75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, October 14, 2008 1:10 p.m. - - - PRESENT: COUNCILWOMAN MARIAN B. TASCO, CHAIR COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN COUNCILMAN WILLIAM GREENLEE COUNCILMAN CURTIS JONES, JR. COUNCILMAN JAMES F. KENNEY COUNCILMAN BRIAN J. O'NEILL COUNCILWOMAN BLONDELL REYNOLDS BROWN BILL 080626 - An ordinance amending Title 13 of The Philadelphia Code, entitled "Water and Sewer," by establishing special water and sewer rates for public housing... BILL 080627 - An ordinance amending Section 19-203 of The Philadelphia Code, entitled "Payroll Deductions," to add the Correctional Peace Officers Foundation... BILL 080634 - An ordinance further amending Bill No. 070368, entitled "An ordinance approving the Fiscal Year 2008 Capital Budget"... - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated
Good afternoon. I'd like to call the Committee on Finance public hearing to order. I'd like to note that there is a quorum present in the presence of Councilman Greenlee, Councilman Green, Councilman Kenney, Councilman Goode and Councilman DiCicco. Would the Clerk please read the first bill.
Bill No. 080626, an ordinance amending Title 13 of The Philadelphia Code, entitled "Water and Sewer," by establishing special water and sewer rates for public housing owned or operated by the Philadelphia Housing Authority by providing for a reduction off regular Water Department service and quantity charges, all under certain terms and conditions.
This bill 24 is being recessed to Thursday, November the 20th at o'clock p.m. 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 Would the Clerk please read the next bill.
Bill No. 080627, an ordinance amending Section 19-203 of The Philadelphia Code, entitled "Payroll Deductions," to add the Correctional Peace Officers Foundation to the list of designated payees to whom an employee may direct payroll deductions; all under certain terms and conditions.
Thank you very much. Could we have the panel who will testify, Catherine Paster, come forward, please. (Witnesses approached witness table.)
Good afternoon. Would you identify yourself for the record, please, and proceed with your testimony.
Yes. My name is Catherine Paster. I am First Deputy 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 Director of Finance for the City of Philadelphia. I am here to testify in support of Bill No. 080627, which would amend Section 19-203 of The Philadelphia Code pertaining to payroll deductions. This bill will permit City employees to authorize payroll deductions to be paid to the Correctional Peace Officers Foundation. Section 19-203 of The Philadelphia Code, as approved by City Council, authorizes the Director of Finance to deduct from salaries such sums as employees may request. The Code lists specifically those entities for which payroll deductions may be made. Any authorization for payroll deductions is made voluntarily by the employee and may be revoked by the employee at any time. This concludes my testimony. I would be happy to answer any questions.
Are there any questions from members of the Committee? 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 (No response.)
My name is Lorenzo North. I'm President of Local 159, District Council 33. I'm here to answer any questions you may have, but if you don't have any, I'd just like to thank the Committee for taking the time to hear this bill. Thank you.
Thank you. Ms. Regina Nash, are you going to testify?
Would you identify yourself, please, for the 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 record.
Yes. My name is Cindy Baker-Numbers. I am a Field Representative for the Correctional Peace Officers Foundation, and on behalf of CPOF, I'd like to thank everyone for letting us come here and assist the correctional officers of the City of Philadelphia. I am also a family survivor. My brother was murdered by an inmate in New Jersey prison. So as a family survivor, I can attest to the good that CPOF does.
Thank you very much. Would you like to come forward and just give us a brief background of the program just for the record? Say your name again, Lorenzo.
Lorenzo North, President of Local 159, District Council 33. The organization was started in 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 1984, and since then in the City of Philadelphia, we had the organization assist one of our members that lost a family member by murder. I think this was 2005. And since then, they've been assisting and still assisting her now. I got Ms. Nash here to testify and Ms. Holt. They can tell you more about the situation. But she lost her family members by murder, and this organization has stood by her and continue to stand by her to this day, mentally and financially.
We have a Board of Directors. Our main headquarters or the main office is in Sacramento, California. They have representatives through the United States. I am the eastern representative.
So it's a national foundation? 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634
Yes, it is. It's a national charity. We are registered with the IRS. It's national. Actually, it's the only charity for corrections in the United States.
Thank you very much. Thank you for taking time to come down, and we're sorry about your loss.
Madam Chair, we just want to personally say we met on this issue and it is certainly a timely issue, and we're happy to have the opportunity to support it. Thank you, Mr. North. Thank you.
