COUNCIL OF THE CITY OF PHILADELPHIA2 COMMITTEE OF THE WHOLE3 Room 400, City Hall6 Philadelphia, Pennsylvania Wednesday, April 27, 20117 10:50 a.m. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA10 COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL CLARKE11 COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN12 COUNCILMAN WILLIAM K. GREENLEE COUNCILMAN CURTIS JONES, JR.13 COUNCILWOMAN DONNA REED MILLER COUNCILWOMAN BLONDELL REYNOLDS BROWN14 COUNCILMAN FRANK RIZZO, JR. COUNCILWOMAN MARIAN B. TASCO15 BILLS 110135, 110136, 110137 and 110138 RESOLUTION 11016117 - - -19 2
Good2 morning, everyone. This is a continued3 public hearing of the Committee of the4 Whole.5 I would ask Mr. McPherson to6 please read the title of the resolutions7 or bills that will be considered today.8 MR. McPHERSON: Resolution9 110161, Five Year Plan; Bill No. 110135,10 the Capital Program 2012 through 2017;11 Bill No. 110136, the Capital Budget 2012;12 Bill No. 110137, the Operating Budget for13 2012; Bill No. 110138, which adjusts the14 wage tax. And today we're taking15 testimony from the Administration on Bill16 No. 110138.17 (Witnesses approached witness18 table.)19
Good20 morning, Commissioner.21 COMMISSIONER RICHARDSON: Good22 morning, Council President Ann Verna.23 Keith Richardson, Revenue Commissioner.24 Good morning, Council President25 4/27/11 - WHOLE - BILL 1101381 Verna and members of City Council2 Committee of the Whole. Again, my name3 is Keith J. Richardson, the Revenue4 Commissioner for the City of5 Philadelphia, Department of Revenue.6 With me today is Rob Dubow, the City's7 Finance Director. We are here today to8 testify on Bill No. 110138 amending9 Section 19-1500 of The Philadelphia Code,10 entitled "Wage and Net Profits Tax," by11 revising certain tax rates and making12 technical changes, all under certain13 terms and conditions.14 Bill No. 110138 maintains the15 wage and net profits tax rates at the16 same rates for 2012 as they were in 2011.17 The wage tax rate is 2.428 for residents,18 3.928 percent including the PICA portion19 of the wage tax and 3.4985 for20 non-residents. While last year's Five21 Year Plan projected that Pennsylvania22 gaming revenues would be used for further23 reductions in wage tax rates, the24 Commonwealth has informed the25 4/27/11 - WHOLE - BILL 1101381 Administration that gaming revenues are2 not projected to be strong enough to3 support additional wage tax relief.4 The Administration is also5 eager to reinstate the City-funded wage6 and net profits tax reductions for both7 residents and non-residents. These8 reductions would lower the tax burden for9 the broadest base of City taxpayers and10 increase the economic competitiveness of11 the City of Philadelphia. A number of12 studies have demonstrated that the City's13 wage tax rates have damaged the City's14 ability to attract businesses and that15 lowering those rates would help attract16 and retain jobs. While the17 Administration would like to restart18 those reductions as soon as possible,19 based on the General Fund's fiscal20 condition, we believe the Fiscal Year21 2014 is the first year we can reduce wage22 tax rates.23 The proposed bill would also24 change the implementation date of Section25 4/27/11 - WHOLE - BILL 1101381 19-1508 of The Philadelphia Code,2 "Refunds and Forgiveness for Poverty3 Income," to Calendar Year 2016. This4 Section provides wage tax refunds to5 those residents and non-residents who pay6 wage tax and who meet the criteria of low7 income and very low income households,8 starting with the wage tax paid in9 Calendar Year 2016. While the10 Administration applauds the goals of11 Section 19-1508, we believe the greatest12 benefit to all taxpayers, low income13 households included, will be the14 continued reduction in the wage and net15 profits tax rates.16 This concludes my testimony.17 Thank you, Council President, for the18 opportunity to address you and the19 members of City Council Committee of the20 Whole. We are available to answer any21 questions you may have at this time.22
Thank23 you very much.24 What is the cumulative value of25 4/27/11 - WHOLE - BILL 1101381 the proposed tax reductions in the Five2 Year Plan?3
