5/19/05
That is a term that actually predates you, in terms of your tenure. It's a term that has been used for the last two or three years. And it's a budgetary term. It's a finance term, in terms of public finance. But it's not something that you would consider when making an investment. You would not want that investment to be revenue neutral. Everyone wants to enhance revenue. They want to gain revenue. They want to make an investment that's going to grow revenue. So, you never, when you use a term revenue neutral, are you referring to anything that should be considered an investment.
Well, tax cuts are very much about the private sector; is that correct?
Well, not all taxes affect the private sector. 119 Whole - 5/19/05
When we're talking about the wage tax, talking about business tax, you're talking about people generally, most of them which are employed in the private sector, and businesses that operate in the private sector, and the revenue that comes from that. And the reason why we would do tax cuts at all would be as an investment.
Yes. Because it allows us to provide city services that would support the quality of life that would create the right environment for business growth, yes.
At this point I'm not taking any position on any particular tax bill, nor am I talking about stuff that is just before us. I'm saying in general, as you spoke to Councilman Nutter's questions about what happened in the mid '90s, up until this point in our reduction of wage and business taxes, you essentially said it was a good investment. 120 Whole - 5/19/05
I think it looks as if it's turning out to be a good investment, yes, but it was a risk at the time.
But it was not an investment that was meant to be revenue neutral.
No. I mean, it had to accommodate some growth because the expenditure side continues to, you know, increase.
My point is, you would never use the term revenue neutral when discussing an investment.
You're welcome. The Chair recognizes Councilman Nutter.
Thank you, Madam Chair. I'll try to be brief. Now, Ms. Reed, let's talk about what you generally don't want to talk about. What 121 Whole - 5/19/05 has been the impact on the budget in our ability to provide services by the decision that was made with regard to foregoing the $18 million from P.G.W.? Did that have any impact on the city's budget?
A hit on the budget; but, you know, it had to be considered with respect to other actions that had to be taken of value, such as helping P.G.W. --
I understand that. I'm not... You know, I'm not saying that it was a wrong public policy decision. We don't have to have that dispute. I want to know: Did that decision negatively impact the budget of the city in its ability to provide services? Yes or no?
I would say yes; but, you 122 Whole - 5/19/05 know, it was accommodated in other ways. I wasn't here at the time, so I can't say exactly how it was affected, but...
Yes, that was money that would not be available to provide services --
So when you -- And I use the you as a bit of a royal you. When you complain about the tax cuts by this Council, which of course we did not make by ourselves, when you complain about the tax cuts and the impact on city services, why do you neglect to mention that you gave up $18 million, albeit for a good cause, but you gave up $18 million that also has a negative impact on the city budget. Why don't you mention that?
I don't think that's any secret. I mean, it is in the documentation, but what we're hoping now is that --
No, it's not a secret. No, I don't see it listed in the litany of things that impact the city budget. All I ever read about in testimony, in speeches, in statements in the newspaper is about tax cuts. Now, we know from our previous exercise that tax cuts have not led to less revenue, right?
We know that forgiving the $18 million from P.G.W. has led to less revenue, right?
Okay. Now, it was before your time, but you're aware that the Mayor did sign into law a wage tax bill, 020092, on April 23, 2002. You're aware of that, right?
And are you 124 Whole - 5/19/05 aware that the most recent wage tax bill, 040607, that was signed by the Mayor on July 1, 2004. Are you aware of that?
Okay. So, Council can pass bills, but ultimately the Mayor pretty much gets the last say, to some extent, right?
Yes. He can either sign them or veto them or let them pass without signature, correct. Yeah.
Okay. But when you sign a bill, would you agree that if you sign a bill, you don't necessarily then have the right to complain about its impact?
You're right. I mean, we just had to live with the consequences of the choices that we made, and... You know.
Right. Okay. Now, what's been the impact on the budget over the years of the Safe Streets Program, 125 Whole - 5/19/05 how much has that cost?
Okay. From the responses from budget season, we received the following information: From FY'02 through FY'05, the overtime cost for the Safe Streets Program are $77,276,696.11. What do you think the impact has been on the city budget as a result of that decision?
Well, I would say probably the effect of that is really seen through the increased property values, and so would be recognized across the entire range of tax sources, because the quality of life in the city improved as a result of Safe Streets.
Well, the property values in all the areas where Safe Streets programs were, I think had been shown -- I've seen some geo statistical maps that the changes in 126 Whole - 5/19/05 property values in all those areas are coming up as well as in the city as a whole.
Well, I didn't know that the Safe Streets Program was primarily focused on raising property values.
I thought the Safe Streets Program was primarily focused on crime reduction.
It was. But I do think that the fact that it improved the quality of life in neighborhoods has meant that property values have gone up spontaneously.
Has the Safe Streets Program been functioning in all the neighborhoods across the city in an equal fashion? And that's, I mean, that's what's driving property values in Fairmount or East Falls or... I mean, I don't think --
Most of those neighborhoods have benefited from Safe Streets --
-- where the most crime is. And it is helping to stabilize those areas.
And, you know, not all property is worth the same across the city either.
Yeah. Now, but it is $77 million out of the city budget for overtime for that program. And you don't mention that as a part of one of the components of the additional costs of government that may lead to a decline in other services in other parts of the government. I mean, you didn't have an extra $77 million sitting somewhere for that purpose. It came from somewhere, right?
That was a 128 Whole - 5/19/05 choice. You made a choice.
Okay. And we've also had an increase in pension costs; is that correct?
I understand that. And we've had an increase in health care costs.
Right. Debt service is up. Over the past four or five years, I think we've had a report from the Controller's Office regarding increased debt.
Our overall debt costs, aren't they up? 129 Whole - 5/19/05
Okay. Where does the $4 million come from that we're spending on legal defense in the federal corruption investigation? Where does that come from?
That's a case where we do have an indemnity fund to try to pay for that. The cost of the federal investigations is exceeding budget estimates. So, it's difficult to try to figure out how to fund those costs which we must fund.
But those are General Fund dollars that are then not 130 Whole - 5/19/05 available for city services, right?
To the extent that we might take them for such a budget line, but I don't think that they end up actually affecting services. That...
Well, if we didn't have the federal corruption investigation, and if we weren't paying for the all legal services, then the Law Department wouldn't spend the $4 million for outside counsel, and they'd probably use it in the General Fund, right?
Okay. I mean, the point of all this, as I'm sure you figured out, there are spending choices that have been made that also drive up the cost of government, as compared to the sole highlighted issue which is the reduction in taxes. And all I'm saying to you is, if we're going to have an honest, legitimate discussion about this, I think it is disingenuous to solely point to the reason 131 Whole - 5/19/05 that there might be some proposal to reduce services. And as laid out by Councilman Kenney, all of a sudden most of them are going to be put back anyway. But if the city administration wants to explain to the public -- If you want to be honest with the public about what's going on, don't only highlight what we've done on the tax side, putting aside the fact that it doesn't make your argument anyway. But there are spending choices that have been made. There are some circumstances that we can't control, all of which lead to less money available for city services. Now, you'd have to agree with that, wouldn't you?