Thank you. 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634
Bill No. 080634, an ordinance further amending Bill No. 6 070368, entitled "An ordinance approving the Fiscal Year 2008 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works, including the supplying of funds in connection therewith, subject to certain constraints and conditions, and acknowledging receipt of the Forecast of Capital Budgets for Fiscal Years 2009 through 2013," as previously amended by Bill No. 080076, by approving a further revised Capital Budget for Fiscal Year 2008. (Witnesses approached witness table.)
Who is 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 going to testify first?
Yes. Chairwoman Tasco, good afternoon to you and the members of the Finance Committee. I'm Janet Parrish, the Executive Director of the Philadelphia Gas Commission, and seated to my left on behalf of Philadelphia Gas Works is William Gallagher, the Director of Budget Reporting, and we each have submitted written testimony. I'd like to -- I will refrain from reading the testimony on behalf of the Gas Commission, but simply note that the ordinance or the proposed ordinance 20 does reflect the recommendations approved by the Gas Commission at its meeting on July 2nd of this year, and a copy of the Commission's order and resolution adopted at that meeting is attached to our testimony by way of detailed explanation. 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 In short, we are recommending that Council amend PGW's Fiscal Year 2008 Capital Budget by increasing it by $2.3 million, of which 1.4 million would be on a conditional funding basis subject to further approvals by the Gas Commission. Before that, money was actually released. And this is in support of PGW's business transformation initiative for which the Gas Commission has approved certain operating expenses. And we have, of course, refrained and directed PGW to refrain from making any capital expenditures in connection with the program until such time as Council and the City would approve these proposed amendments. We are asking that the bill be approved by Committee and reported out with a suspension of the rules so it may have first reading at the next session of Council. And we're here to answer any other questions that you may have.
75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 Mr. Gallagher, do you want to say anything?
I'm fine. I'm here to answer any questions. We filed testimony.
Thank you for coming today. I have a few hopefully quick questions. The first is, with respect to each of these expenditures on a capital basis, do you expect increased or decreased operating costs as a result of these capital expenditures?
Do you have a business case for each one that demonstrates that there will be decreased 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 operating costs for each?
And I might add to that, if I may, that the majority of the expenditures which will result in reduced operating expenses or actually increased revenues are not before Council today. Most of the thrust -- let me just briefly state, there's really a two-prong thrust to this program on behalf of PGW. One is in the customer affairs area of the company, and that is primarily directed at trying to increase, improve collection results. The risk-based collection project that's one of these Capital Budget line items for $300,000 is a portion of the entire project. The vast bulk of everything else -- and there are five initiatives of which that is one -- are all in the Operating Budget side. They are projected to result in 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 something like in the order of $60 million net new revenues over the next five or six years. There's definitely supporting business case. On the field operations side, the intent of PGW is to improve productivity in its field operations, and that is something that -- these are the software pieces that that would be linked to; that is, global positioning software in the vehicles that actually operate in the field around the City and also proposed enhancements to the workforce software system. That's the so-called AIMS, A-I-M-S, software that is in place at PGW right now. That's the piece, the 1.4 million, that the Commission has recommended be approved on a conditional basis, because we are looking for additional detail about exactly what those enhancements would be composed of before we would release that funding.
So with respect to the GPS, just taking them one 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 at a time, with respect to the GPS added to the vehicles, is the $600,000 for the hardware?
We have them installed right now on modems in the computers in the trucks. So the software will help us to integrate -- to interrogate the data that we're getting as far as that's concerned. It's not being used right now, but that will allow us to use it.
And it's GPS, not triangulation by cell tower? 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634
GPS. I don't know the distinction you're making as far as technology.
There are two components to it. There is an auto vehicle locator as well as the global positioning system. There are two pieces that apparently go hand in hand. I don't think either of us are the technological folks, but if you need additional information on the technology, I'm sure that the Chief Information Officer could provide that additional information.
If you can just provide me with who the providers are in terms of the hardware and software for this system and also let me know the monthly and annual cost per vehicle -- or just monthly cost -- I can do the math -- per vehicle of connecting to this GPS software.
Okay. Just to clarify, however, I mean, the hardware is in place, but the software, there are 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 ranges of bids or information that's out there, that I know PGW kind of surveyed the market to get an approximate budget cost. But just to clarify, the software has not been purchased or put in place because they do not have the capital spending authority yet from this Council.
But you've done an RFP and you have a lowest responsible bidder?
It's not an RFP. It was a market survey. I know they got information through the consultant who is working with them on this particular project, and we did ask those questions when we had our hearings, and that's how they got to that $600,000 cost total.