The value of the4 wage tax reductions is $103 million, and5 the value of the proposed business tax6 reductions is about 41 million. So7 combined, it's 144 million.8
What9 is the value of the savings in the Five10 Year Plan by delaying the reductions for11 the Forgiveness for Poverty Income12 Program to 2017?13
Thank16 you.17 The Chair recognizes Councilman18 Goode.19
Thank you,20 Madam President.21 Good morning. Just some22 questions for the record, because I think23 you know where I stand on one of these24 measures.25 4/27/11 - WHOLE - BILL 1101381 Does the federal government tax2 everyone without regard to poverty level?3 COMMISSIONER RICHARDSON: Yes.4 Everyone is taxed at the federal level.5
Does the6 state government tax everyone without7 regard to the poverty level?8 COMMISSIONER RICHARDSON: Yes,9 they do tax, but they do have a10 forgiveness program also.11
And what do12 you believe that those people who fall13 under the poverty level by state14 standards do with the money?15 COMMISSIONER RICHARDSON: It16 goes back into the economy hopefully.17
So what do18 you think the people who would fall under19 the standards in the legislation that we20 pass would do with the money?21 COMMISSIONER RICHARDSON: Go in22 the economy, save it.23
So we should24 spend it for them?25 4/27/11 - WHOLE - BILL 1101381 COMMISSIONER RICHARDSON: I2 don't believe in spending for somebody3 else. Spending for myself.4
If we're not5 giving it back to them, then we're6 deciding to spend it for them.7
Well, I mean, spend8 it for them, I mean, we think that9 that -- that the tax cuts at a broader10 level are more beneficial to the economy.11
We think it's kind13 of a broader segment of the population14 and that it does more to stimulate the15 economy than providing the reductions to16 just one portion of the population.17
A population18 that falls under a certain poverty level.19
And so not21 only is their money going to pay bills,22 but their bills probably still won't be23 paid afterwards?24
Their bills3 probably still won't be paid even if they4 use all this money to pay their bills?5
Thank you,7 Madam President.8 COUNCIL PRESIDENT VERNA:9 You're welcome.10 The Chair recognizes Councilman11 Green.12
Thank you.13 I have a few questions related14 to Councilman Goode's questions. So does15 the federal government have graduated16 rates with respect to taxation based on17 how much income you earn?18 COMMISSIONER RICHARDSON: Yes,19 they do.20
And why do21 they do that? What's the public policy22 rationale for that?23 COMMISSIONER RICHARDSON: I24 don't know the policy issue why they do25 4/27/11 - WHOLE - BILL 1101381 that, but --2
To have a3 progressive tax structure, so that the4 more you earn, the higher the rate is5 applied to your income, because you have6 more to give to government.7 COMMISSIONER RICHARDSON:8 Right.9
And we can't10 do that in Pennsylvania under the11 Uniformity Clause of our state12 constitution. We can't have a13 progressive wage tax structure. So what14 we did to make our taxes progressive was15 give a credit, which we can do under the16 Uniformity Clause, to people who are in17 poverty of some of the taxes they would18 otherwise be paying us. Why does the19 Administration disagree with that public20 policy?21
I don't think we22 necessarily disagree with that public23 policy, but we just think given the24 choice between that and a broader-based25 4/27/11 - WHOLE - BILL 1101381 reduction, we think the broader-based2 reduction makes more sense, which is what3 the Tax Reform Commission said also.4
So the wage5 tax relief for non-residents is a better6 public policy for Philadelphians than a7 progressive tax credit for people in8 poverty in Philadelphia?9
One of the things10 that we've heard over and over again,11 particularly about the non-resident wage12 taxes, is that it has cost the City jobs,13 that it hurts our competitiveness, and we14 think improving the City's15 competitiveness is an important public16 policy goal.17
Don't you18 think that it would have less of a19 dissortative effect if the City wage tax20 rate was the same as the non-resident21 rate?22
No; were the25 4/27/11 - WHOLE - BILL 1101381 same as the non-resident wage tax rate.2 In other words --3
No; I understand4 what you're saying, and I think the issue5 with that is, I think we're not allowed6 to do that under state law.7