Yes, sir. Thank you. Thank you very much. Are there any other questions or 132 Whole - 5/19/05 comments of this witness? (No response.)
Thank you very much. Is there anyone else to testify? Good afternoon. Please identify yourself for the record and proceed with your testimony.
Madam President, members of City Council, I am Bret Mandel, Executive Director of Philadelphia Forward. And I probably do not have to tell you that I come before you today to urge you to eliminate the job-killing Business Privilege Tax to grow jobs in Philadelphia. I do not have to tell you that in my lifetime high and unfair taxes have contributed to the loss of more than 250,000 jobs or the fact that Philadelphia County lost more jobs than any county in the United States last year, with the exception of Detroit's host county. In its ranking of the best places for doing business in America, Inc. Magazine 133 Whole - 5/19/05 determined that Philadelphia ranked 265th out of 274 places, and said of us, the city's high business taxes, poor level of public service, crummy public schools, and reputation for political corruption continue to chase businesses to the neighboring suburbs. I also don't have to tell you that in the past decade we have reduced tax rates each year, but we have increased tax revenues. The research performed by Wharton's Robert Inman for the Street administration demonstrates that our recent tax reductions are responsible for preserving more than 22,000 jobs over the last decade. You know, it's also unheard of to tax businesses locally the way we do in Philadelphia. We tax every dollar in city gross receipts the business takes in, even if it is not making a profit. 5 percent. Additionally, this tax is imposed in 134 Whole - 5/19/05 such a way that sole proprietors and partnerships actually pay an effective tax rate that is higher than their corporate competitors. You also know that the Tax Reform Commission concluded that we should phase out this tax and eliminate all its problems. You don't need to hear all this from me again, so let me tell you a few simple stories that I have collected as part of Philadelphia Forward's work and then serenade you. One responder wrote: I run a small electric business with two employees. This is my fourth year in business in the city since I broke away from my father's company. T. from my accountant in the mail this morning, I know why my father chose to move his business out of the city. It makes me want to leave the city. I love life in the city but can't justify the high taxation. Another wrote: In 2003 my partner and I turned a dusty, shuttered shop front on 135 Whole - 5/19/05 Emlen Street into a viable, small restaurant, doing much of the construction ourselves. In just four months and with only $78,000, we employed eight workers all living in Ms. Reed Miller's district for most of last year. Now they're all jobless. This is a shame. Why did we close our doors and put the place on the market? Philly business permits, fees and taxes. The Mayor's hand-picked transition team, the 21st Century Review Forum, declared the Mayor's very important quality of life strategies will not have the desired impacts or be sustainable in the long run in the absence of fundamental tax reform. Some will question whether the city can afford significant tax reform at this time. But that is the wrong question. Rather, we should ask how we can afford not to reform our taxes now. I could not have said it better myself. The Tax Reform Commission estimated that its recommendation will mean 47,000 jobs 136 Whole - 5/19/05 for Philadelphia by 2010. If there is another plan on the table to grow 47,000 jobs in the coming years, let's debate its merits. But we cannot accept the excuse that we cannot afford to enact the tax reform package. Truly, we cannot afford not to do it. I urge you to take action today and eliminate the job-killing Business Privilege Tax. But it's been a long day, and it will be a long night. So how about I lighten the mood a bit and serenade you. I'm going to sing backup instead of lead. ) I hope that helps gets you through this long day.
Thank you. All right. Do we have any other witnesses that would like to testify? 137 Whole - 5/19/05 Please approach the witness table.
Thank you, Councilwoman. We're the "One Philadelphia Dancers" here to perform for you today. My name is Sharon Ward. I am the Child Care Policy and Advocacy Director for Philadelphia Citizens for Children and Youth and Co-chair of One Philadelphia. We're here today to testify very briefly on the tax bills. We thank you very much for having this additional opportunity to testify on the budget and tax bills. We know that there are a few members here who we haven't seen before. We're happy to see Councilwoman Krajewski back. Just want to make a few points. We're here today to speak in opposition to Councilman Nutter's bill, 040767, and in opposition to the budget. We'd like to make a few recommendations for Council as you move towards deliberations on the budget and tax bills. 138 Whole - 5/19/05 The first is that we ask you to restore the tax cuts -- to restore the budget cuts first. We think that the city really cannot bear the kinds of cuts that we're seeing this year in libraries and recreation centers, and other things. We also want to remind you that there are a variety of cuts in services, including health care services, that have not drawn a lot of attention, that have not brought a lot of people out to speak, but those are still as significant as the ones that you have heard thousands of people speak about. If you do anything, we just want to ask you -- And this is apropos to the dialogue that was just had with Councilman Nutter and with Councilman Goode and Budget Director Reed -- that we think it's critical that at least this year Council begins to understand that there is a link between tax cuts and cuts in services. I want to make a very important point. And this is not a point that we make 139 Whole - 5/19/05 as One Philadelphia, and it's certainly not a point that you've heard from the administration, but it is a point that was made by the Tax Reform Commission and E-Consult, their consultants. You can cut taxes, and those tax cuts will simply not pay for themselves. This Council may elect to cut taxes, but it will never generate enough revenues to pay for the tax cuts. Most economists would argue that tax cuts will bring in at very best $2 for every $10 that are spent. So, to Councilman Goode's question about return on investment in the private sector, there is no return on investment here. You spend money to pay for tax cuts. The question is then, how do you pay for those tax cuts? Many cities that have enacted tax cuts pay for them through service cuts. And that's the second point that needs to be remembered. Economists, including E-Consult, have said that tax cuts that cause cuts in 140 Whole - 5/19/05 services have no good economic benefit. So what we have here is a situation in which we are taking the most costly approach to dealing with the city's economy, which is to give everyone a tax cut, something that will cost millions, if not billions, of dollars in order to influence behavior of a few people and without considering other alternatives. There are four other things that have been raised as critical issues that affect business location decisions in this city. They include dealing with L & I and zoning. They include access to capital. They include access to work force. Nobody has paid attention to those issues. Bret said there needs to be another alternative on the table. That's absolutely true. But before we spend $2 billion on tax cuts, we need to look at the other alternatives. We need to consider them. The final thing that economists have said is that what actually has been proven to work in building the economies of cities like 141 Whole - 5/19/05 Philadelphia's is not tax cuts but spending. Investments make a difference. They produce a better return on investment than tax cuts. So, it's critical. This body may decide that it wants to cut taxes.
But please be assured that that will be done by -- and it will be paid for, and it will be instead of improving and supporting services, and it is very likely to result, as the Tax Reform Commission also indicated, in increases in property taxes. So, the people who will be paying for this tax cut are people who live in row houses in Philadelphia. And this body will have to decide that a 33 percent property tax increase in Fishtown is something that they are willing to support to pay for the tax cuts. This is about -- As was mentioned earlier, this is about choices. You have three of them. You can cut taxes, you can improve services, or you can maintain property taxes at a reasonable level. You can't do all three. Thank you. 142 Whole - 5/19/05
Thank you very much. Our next witness, please. Identify yourself for the record.