Well, we can't10 increase the non-resident rate. We could11 lower --12
Right, but13 we could lower the resident rate to the14 point where they're equal.15
And why17 would we not choose to do that and apply18 the non-resident wage tax -- we don't19 have to cut it. Why would we not choose20 to use the money for non-resident wage21 cuts to promote policy goals that will22 make Philadelphia more competitive or23 that will help people in poverty in the24 City of Philadelphia?25 4/27/11 - WHOLE - BILL 1101381
And, again, because2 what we've seen in studies over time is3 that that non-resident rate makes us less4 competitive and hurts jobs.5
I don't6 understand. Both rates make us less7 competitive. We can agree that if we8 could eliminate the wage tax, the City of9 Philadelphia would be more competitive.10
The question12 is, doesn't it distort decision-making to13 have a differential wage tax between14 suburban people who work in the City and15 Philadelphians? In other words, we're16 incentivizing people not to live here17 that work here because they'll pay less18 in taxes versus having a completely19 neutral decision, at least with respect20 to wage tax.21 So if we're going to lower wage22 tax by $100 million, if that's our23 policy, shouldn't we first apply all of24 that to the resident portion of the wage25 4/27/11 - WHOLE - BILL 1101381 tax until it is equal to the non-resident2 portion of the wage tax and then reduce3 it further? That's the first part of the4 question.5 The second part of the question6 is, alternatively, shouldn't we -- we7 could make the City more competitive by8 applying it in other areas, like with9 respect to net income tax reductions or10 other things that are going to make the11 City better able to compete with the12 suburbs for businesses, or alternatively,13 we could decide to not lower the14 non-resident wage tax, people who are15 working here, and help people in poverty16 in the City of Philadelphia. And I'd17 like to understand why the Administration18 is making the choice it is making with19 respect to the dollars rather than any20 one of those three options.21
Okay. So on the --22 I guess we've talked about versus low23 income, so I won't repeat that. What24 these analyses have shown is that the25 4/27/11 - WHOLE - BILL 1101381 non-resident rate actually has a larger2 deterrent impact than the resident wage3 tax. So we thought it was important to4 reduce that also.5 We are also proposing6 reductions in business taxes, so we have7 both of those in plan.8
I don't9 recall seeing that in any of the Tax10 Reform Commission reports, non-resident11 versus resident, broken-out studies12 separately.13
There were analyses14 that Professor Inman did that have shown15 that differential.16
Frankly, I24 don't see how that could possibly be true25 4/27/11 - WHOLE - BILL 1101381 compared to just having a neutral wage2 tax rate that then is lowered both.3 You're creating a disincentive to be here4 if the wage tax when you live outside of5 the City is less than if you choose to6 live in the City. To me that's common7 sense.8
I think the real9 disincentive isn't that marginal10 difference. I think it's the difference11 between the overall wage tax rate and the12 rates that the suburbs have. I don't13 think --14
I don't think the17 difference between the non-residential18 and the residential is really driving --19
It's the20 fact that we have a wage tax at all, is21 the point.22
As high as25 4/27/11 - WHOLE - BILL 1101381 it is. Okay. Great. So why not2 equalize them so that we don't have a3 dissortative effect instead of giving4 wage tax relief to people who enjoy our5 services, our police force, our public6 transportation and all the things that we7 pay for?8
Again, because both9 sides have an anti-competitive impact.10 There are studies that say the11 non-resident has a more damaging impact.12 So we think it's important to reduce both13 of them.14
Well, it's15 not saying -- you just testified that16 it's not saying that the non-resident has17 a more damaging impact. Your testimony18 was the fact that we have a wage tax at19 all is what's damaging, because somebody20 is going to make the choice at these wage21 tax rates and even at the wage tax rates22 you propose to reduce it to over the next23 five years, somebody is going to make the24 choice to put their company in the25 4/27/11 - WHOLE - BILL 1101381 suburbs instead of in the City because of2 the wage tax.3