Good afternoon. My name is Andre Butler, and I'm from the Philadelphia Unemployment Project, also a coalition member of One Philadelphia. I'm thankful to be here again with the privilege to speak to this body of legislators, the City Council. And I have a couple of quick comments. I want to say I'm glad, as Ms. Ward said, that we see other Council members here today that were here the last time that we spoke, one of which is Councilman Cohen who made it very clear the first time I was here that he felt that the Tax Reform Commission suggestion of a Business Privilege Tax cut may have been the same thing or similar to the George Bush Republican tax giveaway which was a very powerful statement. And just to reiterate that, we see no difference. It's the same thing. 143 Whole - 5/19/05 The Business Privilege Tax cut very simply was going to affect every -- would affect revenues to every department in the city. And we have to remember who is making the suggestion of that. And that's the wealthy people of this city. They're the ones that can afford a tax cut. Because they can either afford to either live over the tax cut by living in a better part of the city or live in a better suburb. They don't need a good police force. They can afford to hire the best security for their own homes, or go live in the suburbs where they think it's safer. They don't need to have the best fire protection for their home or business in the city. They can afford to either buy the best for their home or business or live in the suburban community. They don't need a good library system in this city. They can afford to send their children to a private school or to live 144 Whole - 5/19/05 outside the city and work in the city. They don't need to have, necessarily, to have a good Streets Department to pick up trash that they have received. They can afford to do the trash themselves. The business communities is what is asking for this tax cut for the elimination, because they can afford to live over the tax cut. The regular common folk cannot afford to do that. I just left the law firm Lineberger and Goggin that's involved in collecting the back property taxes in this city. We're trying to get deals for people who are behind in their taxes, who want to pay their taxes but who want to also be able to live at a decent -- have a decent standard of living. They're being forced in some cases to sign deals of paying $2,000, $3,000 down and $500 a month just to pay their back taxes. They're only making $1,000 a month, some of them. That's all they're making as 145 Whole - 5/19/05 gross income. They're being forced to give up all of their money for taxes. And this body is talking about our Business Privilege Tax cut. Think of that the next time you give Comcast a big break. Think of it the next time this body decides to pay its share for two new stadiums we couldn't have afforded back then. Think of that the next time you make those kind of irrational decisions. The regular common people of this city cannot afford a B.P.T. reduction. You also have to remember that the Tax Reform Commission suggested if we eliminate the Business Privilege Tax we're going to have to raise property taxes. That's in writing. The city already has 1,000 or more sheriff sales a month. That's just for mortgages, not counting that there are now two tax lien sales a month. We have two tax lien sales plus one foreclosure sheriff's sale. And all those people, most of them, come to our offices for help. We have to try 146 Whole - 5/19/05 to work deals for them over -- either with their lenders or the mortgage company, something to get them to be able to pay their taxes and live at a respectable, decent living. So I ask this body to think about the common folk, the regular people, on which the back of the city is built. Think of that if we decide to eliminate and cut services and cut taxes, which is going to cut services. Think about the regular common people in this city. Thank you.
Good afternoon. I'm Stan Shapiro. I'm the coordinator of One Philadelphia. I'm glad to see many of you folks again. Bret Mandel asked, what are we going to do if not this, to create 46,000 jobs? The answer is the answer that a doctor gives to a patient: First do no harm. And cutting these taxes puts the city at risk with no firm basis for knowing 147 Whole - 5/19/05 that those risks are not going to come into effect. The Tax Reform Commission said that without this Council doing anything to raise real estate taxes, real estate values will go up at a far faster rate than they would otherwise, without a Business Privilege Tax cut, and that the only way that a Business Privilege Tax cut can be revenue neutral at best is if this Council allows those increases in real estate tax values not to be translated into higher real estate tax revenues. So, this Council would not be able to respond to all of the complaints from the neighborhoods about their automatically increasing real estate taxes or else the revenue shortages are guaranteed even by the Tax Reform Commission. It is not we who are saying there are going to be revenue shortages. It's the Tax Reform Commission that says there will be revenue shortages unless this Council allows real estate taxes to go through the roof by 148 Whole - 5/19/05 doing nothing. And maybe this Council will want to do that or the next Council. But I know that it is very difficult and it is justifiably difficult for Council to, in fact, allow more of our homeowners to be under the gun because of real estate taxes that they cannot afford. And furthermore, the real estate tax is imposed on a flawed model, one which imposes higher values on low income owners, as opposed to high income owners. So that the rate increases will be inherently unequal, inherently unfair, and yet absolutely necessary to make up for the lost revenue from the Business Privilege Tax. So, this is a lemon of an idea. That's why you all will find some lemons on your tables. We don't have any other entertainment for you. We don't actually think that this is an entertaining idea. And we think that we need to seriously think about what to do to continue to grow the city. But first, we don't want to do any harm. 149 Whole - 5/19/05 Thank you.
Thank you. The Chair recognizes Councilman Goode.
Thank you, Madam President. During the testimony there was some reference to comments I made. I don't know what it was. But what was interesting about it, I did sit down with One Philadelphia to discuss this whole issue, the fact that I thought that it was too philosophically driven and not getting down to issues where we could find common ground which include terminology. And my suggestion at that point in that meeting was that we not discuss the issue of tax cuts, rather than tax reform. The issue here today is tax reform. Not only is the term tax cuts being used but the terminology paying for tax cuts. I don't understand how you pay for tax cuts. How do you pay for tax cuts? See, we can't communicate unless what you're 150 Whole - 5/19/05 saying makes sense to me.
Well, excuse me, I would like to ask Councilman Goode, how do you call tax reform eliminating a tax?
I asked you a question. I'm the one asking the questions here.
Excuse me, sir. The Councilman is speaking. Would you wait until he's finished? And then you can reply.
Question is simply, how do you pay for tax cuts? I need to understand that terminology.
Councilman, it's an important question. And actually, there 151 Whole - 5/19/05 are -- On a number of levels of government there are actually documents that track tax expenditures. That is well established that a tax cut is considered to be spending of today's dollars. So, for example, on the federal level they do actually track tax expenditures. If they cut taxes for pork bellies in Chicago, they track what the loss of revenues will be for that. So, what that means is, for example, and how you pay for it, is that if I have $10,000 of income today, and I pay seven percent tax on it, next year I pay five percent tax on it. Then the taxing body's going to get two percent less. They have to come up with dollars to pay for that. But let me point out to you again --
You know what? That makes a whole lot of sense. And I'm glad you explained that.
So, if we keep the revenue level the same, and it's revenue 152 Whole - 5/19/05 neutral, but beyond that there's actually some revenue growth, we could dedicate that to tax cuts, and we would both be doing something that is revenue neutral and paying for tax cuts. Is that correct?
Yes, that's true, Councilman. But what that also means is that if you dedicate that revenue -- That assumes that there's revenue growth, because what I'm saying --
Well, we're not assuming because we know that there's revenue growth.
There is revenue growth, but you can't necessarily say that the revenue growth is due to the tax cuts.
You absolutely can say, after examining it over a ten-year period, that there's continued revenue growth, there's going to be continued revenue growth. Even the Budget Director who is against tax reform will tell you there's going to be continued revenue growth. The issue is whether, if you hold 153 Whole - 5/19/05 revenue steady and then invested all additional revenue that's coming in, as you say, to pay for tax cuts, then you would in fact be paying for tax cuts.
Two points. One is, I would dispute the argument that -- or dispute the contention that the tax cuts cause the revenue growth. I want to point out that the '90s were a time --
That's a philosophical argument. And I'm not here to debate philosophy. I really asked you a question about what you meant by paying for tax cuts.
And when you're talking about paying for tax cuts from existing revenue or paying for tax cuts from revenue growth, I don't believe there's a bill before us or a bill even as amended before us this year that deals with this budget or the next budget or the future budget in terms of tax reform or what you refer to as tax cuts that cannot be paid for 154 Whole - 5/19/05 ten times over with revenue growth. That's already been demonstrated over the last ten years.
Councilman, I certainly would acknowledge your contention on that. I would simply say that the Tax Reform Commission said that in this city 50 percent -- that there would be a 50 percent reduction in the -- or there would be 50 percent less income generated from the tax cuts than was lost. And therefore, it would need to be paid for some other way. And their suggestion was an increase in real estate taxes would do that. So, again, that's not my position. That is their position.
Well, whether it's real estate tax revenue growth or whether it's Business Privilege Tax revenue growth, whether it's wage tax revenue growth, you would agree that if there is additional revenue growth, then -- and that the cost, as you put it, for paying for tax cuts does not 155 Whole - 5/19/05 come from existing revenue but from revenue growth, then you're paying for it from growth.
I would argue, Councilman, that if there is growth... I mean, again...
There is growth. It's been documented today, and it's a part of this record.
I'd like to offer, perhaps, a perspective on that. If there is -- If there is revenue growth, then there are choices. Then the Council could choose to cut taxes or it could choose to increase services. We actually think that... Right?
You could some of both, yes. I think those are the choices that the Council would have under those circumstances.
But what I'm trying to avoid is people believing that we're, quote unquote, paying for tax cuts out 156 Whole - 5/19/05 of what was the existing revenue levels because that is not true.
No. I think what we're trying to communicate is that, given the tremendously sharp tax cuts that are on the table, that that --
They could change any minute. And we understand that there's some talk about some changes. But the particular tax cuts that are on the table would actually cut revenues, and therefore would have to be paid for. Now, if economic theory, which was not even adopted by the Tax Reform Commission, produces more revenue than is lost, which no one is actually predicting...
I'm not talking about economic theory. I'm not talking about philosophy. I'm not interested in debate over that. I'm talking about real money that exceeds revenue projections, real money that 157 Whole - 5/19/05 exceeded revenue projections over the last ten years, real revenue growth at the same time that tax reform and tax cuts, as you call them, existed. And so, there actually has been an increase in revenue, will be an increase in revenue above existing revenue levels. Therefore, there is money for a decision to be made about. And it is a decision about whether you invest in services, you invest in tax reform, you invest in both. And I understand your argument about investing in services. I'm not necessarily going to say you're wrong. But I don't like the suggestion that we are paying for tax cuts, as you say, and assuming that it's coming from existing revenue that existed and not from the growth that we have achieved.
All right. I think to have a complete answer to that, you'd also have to compare the growth in city expenditures, because there is an inflationary factor. 158 Whole - 5/19/05 So that if the revenues that have been coming in have been increasing at a lower rate, which Ms. Reed also suggested when she first testified, then they may not have been keeping up with the demand for services. So, there may not -- There may not have been money available for tax cuts. Those revenue increases may have been needed to maintain services.
I don't disagree with you. My point is that if there's additional revenue growth, we then make a decision how we want to invest it, but that to suggest that tax cuts are being paid out of existing revenue or existing revenue levels that were set the year before just simply isn't true. It's equally untrue as to suggest that less tax cuts means less revenue. Less tax cuts has not meant less revenue.
We agree that it has not meant less revenue than prior years, but 159 Whole - 5/19/05 I think we have a disagreement -- we may have a disagreement over whether or not it meant less revenue than we otherwise would have had, and whether or not that wound up being a good choice because those tax cuts did more good than maintaining services or increasing services would have done. We would tend to think that increasing services would have been a better way to keep population and keep businesses.
I'm not going to take a position, agree or disagree because, as I said, it's not a philosophical debate for me. It's really just trying to clarify the record, in terms of what you mean by pay for tax cuts, just like I asked the Budget Director what she meant by revenue neutral. They can be very misleading terms. Thank you.
The Chair 160 Whole - 5/19/05 recognizes Councilman Nutter, and then Councilman Kenney.
Thank you, Madam Chair. There's been a lot of mention of different components from members at the table about what the Tax Reform Commission recommended. Can we at least agree that the Tax Reform Commission made Recommendation Number which is the incremental elimination of 13 the Business Privilege Tax? Would you at 14 least agree to that? 15
Yes, but without 17 context it really doesn't state the full 18 picture of what they said. 19
The context is, 20 Recommendation Number 23, incremental 21 elimination of the Business Privilege Tax. 22 And they have a schedule that they 23 recommended, showing the elimination of the tax in 2015. The bill in front of us recommends the elimination in 2017. 161 Whole - 5/19/05 Whatever the context is, there is a recommendation. You've referenced the Tax Reform Commission report on any number of occasions to bolster your argument. I'd at least like you to recognize and agree that there is a recommendation in their report proposing to do that.
Can we at least agree on the rather simple things first?
One of the criticisms of the Tax Reform Commission's charge was that its charge was to look at cutting taxes. So, it would have been astounding --
That's what a Tax Reform Commission does, and that's what the voters asked them to do. That was their charge. It was to lower the overall tax burden on Philadelphians. That was their charge, and I think they did their job. 162 Whole - 5/19/05
And their recommendation was that you could do that, assuming that you allowed real estate values to increase drastically, and you did nothing to stop the increase in real estate taxes. I think they said that if you had the courage to do that. I think those were the words they used.
That was not their recommendation. What they said was: If all other revenue generating options failed, and there was no other way to fund the Commission's recommended package of tax reform, the city could increase property-based tax rates. That's what they said.
I'm not aware that there are other revenue-raising measures that have been suggested.
They suggested a number of them in their report. That would be in the...
...volume one 163 Whole - 5/19/05 there was a whole series of recommendations for revenue enhancements. That's from the report.
I'm not aware that they are before the Council at this moment.