Or not in9 this region at all.10 So as long as we have a wage11 tax, I don't understand the public policy12 rationale for not making them equal for13 residents and non-residents.14
Very well.19 So moving to the legislation itself, I20 don't believe it actually lowers the wage21 tax during the course of the Five Year22 Plan.23
No, it does not.24 And one of the reasons that we took out25 4/27/11 - WHOLE - BILL 1101381 the reductions from the legislation is2 because of the unpredictability of the3 gaming revenue. The numbers kept kind of4 moving around on us. So we would rather5 do it kind of year by year as we get to6 the years in question. But we still --7
As the Plan shows,12 we still intend to reduce the rates in13 those years.14
Which you15 would need City Council approval for at16 that time.17
So it's your19 testimony that the bill that you've20 proposed does not reduce the wage tax in21 '14 and '15?22
That's correct. We23 show that reduction in the Plan, and24 that's our intention.25 4/27/11 - WHOLE - BILL 1101381
I2 understand. And the bill that you've3 introduced does not in fact reduce gross4 receipts or net income tax in '14 and '155 or is that already in the -- or is no6 amendment needed for that?7
There's no bill for8 that. We don't have a business tax bill9 in front of you. We just have the wage10 tax bill.11
Okay. Fair12 enough. So I'm not sure what we're13 discussing here. In other words, you're14 saying that we need the money for the15 Cohen wage tax relief to apply it to --16 or the poverty wage tax relief to apply17 it to net income tax and gross receipts18 tax cuts because that's a better public19 policy. The gross receipts tax cuts is a20 hundred million dollars -- I'm sorry; the21 wage tax cuts is a hundred million22 dollars. If we're going to deal with it23 in the out years of the Five Year Plan,24 let's just deal with it all in the out25 4/27/11 - WHOLE - BILL 1101381 years of the Five Year Plan, because your2 budget that you're presenting this bill3 does not reduce the wage tax. So you can4 present a Five Year Plan to PICA which5 shows the revenues from the wage tax,6 because that's what we're enacting in the7 law this year.8
Well, we have two9 issues from a PICA perspective. One is,10 current law does include the low income11 tax bill. So that would give us a PICA12 problem.13 The second is, I think the14 current legislation actually has15 reductions in the out years, and so if we16 didn't do new legislation, the PICA --17 we'd have to show that level of18 reduction, which is slightly larger19 because of what we thought we were going20 to --21
I'm glad you22 said that. So what this bill actually23 does is increase the wage tax versus the24 current legislation?25 4/27/11 - WHOLE - BILL 1101381
It really has no2 rates. It doesn't really -- I mean, it3 says "thereafter," but it doesn't really4 address the out years.5
Right.6 Okay. Well, if we pass this legislation7 as is, we're basically adding a hundred8 million to the Five Year Plan compared to9 your actual Five Year Plan in this10 legislation.11
Well, two things.12 One, it's slightly different from that,13 because the rates that are in the14 legislation are different from what we're15 assuming in the Plan. And, second, the16 Plan actually takes out that revenue17 because it assumes that that's what we're18 going to do. So it would not --19
It would not affect22 what we showed in the Plan we submitted23 to PICA.24
But it's not25 4/27/11 - WHOLE - BILL 1101381 in fact what the law is.2
That's right. I3 think in terms of a PICA perspective,4 though, we would have a problem if we5 tried to show revenue that was in excess6 of what the law was. Then they would say7 that there was a reasonableness problem.8 I think if we show revenue that we say is9 lower based on what we intend to do, I10 don't think they'd have a problem with11 that.12