I'm not aware that those recommendations are before the council at this moment, other than increases in the parking tax which would compensate for part of the reduction in the business privilege tax.
So that we think that things have to be done in a package as the reform commission recommended. If anything is going to be done at all.
Well, that's the wonderful thing about the tax reform commission. It was advisory in nature and we actually have the job and the responsibility of taking action. We've taken some action on these particular matters. 164 Whole - 5/19/05 Let me ask this question: Ms. Ward, you made reference to... and I didn't understand the context... $2 billion in tax cuts. What is it that you're talking about?
Councilman, my recollection of the cumulative cost of the Business Privilege Tax elimination over the years was about $2 billion. I could be 10 off on that. But it's certainly well into 11 the billions of dollars. 12
Yeah. Okay. 13 Do you know what the cost of the 14 proposed tax bill in front of us and the 15 amendments that have been circulated that go 16 with it? Do you know what those costs are? 17
I have received a copy of the proposed amendments to the bill and the revenue projections or the fiscal impact. So, yes, over the first five years of the bill would be $14 million.
Okay. Do you 165 Whole - 5/19/05 think that will send the city into fiscal collapse?
No, I don't, Councilman; but one of the things that we have argued here is that the city needs to find dollars just to pay for things that have been cut in this budget. And we would also like to argue that --
Apparently all the things that have been proposed to be cut, looks like they're coming back.
Well, there are -- Councilman, part of this is about an acceleration in an already existing reduction in taxes. So, I guess part of the question might also be, why bother to do an additional $600,000 worth of tax reduction when there's already a schedule of tax reduction that's in place.
Well, there's no 23 scheduled reduction in the net income portion of the Business Privilege Tax. We're in the soon-to-be third year of a five-year cut in 166 Whole - 5/19/05 the gross receipts portion of the Business Privilege Tax. And if you want to send the right message, I think you at least seek to guarantee five more years of stable, consistent cuts, in an effort to demonstrate a commitment to try to make the city a place where people want to stay or locate their businesses. I mean, as much as I believe in services, I'd at least state, respectfully, that what a lot of people need are jobs. Would you agree or disagree?
Do you have a proposal to help improve the climate here, that people would want to stay or grow their businesses so people can get jobs and be less dependent?
And this is a proposal that is backed up by economists who have looked at this issue. They argued that investments in quality of life, that people want to live in a city, and investments and things like infrastructure are more effective ways of improving business climate and attracting business to a city.
Okay. Was the Mayor wrong to sign the tax cut bills that have been put into effect?
Was the Mayor wrong to sign the two tax bill cuts that have been put into effect?
Well, the Mayor signed tax cut bills and proposed a budget that cut the libraries. So, that was -- that -- the Mayor will have to answer the question about whether he was wrong to do that.
I'm talking about in 2002 and in 2004. Was the Mayor wrong to sign the bills that reduced the wage 168 Whole - 5/19/05 tax?
We haven't taken an organizational position which looks back.
I'm not asking for an organizational position. The witness is at the table. We've had a quite friendly and extensive discussion about taxes and tax policy and tax philosophy and a whole host of other issues. What I want to know is, was the Mayor wrong to sign the tax reduction bills. Yes or no. 14
In the current environment where services are under grave threat, and not just from losses of city revenues and expansions of needs in the City of Philadelphia, but also a tax cutting frenzy, you could call it, in Washington and Harrisburg, and tremendous threatened cuts from those sources --
I can't really 169 Whole - 5/19/05 control what they do in Harrisburg and Washington.
Not exactly. Let's move down the row. Ms. Ward, was the Mayor wrong to sign the bills?
Councilman, I work at Philadelphia Citizens for Children and Youth. We would argue that there are vast amounts of unmet needs in this city, and we would argue that it's better to invest in services and --
-- therefore, we would rather have the dollars spent on services.
Your response 170 Whole - 5/19/05 doesn't answer my question. Was the Mayor wrong to sign the tax cut bills in 2002 and 2004?
Councilman Nutter, if I may say this because that's the -- We -- We see it up at the unemployment project. We get most of the jobs people. And we certainly would question his signing of those two bills. We have seen absolutely no -- They were -- They were implemented hopefully to increase the business climate and increase the availability of jobs. We have seen absolutely, positively no reduction in people coming to our office looking for jobs; none.
Mm-hmm. Okay. All right. I do appreciate your views. Now, I expect to be voting for it, but what's your view on any number of our tax incentive programs? 171 Whole - 5/19/05 One of our colleagues has a tax increment financing bill that for development purposes will forego future tax revenues. Are they incorrect as well, as a part of policy to create jobs?
I don't believe that you can make an across-the-board assessment of those kinds of proposals. I think -- And that is --
It's less tax revenue. That's what you're concerned about, right?
And that is why -- That is one of the main reasons why we are in opposition to the Business Privilege Tax elimination, that it goes to businesses that might need financial incentive to stay and businesses that need no financial incentive to stay whatsoever. And so, therefore, these funds are spread out in a way that undoubtedly wastes major portions of the tax reduction. There may be instances in which the government makes choices about particular 172 Whole - 5/19/05 industries, that after study and investigation, and based upon the fact that those industries represent the kinds of jobs that we really want to keep, as opposed to, you know, the minimum wage jobs which this Council tried to act against last week. There may be instances in which this Council would legitimately vote for that kind of assistance, but that is a completely different issue than the issue before us now.
Councilman, let me just say that my boss has been here numerous times testifying against particular TIFs.
Because of their impact on city revenues and also their impact on the schools. I also want to point out, which I neglected to do in my testimony, that we do believe that taxes are part of the discussion around business climate and quality of life. We don't think they're the only part of the discussion right now. And we frankly 173 Whole - 5/19/05 think it's the most expensive and the riskiest approach. So, we're happy to consider taxes. We're happy to consider their impact, but the dialogue needs to be broadened to address the other types of issues that impact business decisions and the decisions individuals make about living in a city.
And also, Councilman Nutter, as I'm just shortly going to restate, when we have angry taxpayers that came -- that are at our office and that met with -- Some of them met with Councilwoman Blackwell and some who are involved in this. When they see a big tax giveaway to Comcast, and see people coming and see them coming after the little man asking them for $2,000 and $3,000 down and half of their income a month, yet you can get a tax cut to Comcast, they don't like that. The regular lay people can't make sense out of that.
Yeah. I can appreciate that. Okay. 174 Whole - 5/19/05
-- the economic theory of supply side economics has proved wrong at the federal level numerous times. We have it in place right now. It's causing huge deficits. But the federal government can continue to spend money as it wants to because it effectively prints money.
We all know that this Council cannot print money. So that if the theory doesn't work, then this Council will have to cut services.
Well, one, we haven't heard it here. No one's talked about it, I think, other than you raising it. And secondly, I think there is some significant differences between the federal government and the national economy versus the economy of the City of Philadelphia versus Bucks, Chester, Delaware, Montgomery 175 Whole - 5/19/05 Counties or other parts of Pennsylvania or other areas in the United States of America. It's a little easier to not locate in Philadelphia versus not locating in the United States of America. I mean, they really... At some point, you know, you're into an apples and oranges discussion. But I do appreciate it. I respect your views. And I really thank you very much for your testimony and your responses. Thank you.
You're welcome. The Chair recognizes Councilman Cohen. Councilman Cohen, your light is on. Did you want to be recognized?
Yes. I've had a kind of mental merry-go-round on the question of tax 176 Whole - 5/19/05 reductions. First it seemed to me to be very fair that we get rid of the gross receipts tax. But then I learned we're not only getting rid of the gross receipts tax; we're getting rid of the net profits tax. Now, everybody was angry about having to tax gross receipts because maybe the owner lost money which happened in many cases. But it seemed just wrong that somehow in a bill that was spoken of generally as righting what many of us thought was wrong, taxing the gross receipts, there was a clause in it that ultimately exempted totally from taxation business taxes. Then came the bill itself, and that seemed kind of tough. And by that time I got straightened out enough so that I believe I did not vote for this bill when it came up. And maybe mine would have been a 12th vote that could have passed the bill 24 because it lost 11 to 5. I think my memory of that may be a bit vague, and I'm not 177 Whole - 5/19/05 certain. But then comes this very seductive approach. We'll make it simpler. We'll cut less of taxes. Now, that sounded good to me because by that time I understood that chasing older people, of whom I am one, from living in the row houses of Philadelphia might not be the right thing to do, and that really they had a right to live, since I felt they had produced a great deal during their lifetime. And Philadelphia ought to treat them better than just chasing them out of their home or telling them they got to, at an older age, get into mortgage games. And this was a seductive idea. This was an idea that was going to cut the amount of taxes. And then suddenly Councilman Nutter before us spoke about the message that sent. What is the message sent by this amendment? The message sent by this amendment is, look how reasonable we are; we're going to cut taxes less; we'll give the Mayor a little more money to spend. 178 Whole - 5/19/05 We're not going to be able to restore all services, of course; and people will have to suffer, except those that don't need the services. And I think that's a wrong message. I think it's not an honest message to send to people when you're taking an action that's going to hurt them. And anything that cuts further services is going to be harmful. So, therefore, I have to conclude that this amendment sends the wrong message because it sends a message opposite the facts. It sends a message, look how good we are; we're restoring income; when, in fact, we are not doing that at all; we're still cutting the budget. So, I'm going to be voting against this amendment, and I urge all my colleagues to do it. I think if anybody's to stand up for the people of Philadelphia, I know one thing, and that is, it won't be the business community, not a community that gets behind 179 Whole - 5/19/05 the Tax Reform Committee that tells older Americans after that most of them have retired, that you may face eviction from your home or you may have to finance something through undertaking a mortgage and you don't know how you're going to ever pay for it. So, I'm going to fight for a City Council and for action in City Council as long as I'm ever a member of it to provide the services needed. And who ought to pay for the services? The people that profit from them, people of Philadelphia. And that's a simple question to answer because it's the business community that profits from them. Now, if there's any unfairness in the tax, like taxing gross profits, I'm always ready to listen to that. But I'm surely not ready to listen to that as a cover for getting rid of all business taxation. I don't think taxes ought to be eliminated in such a way as to put the burden on ordinary older people who have very little ability to meet any current taxes, let alone 180 Whole - 5/19/05 the new taxes. I'm very much impressed. I don't know your name.
But you testified very effectively. In my judgment, in fact, I'm very proud of this panel. I don't know where it came from because in Philadelphia we haven't had that ability before. But I think we now have for the first time people able in the field, people who are citizens of Philadelphia, to represent us in our thinking and to give us in Council the other point of view. So that in addition to the business point of view, which is a valid point of view, we have to have the other equally valid point of view, the viewpoint of the residents. And for that I say to this panel, thank you very much for your efforts. It made the issue much clearer in my mind and I think to all Philadelphians. Thank you, Madam. 181 Whole - 5/19/05
You're welcome, sir. Are there any other questions or comments from members of the committee? Do we have... Thank you. Thank you very much.
Do we have anyone else to testify on this bill? (No response.)
Do we have anyone else to testify on this bill? It's Bill Number 040767.
Thank you, Madam Chair. Just a quick question, from a logistics point, I guess. Where, other than physically here in the Council chambers... 182 Whole - 5/19/05 Where are we in the process?
In the process, if there's no one to testify on any of the bills before the committee --
So, all the bills in front of us presently in the Committee of the Whole?
Okay. So, let me at least say I did circulate some amendments to 767.
I'm getting a sense that, while there might not be final action on the budget...
...I would at least like to put that bill in its proper form, regardless of how...
We were contemplating your introducing your amendments.
And we 183 Whole - 5/19/05 would move on that today.
If we don't have any other witnesses regarding the bills before us -- this is the Committee of the Whole -- then I am concluding the public hearing. (Public hearing concluded at 4:53 p.m.) 184 Whole - 5/19/05 - - - COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC MEETING - COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Thursday, May 19, 2005, 4:53 p.m. - - - Bill 050236 - An ordinance dissolving the 1600 North Broad Tax Increment Financing District and creating the Avenue North Tax Increment Financing District, being the approximately three acre site at 1600 through 36 North Broad Street, generally bounded by Cecil B. Moore Avenue on the north, Broad Street on the east, Oxford Street on the south and Carlisle Street on the west. Bill 050190 - An ordinance dissolving the Networks Tax Increment Financing District, being the area generally bounded by 16th Street on the west, Spring Garden Street on the north, Hamilton Street on the south and 15th Street on the east. BILL 040767 - An Ordinance amending Section 18 19-2604 of The Philadelphia Code, relating to tax rates, credits and alternative tax computation for the business privilege tax, by reducing certain tax rates, all under certain terms and conditions. - - - V A R A L L O Incorporated Litigation Support Services 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 185 Whole - 5/19/05 BILL 040789 - An Ordinance amending Chapter 19-2600 of The Philadelphia Code, entitled "Business Privilege Taxes," to provide for an exemption from the tax on gross receipts for certain new businesses, under certain terms and conditions. BILL 050001 - An Ordinance to adopt a Capital Program for the six Fiscal Years 2006-2011 inclusive. BILL 050002 - An Ordinance to adopt a Fiscal 2006 Capital Budget. BILL 050003 - An Ordinance adopting the Operating Budget for Fiscal Year 2006. BILL 050007 - An Ordinance amending Chapter 19-1200 of The Philadelphia Code, entitled "Parking Tax," by establishing a rate of taxation on parking transactions for Fiscal Year 2006 and thereafter and making such rate contingent on certain decreases in business privilege tax rates. BILL 050008 - An Ordinance amending Section 16 19-2604 of The Philadelphia Code, relating to tax rates, credits and alternative tax computation for the business privilege tax, by reducing certain tax rates and making such reductions contingent on an increase in the parking tax. BILL 050383 - An Ordinance amending Chapter 19-1200 of The Philadelphia Code, entitled "Parking Tax," by increasing the rate of taxation on parking transactions for Fiscal Year 2006 and thereafter. RES. 050022 - Resolution providing for the approval by the Council of the City of Philadelphia of a Revised Five Year Financial Plan for the City of 186 Whole - 5/19/05 Philadelphia covering Fiscal Years 2006 through 2010, and incorporating proposed changes with respect to Fiscal Year 2005, which is to be submitted by the Mayor to the Pennsylvania Intergovernmental Cooperation Authority (the "Authority") pursuant to the Intergovernmental Cooperation Agreement, authorized by an ordinance of this Council approved by the Mayor on January 3, 1992 (Bill No. 1563-A), by and between the City and the Authority. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE L. BLACKWELL COUNCILMAN DARRELL L. CLARKE COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JACK KELLY COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN BRIAN J. O'NEILL COUNCILMAN JUAN F. RAMOS COUNCILWOMAN BLONDELL REYNOLDS-BROWN COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO 187 Whole - 5/19/05 - - - P R O C E E D I N G S - - -
We will now go into our public meeting. And the Chair will recognize Councilman Nutter.