I agree. So13 let's just pose a scenario that City14 Council passes this bill that you just15 testified on the way you have presented16 it to us and we don't pass the Five Year17 Plan, but we amend the bill to leave in18 the anti-poverty tax cut.19
You don't21 have a PICA problem, because you've got22 an extra $61 million that you're not23 presenting to them. You're choosing to24 present cuts in the out years, but if we25 4/27/11 - WHOLE - BILL 1101381 pass this without passing the Five Year2 Plan, you don't have a PICA problem3 unless you create one.4
But then what we5 are saying to the business community is6 we're not doing the cuts that we told you7 we would do. So we have a different8 problem if we do that.9
You just10 testified that we're not doing them in11 this law, but we're going to do them one12 year at a time, and certainly, assuming13 I'm reelected, I'm willing to look at14 that with you.15
Right, but what I'm16 saying is, if you didn't take $55 million17 out of the Plan, we would not be able to18 have a balanced Plan that has the wage19 tax reductions that we have in here,20 because it would go out of balance. That21 would --22
Can I finish? That25 4/27/11 - WHOLE - BILL 1101381 would send a signal to the business2 community that we're not going to do3 those cuts.4
You've5 already sent the signal with the6 legislation you passed that you have7 presented to us which doesn't contain the8 cuts.9
No. We send the10 signal through our Five Year Plan that we11 intend to continue those cuts. That's12 the signal that we've sent.13
Okay. Thank14 you. That's all I have.15 COUNCIL PRESIDENT VERNA:16 You're welcome.17 The Chair recognizes Councilman18 Goode.19
Thank you,20 Madam President.21 Just one more attempt at this.22 I want to ask an obvious question. If23 you actually believe in broad-based wage24 tax relief versus targeted tax relief for25 4/27/11 - WHOLE - BILL 1101381 the poor, then why shift strategy in2 future years?3
I mean, yeah, I8 guess the logical extension would be not9 to delay it but not to do it at all. I10 think that's --11
If it's the12 wrong thing to do, then you should never13 do it. If you actually believe in a14 broad-based strategy rather than a15 targeted strategy, then why shift gears?16
Well, we're25 27 4/27/11 - WHOLE - BILL 1101381 proposing a delay. I think our2 preference would be not to have it at3 all, but we don't think Council would be4 comfortable with that. So that's why5 we're not proposing eliminating it. And6 I guess the hope is that by the time we7 get out to '17, we're in better financial8 shape.9
But as a10 matter of tax policy, if you believe that11 broad-based wage tax relief is a better12 strategy than targeted tax relief for the13 poor, then the question still is why14 change strategy?15
And I think it's16 because we understand it's not our17 decision unilaterally, that we have to do18 something that we'll reach agreement on19 with Council.20
So you will21 seek to delay it again in the future22 probably?23
I think that would24 probably depend on where our finances25 28 4/27/11 - WHOLE - BILL 1101381 were.2
Okay. Thank3 you.4 Thank you, Madam President.5 COUNCIL PRESIDENT VERNA:6 You're welcome.7 Mr. Dubow, if you reduce the8 general reductions from $144 million to9 $89 million, couldn't we still do the10 forgiveness program?11
We could, and we12 wouldn't advocate that for the reasons13 that we're talking about. We think that14 the general reductions are a better15 policy alternative.16
Thank17 you.18 The Chair recognizes Councilman19 Jones.20
I'm a little21 confused. The Commonwealth has informed22 the Administration that gaming revenues23 are not projected to be strong enough to24 support additional wage tax relief. Is25 29 4/27/11 - WHOLE - BILL 1101381 that true or not true?2
And so what4 does that mean by way of your wage tax5 relief projections?6
That means that in7 last year's Plan, we thought that we'd be8 able to make deeper cuts in the wage tax9 rate, but because we're going to get less10 gaming money, we can't make them as deep.11
So we're12 going to put the brakes a little bit on13 that?14
And so that16 does not -- all right. How does that17 counterbalance what we are seeing by way18 of sales tax and others? I mean, does it19 give us a net gain, net revenue neutral20 or net loss?21
So they're kind of22 two separate things. The Gaming Relief23 Act is specific money that came from24 gaming that would be used to reduce25 30 4/27/11 - WHOLE - BILL 1101381 rates. That is going to come in a little2 lower than we anticipated. So the wage3 tax rates won't go down as much as we4 anticipated.5 On the other side, in terms of6 actual collections, wage and sales tax7 collections have been up, which is great.8 We had projected that. So they're fairly9 consistent with what we had in the Plan.10 So we are collecting more, which is what11 we had anticipated.12
Okay. So13 two different columns. We won't get the14 wage tax relief for the public, but on15 the unanticipated increase in sales and16 other --17
Not unanticipated.18 Anticipated sales in wage tax increases.19
Good job.20 Does that mean that we're developing a21 Plan B to restore services similar in22 departments like the Fire Department23 where we had rolling blackouts? Are we24 looking at hiring people based on that25 31 4/27/11 - WHOLE - BILL 1101381 good news coming from our collections?2
Well, yeah. We3 anticipated having additional4 collections. That's why, for example,5 the Plan includes a police class, because6 we thought, Okay, now we can start to7 build the force back up, and we included8 that in the investments we put back into9 the Plan. So some of that is reflected10 in -- that's reflected in the Plan that11 we presented.12
All right.13 What has been the impact of the14 Commonwealth's projected cuts to your15 projected revenues? For example, DHS,16 major recipient, School Board. I mean,17 where is that? Have there been any early18 indications as to how that is going to19 pan out?20
Yes. There are --21 the cuts will hit a number of kind of the22 departments that we have in our health23 and opportunity area. So there's an24 effect on the Department of Human25 32 4/27/11 - WHOLE - BILL 1101381 Services, some on Health and an effect on2 the Office of Supportive Housing.3
I think DHS was in5 the five and a half million range.6 Supportive Housing may have been a couple7 million.8
It was not -- for11 the City's General Fund revenues, it was12 not as big a hit as we had feared. It13 was still a hit. I mean, it still has an14 impact on us. It has a really negative15 impact on the School District. There's16 about a $100 million hit from the state17 budget to the School District and a hit18 to local hospitals in particular. There19 were cuts that affected them.20
Well, let21 me -- and I don't want an answer today,22 but let me ask you this: We did an23 increase in real estate, which is, quote,24 "temporary," and we did not include them25 33 4/27/11 - WHOLE - BILL 1101381 in the pro rata share of that increase,2 did we, the School Board, meaning the3 School Board?4
We increased6 it, but we didn't increase their portion7 of it?8
With the10 other counterbalancing revenues that are11 coming in a little stronger than what we12 anticipated, does that mean that is on13 the table for consideration for the14 School Board? Do not answer that.15
Okay, but I just16 want to say again, it's not that we have17 more revenue than anticipated. It's that18 revenues increased and we budgeted that19 and we've built that into our budget.20
All right.21 So I can say one of the options that I've22 heard floated about solving their problem23 is to consider the portion of the real24 estate that we increase, giving them a25 34 4/27/11 - WHOLE - BILL 1101381 cut of that, and to whatever degree that2 is has obvious budget impacts on us.3
So are there6 scenarios being put out there looking at7 those kinds of numbers and calculating8 those types of numbers to save our9 schools?10
I think the School11 District detail budget is supposed to12 come out today, so we may have a better13 sense after that comes out of what14 they're looking for.15
All right.16 Thank you, Madam President.17 COUNCIL PRESIDENT VERNA:18 You're welcome.19 The Chair recognizes Councilman20 Green.21
Thank you,22 Madam Chair.23 I received a memo through the24 President's Office yesterday which was25 35 4/27/11 - WHOLE - BILL 1101381 from IHS, which was a response to my2 request in Council to receive any written3 material provided to you by IHS regarding4 the revenue forecast that they provided,5 and my memory of that conversation is6 that you didn't have one consultant, you7 had several consultants on revenue?8