Thank you, Madam Chair. I'm going to make the big assumption that after this public meeting we're going back into a public hearing, to then recess that to a date certain. I mean --
-- and then I think Councilman Clarke's got a matter of his --
If we're in the public meeting, your stuff needs to be reported out, right? 188 Whole - 5/19/05
Right? You need yours reported out in the Committee of the Whole.
We will be reporting those bills out. Right now we're dealing with --
-- the tax bills. And I am recognizing you because I am told that you have an amendment --
Correct. Thank you, Madam Chair. The amendment was circulated yesterday; and some of the discussion this afternoon, I think, addresses those issues. What this amendment seeks to do, in what I would at least characterize as a fiscally responsible fashion... And I would ask solely for support to amend a bill to get 189 Whole - 5/19/05 it in the form that the sponsor wishes to have it. I acknowledge to my colleagues that that is not an indication as to what may happen in its final form. But this amendment seeks to do two things. One, it changes the proposed decreasing rates for the net income portion of the Business Privilege Tax, so as to lessen the fiscal impact of those proposed cuts. Secondly, the bill lays out on 3, I believe, the new section 5, that while there is a schedule of proposed cuts through 2017 which would drive both the gross receipts tax rate and the net income portion rate to zero percentage, and obviously the elimination of both of those components, this amendment only ensures the tax cuts for the first five years. And so, in 2010 or during that budget cycle, Council would then have to take additional action if it wished to see further cuts in the Business Privilege Tax. 190 Whole - 5/19/05 Otherwise, at that point the rates in 2010 would stay in place until action was taken by the Council. So I would only ask in this preliminary stage, if the bill could at least be amended, to be in the form that I think best addresses the issue. That would be my request to my colleagues, to at least have it in its proper form, and notwithstanding how the members may subsequently vote when we come to that point in the budget process. With that, Madam Chair, if there are no questions, I would move the adoption of the proposed amendments to Bill 040767. UNIDENTIFIED COUNCIL PERSON: Second.
It has been moved and seconded that the motion was made and seconded that the amendment proposed by Councilman Nutter be adopted. All in favor will signify by saying aye. 191 Whole - 5/19/05 (Chorus of "ayes.")
Point of order. My light is on. I have a right to speak.
I don't see your light's on; and it just came on, Councilman Cohen.
I can't -- I can't know what you're thinking of if I don't see your name.
Well, it was on there (Indicating); and there's something defective here.
Up till now I've always supported the right of a sponsor to put a bill in the form he or she wants it to 192 Whole - 5/19/05 be in, with respect to final passage. But under these circumstances, as I said earlier, I think the amendment sends a deceptive approach. The bill talks for the first five or six years of tax reductions, that amount to, from the city's point of view, an insignificant amount, $600,000 in a budget of nearly $3.5 billion. But the bill also sets forth a goal that can -- that would be present for Council and many people to assume will follow after the six years, and that is to multiply by more than ten times the amount of the tax cut, to something like $6.5 million a year from the lower figure of $600,000. Now, I think that's wrong to have as a guide because what will probably happen six years from now, as our memories dim, we'll all believe that this formula was approved by the Council because it would be in the amendment and in the bill as passed. Therefore, I think that that provision is wrong. It sends a wrong 193 Whole - 5/19/05 message. Therefore, I'm in between two things. I'm in between --
-- having a bill 6 that has a larger amount or a lesser amount.
Yeah. I'm sorry, Councilman. I missed -- I may have missed the central point of your argument. The concern is about the about the schedule, and...
Right. Right. There's another seven in a schedule which cannot go into effect unless Council takes action.
Yes, but it sets 194 Whole - 5/19/05 a schedule. If we pass the bill with this provision in it, it indicates that we've approved that schedule.
And therefore, it sends what could easily be a misleading position. Therefore, despite the fact that it's going to cut less from city taxes than the original bill...
And that's a good plus. It sends a deceiving message to people that, look how reasonable the business community is. It's cutting less than it intended to cut.
And that, too, is a deceiving message, because right now what's endangering the citizens of Philadelphia is the failure of services.
This body has a responsibility to set rates, and we can change those rates in any way that we choose to over time. We did the same thing last year. We changed the rates in the schedules in the tax bills that we did. We changed the rates in the schedule for your low income wage tax bill.
We're putting in the rate -- We're indicating we think after five years the rate should be multiplied by 10 or 11 times.
It continues to go down, yes. I mean, that's the direction that it's going. I mean, it's got to go down if you're going toward ultimate elimination. 196 Whole - 5/19/05 But that schedule is not guaranteed.
After five years, this Council has to decide, do you continue with the cuts or do you leave in place the rate of 2010. That's the only issue. But you're giving an indication by a schedule as to what you could do, but there's no guarantee that that's going to happen. We'll revisit it in five years. And we've been doing five-year budgeting. We make adjustments along the way. There's no guarantee as to what the rate is going to be in 2011 because the bill 18 doesn't allow for the rate to change in 2011 without Council action.
What's the purpose of the schedule, if you're not going to apply it? 197 Whole - 5/19/05
The purpose of the schedule is to give an indication as to how you hope to reach the ultimate goal, but it can be changed. We've done schedules before.
Under the schedule, wouldn't the amount of the cut be multiplied by ten times or a very high number, if not ten? It could be eight or nine or twelve. Doesn't it jump dramatically from $600,000 to $6.5 million?
After the first five or six years in the schedule which you say is not a matter of law.
And can be 198 Whole - 5/19/05 rejected or accepted. Doesn't that number increase the amount of the cut ten-fold or nearly so?
I wouldn't necessarily characterize it as ten-fold, but there are certainly substantial increases in the amount of the cut after year 2010. But that is then the responsibility of this body because it can't change after 2010 without action by this City Council. No matter what the schedule says, no 13 matter what the rates are, this body has to make those decisions. Otherwise, the rate stays the same.
Yes, except we're setting an example to the Council in year 2005, decided that the guide should be ten-time increase in the amount of the cut.
Yeah. And then in 2010 we may decide something else. I mean, we passed the --
I mean, we 199 Whole - 5/19/05 passed the wage tax bill last summer that had a 12-year schedule in it.
But if Councilman Nutter is here, not as the Mayor or the Council President --
Your low income wage tax bill had -- had a -- I don't know -- a ten schedule on it. I mean, that's what we do. We establish schedules. We adjust to what goes on in the marketplace, and then if we need to make a change we do. Last year we changed the wage tax cut system from a fiscal year to a calendar year, and generated more revenue for the City for the first time ever.
Why don't you put in as a guide that the full revenues should be restored to the city at the end of the five years?
To the city, that you not take the money away from city services.
Councilman, the services in our budget bill, whenever we get to that, are going to be restored in the first -- I don't understand how you restore the revenue. From where?
You're going to increase your revenues. We've had the discussion. Revenues have increased every year since we've been in a ten-year tax reduction program. I'm not making the argument that the cuts have led to more revenue. My argument was, the cuts have not led to less revenue. I'm not making the first point that you were making with the folks. I've never said that. But no one can sit at that table and say, including our own Budget Director, that the cuts have led to less revenue. I have 201 Whole - 5/19/05 not made the argument that they have increased the revenue. That's for economists to make. I'm just trying to deal with the actual numbers. We have a schedule. It's years. 7 You only get the first 5. And if City 8 Council doesn't do anything else, there are 9 no more tax cuts; that's it. 10
If City Council 11 does nothing, the new rates you're using as a 12 guide after the five years would go into effect.
The new rates will not go into effect. If we do nothing, that's the end of the cutting the tax cut program. It's over at that point. That's what the amendment says. Unless we take action in 2010, the schedule is meaningless. Those rates cannot go into effect. The rates stay the same as they were in 2010.
Well, then, if that's your intent, why don't you leave it at that, without introducing this guide that 202 Whole - 5/19/05 you're suggesting the new Council follow by increasing the amount of the cut?
And I guess I would only say to you, Councilman, I think it's important to at least try to give an indication as to where we ultimately think things should go, to send the right message to a variety of people, not only here in the city but in the region and across the country that Philadelphia is trying to grow this city and create -- help create --
Yeah, but not at the cost of city services. Not at the cost of throwing seniors out of their homes or compelling them to take mortgages.
Councilman, I don't know why you keep saying that. We don't have any real estate tax bills in front of us. We have not increased the real estate tax. We have not touched real estate tax rates since 1991. There's never been a millage increase since '91.
Do you deny the fact that the intent of the -- that the Tax 203 Whole - 5/19/05 Reform Commission found that the new revenue is largely going to come to increased real estate taxation that will make up for the loss in the business taxes?
I would disagree with your premise, Councilman. The Tax Reform Commission said that if all other measures fail, the city could look at real estate tax rates to make up any shortfalls. That's what they said. You could look at it.
We don't have any tax bills in front of us. And the real estate transfer tax is going through the roof. Why? Because we're in a hot real estate market. Real estate revenues are up over estimates. Why? Not because of any action that we took with regard to rates. We haven't touched the rates. We are in a hot real estate market because people have finally figured out that property values are generally lower here than 204 Whole - 5/19/05 in most other places.
But when this figures for Philadelphia forward are asked from the floor, of anybody, is that a good sign when real estate taxes go up? They say absolutely. It shows the city is thriving. When people are paying more, of course there's going to be more tax on them. And therefore, people are going to have to move.
Councilman, this is a distinction between terminologies. You have tax rates and you have tax revenues. The rates have not changed. They haven't changed in 14 years.
Councilman, you can't legitimately say that. There's no real estate tax bill in front of us. And they're not going to change. The rates are going to be the same. And you know that.
Well, I don't think this debate's going to get anywhere. 205 Whole - 5/19/05 So I'm going to be voting no --
-- and urge my colleagues to vote no on this. I think it's shameful for a City Council to be taking an action which the proponents of this measure say will increase real estate taxes. We know our people are now complaining already about the real estate taxes.
It has been moved and seconded that the amendment submitted by Councilman Nutter be adopted. All in favor will signify by saying aye. (Chorus of "ayes.")
The record will reflect that Councilman Cohen was the only nay, for the record. All right. We will now consider Bill Number -- Oh, I'm sorry. The bill has been amended, and I would like to note that all of the bills regarding the tax bills and also Councilman Clarke's bills, all bills that were before the Committee of the Whole today, will be continued... All of the bills before the Committee of the Whole, namely, if you want me to do it this way... Bill Number 040767, 040789, 050001, 050002, 050003, 050007, 050008, 050383 and Resolution Number 050022, the hearing will be continued until Wednesday, May the 25th at 11:00 a.m. The Chair now recognizes Councilman Clarke regarding Bill Number 050236.
Thank you, Madam President. Madam President, I believe this amendment was circulated. It is listed as Exhibit A. I would like to make a motion to 207 Whole - 5/19/05 offer an amendment to Bill Number 050236. UNIDENTIFIED COUNCIL PERSON: Second.
I'm sorry. Move the adoption. UNIDENTIFIED COUNCIL PERSON: Second.
It has been moved and seconded that the amendment be adopted. All in favor will signify by saying aye. (Chorus of "ayes.")
The ayes have it, and the amendment is adopted. The Chair again recognizes Councilman Clarke.
Madam President, I move that Bill Number 050236 be reported out of committee, as amended, with a 208 Whole - 5/19/05 favorable recommendation and no rule suspension. UNIDENTIFIED COUNCIL PERSON: Second.
It has been moved and seconded that Bill Number 050236 be reported out of committee with a favorable recommendation, as amended. All in favor will indicate by saying aye. (Chorus of "ayes.")
The ayes have it, and the bill will be reported out with a favorable recommendation. Again, the Chair recognizes Councilman Clarke --
Madam President, I move that Bill Number 050190 be reported 209 Whole - 5/19/05 out of committee with a favorable recommendation.
Do I hear a second? UNIDENTIFIED COUNCIL PERSON: Second.
It has been moved and seconded that Bill Number 050190 be reported out of committee with a favorable recommendation. All in favor will signify by saying aye. (Chorus of "ayes.")
The ayes have it, and the motion carries. That concludes our public meeting of the Committee of the Whole. We will now continue our Council session. (Public meeting concluded at 5:12 p.m.) 210 CERTIFICATE I HEREBY CERTIFY that the proceedings and evidence are contained fully and accurately in the stenographic notes taken by me upon the public hearing and public meeting of The Philadelphia City Council, taken on May 19, 2005, and that this is a true and correct transcript of same. _____________________________ DAVID A. DEIK, RPR and Commissioner of Deeds (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)