It's slightly -- we9 had IHS, is our consultant, but we also10 then went and had a meeting with a group11 of economists down at the Fed, and that12 played an important role in shaping our13 projections.14
When you15 went down to the Fed, did you provide16 them written material in advance of that17 meeting?18
Was there23 any other written material provided by24 IHS prior to April 26th, which is the25 36 4/27/11 - WHOLE - BILL 1101381 date of this memo?2
I don't think so.3 I wasn't directly involved in the4 conversations with IHS, but I think it5 was mostly a series of conversations back6 and forth.7
So they8 provided detailed revenue projections to9 the City without ever putting them in10 writing or sending you a spreadsheet?11
I think there12 was -- it was an e-mail with the actual13 numbers, and I think that's reflected in14 there.15
I think it's a18 spreadsheet that just has those numbers.19 I don't think there's anything beyond20 that.21
And they22 didn't provide you any back-up material23 for the spreadsheet?24
Not that I'm aware25 37 4/27/11 - WHOLE - BILL 1101381 of. I think all of the kind of back-up2 was through conversations.3
Could you4 please confirm in writing to the5 President that other than the handout at6 the Fed, there is no other written7 material provided to you by IHS?8
The handout at the9 Fed was not from IHS. We put that10 together.11
Can you tell25 38 4/27/11 - WHOLE - BILL 1101381 me what the revenue difference is between2 the estimates provided to me yesterday3 and the City's Five Year Plan over the4 course of the Five Year Plan?5
In hundreds8 of millions of dollars over the Five Year9 Plan.10
Yeah. Their11 projections were more aggressive that12 will wind up in the Plan, so they would13 produce extra revenue. And we can get14 back to you with what that would be, but15 after our conversation with the other16 economist at the Fed, we weren't17 comfortable using those projections18 because --19
So we can show you22 that so long as it's in the context of23 understanding why we used our numbers.24
Your25 39 4/27/11 - WHOLE - BILL 1101381 meetings with the Fed, did that result in2 a written report?3
No. It's a4 conversation. There's no written report5 from that.6
And there7 was no memo made in the City that8 resulted from that meeting. It's all9 just in your heads?10
Well, the meeting19 actually was either late February or20 early March. It was right around when21 the Plan --22
And you just23 kept all that information up here rather24 than reducing it to a writing after the25 40 4/27/11 - WHOLE - BILL 1101381 meeting?2
Okay. Or5 writing? I'm not being specific with6 respect to memo. I'm asking if there's7 any writing.8
Okay. Very11 good. If you could please provide the12 Chair with answers to those questions,13 including what the revenue would be14 assuming IHS were correct rather than the15 more conservative assumptions, I would16 appreciate that.17
Thank20 you.21 Are there any other questions22 from members of the Committee?23 (No response.)24 COUNCIL PRESIDENT VERNA:25 41 4/27/11 - WHOLE - BILL 1101381 Seeing none, thank you.2
Thank4 you very much.5 The Committee will stand in6 recess until 12:30, at which time we will7 have public testimony. Thank you.8 (Short recess.)9
Good10 afternoon, everyone. This is a continued11 public hearing of the Committee of the12 Whole.13 I would like to say that we do14 have a number of witnesses that would15 like the opportunity to testify. With16 that being said, we will allow each17 person three minutes to testify.18 Hopefully we can get to hear everybody's19 testimony. So we do have a timer here,20 and I would really appreciate it if21 everybody would abide by those rules.22 Thank you very much.23 Our first witness?24 MR. McPHERSON: Cathy Scott.25 42 4/27/11 - WHOLE - BILL 1101381 (Witnesses approached witness2 table.)3 (Applause.)4
Good afternoon,7 President Verna and members of City8 Council. 13 Thank you for the opportunity14 to provide testimony concerning the15 proposed Fiscal Year 2012 budget and the16 Five Year Plan. 22 As I have stated in prior23 budget testimony, the budget is a24 document which lays out the priorities of25 43 4/27/11 - WHOLE - BILL 1101381 the Administration and City Council. 7 In prior years' testimony, I8 have suggested many ways to raise9 revenue. 10 In another area of the budget,11 the Administration is seeking to move the12 Department of Human Services from the13 General Fund to the Grants Revenue Fund14 to, in its own word, quote, "add more15 transparency to the City's finances," end16 quote. 24 However, this change has made25 45 4/27/11 - WHOLE - BILL 1101381 it more difficult to track changes in the2 proposed budget. 7 This budget shows this category dropping8 approximately $387 million, or 349 percent, from Fiscal Year 2011. 94 billion. So purchased services is22 actually a larger portion of total23 Operating Budget expenditures than total24 personnel costs. 12 The failure to do a cost-benefit analysis13 to see if work can be done as cheaply and14 efficiently by City employees is15 disgracefully missing. 24 Our union City employees pay25 47 4/27/11 - WHOLE - BILL 1101381 these and other City taxes. Many of our2 members must complete financial3 disclosure forms. Contract staff that do4 the same work do not have to complete5 these forms. 8 Contracted staff are not bound by these9 rules. This proposed budget takes the10 City further in the wrong direction when11 it plans to spend $400 million more this12 year on contracted services than on its13 own employees. So I would like to issue14 a challenge to the Administration and15 City Council. Move a portion of the16 total requested allocation from Class17 200, purchase of service money, to Class18 100, City employees. 24 But I have left the most25 48 4/27/11 - WHOLE - BILL 1101381 egregious and insulting part of this2 Administration's proposed budget for my3 final comments. of the Five Year4 Financial Plan lists two line items. The5 first is Reserve for Wage/Health Benefit6 Increases, which shows zeroes from Fiscal7 Year 2010 through Fiscal Year 2016. 14 On of the Five Year15 Plan, the Administration says, and I16 quote, "For AFSCME District Council 3317 and District Council 47, the City seeks18 zero wage increases across the life of19 the contracts. " Later the Administration25 49 4/27/11 - WHOLE - BILL 1101381 states, quote, "As it is, however, the2 City has avoided costs over the past3 three years, since neither wages nor4 healthcare costs have risen for5 non-uniformed employees since 2008. "12 There is no doubt about the13 position of this Mayor. By asking you to14 approve this budget, he is asking you to15 approve a Five Year Plan with no wage16 increase through Fiscal Year 2016. That17 is unprecedented and unacceptable. )20
-- nine years of21 wage freezes from 2008 through 2016 is an22 outrage.23 To make this situation worse,24 Mayor Nutter is asking you to pass a25 50 4/27/11 - WHOLE - BILL 1101381 budget calling for nearly $12 million per2 year in lost wages for City employees.3 City Council needs to send a loud and4 clear message to the Mayor that you will5 not be a party to his irresponsible and6 contemptible behavior toward7 non-uniformed City employees.8 (Applause.)9
Our members have10 gone without raises for three years.11 They have had significant payroll12 deduction increases in their healthcare13 costs. For the Mayor to tout these facts14 as a success of his is despicable. Many15 have been denied pay step increases which16 they were promised when they were hired.17 Many have been denied their longevity18 increases. Our members have lost19 millions in wages each year since 2009.20 And this Administration needs to get21 serious about finalizing the interest22 arbitration for Local 810, who are First23 Judicial District employees.24 (Applause.)25 51 4/27/11 - WHOLE - BILL 1101381
Further, our union2 has worked with the City Administration3 presenting revenue-enhancing suggestions4 and saved the City hundreds of millions5 of dollars during these tough times. I6 am calling on City Council to refuse to7 pass a budget which allocates any8 workforce saving category or any9 statement of wage freezes or reductions.10 This Mayor has failed miserably11 in one of his major responsibilities as12 the Chief Executive of the City. He has13 been incapable of bargaining fair and14 reasonable contracts with his employees.15 (Applause.)16