Not to my 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 understanding, no. 3
Okay. If you could provide us with that information. That's all I have. Thank you.
One question, or just an observation. It wasn't that long ago where half the capital expenditures we were approving had already been spent. I'm glad to see things have turned around in many ways at PGW, and all for the positive. I just have a question. It's not really related to your capital, but you were talking about how much of the capital is being driven towards collections and revenue enhancement. And this is each of our local utilities. It's not a PGW issue alone. We have a disincentive for people to pay on their credit card 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 because we charge for it. Water and PECO do the same thing, my understanding is, but it's also my understanding that nationally most business entities, which you are, even though you're attached to us as well, have costed it out and it's more cost effective to take the one and pay the Visa or MasterCard fee rather than be sending paper, because there's a cost involved with each envelope and all that kind of thing. If you could give me the cost on that or a review of it. I don't think -- I think we're getting to be dinosaurs in this area and we probably could be saving a little money in getting some more revenue. Thank you.
Councilman, I'm sure Mr. Gallagher can certainly have the Customer Affairs Vice-President or an appropriate person get back to you, but I would tell you my understanding, from having discussed this and reviewed it, is 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 that most of the utilities, if not all, in Pennsylvania and perhaps in other states do charge these credit card fees, not because they're charging a fee but it's a pass-through from the vendor. I mean, PGW is not charging it. But, again, the economics of it -- and there are other ways that customers can make payment automatically without being assessed.
Thank you, Madam Chairman. Just for background and by way of clarification for this Committee, these efficiencies that we're talking about and something that Councilman O'Neill pointed out, this is a total 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 efficiency package that has a price tag of what?
How much totally is the management contract we have for the efficiency improvements?
The total -- the main consultant on the project, who is Accenture, has a $5.9 million budget. However, all those operating costs have not yet been approved by the Gas Commission, as you and the Chairwoman know, and we have been doing that in pieces.
And that's my point. I wanted you to let this body know that you are looking at each and every piece of this efficiency contract to make sure that it is justified, to make sure that it is warranted and so that we get what we actually pay for. And I just wanted you to point that out.
Yes, that is 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 correct. The Gas Commission, as indicated in our written testimony, approved 1.65 million, as you'll recall, on July 2nd of a $2.25 million request from PGW on the operating side, and we explicitly deferred or actually excluded one of the payments that they had been asking for because it did relate to Capital Budget expenditures, and the Commission was not going to approve expenditure of funds that pre-supposed the Council approval that was not in place yet. At our meeting on September 23rd, the Gas Commission incrementally approved an additional several months worth of payments to the vendor to keep us going while the Commission is reviewing final action on the Operating Budget. And, yes, I think it's safe to say that we have tried to really break down and justify each and every component of the project to ensure that the ratepayers are getting a reasonable return on the investment. 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634
So, Councilman O'Neill, your observation is due to Madam Chairwoman's efficient manner of operating over at the Gas Works. Thank you.
Thank you. Any other questions or comments? Councilwoman Blackwell.
Thank you. Just a total aside question. Do you know when the moratorium is and what those dates are?
The winter moratorium or restricted shutoff period typically begins December 1 and goes through March 31.
I've forgotten it's so late these years. Thank you.
Thank you very much. 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 Any other questions or comments? (No response.)
I will remind you that the Gas Commission budget process is ongoing.
Yes. Madam Chair, we completed our hearings on the '09, Fiscal Year '09, Operating Budget on September 29th, and as we speak, I'm writing the staff recommendation. The parties' briefs are due this week, and that will be before the Gas Commission at a meeting in November, November 18th, where you will hear any argument that there may be about disagreements, and hopefully we'll be putting that to bed when you meet on December 2nd.
I remind the Finance Committee that the hearings are open to the public. The Executive Director will let you know when we begin the budget process again on the Capital Budget, because that budget has to be 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 approved by City Council. It's a very complicated process and it would be helpful if you had time to attend some of the meetings, the hearings, to see the dialogue between the Gas Works and the Gas Commission and other advocates, the public advocate and other entities who might testify, so you get a flavor of what goes into establishing the Capital Budget. I mean, the Operating Budget is open to you also, but because you do vote on the Capital Budget, it would be helpful for you if you could attend some of those meetings so you get the flavor and the sense of the discussion and the requests that are made and how they're made and all the details that may seem here a little bit out of context, because it's a bigger and broader process that goes on.
So what we're doing here is just amending something that we passed before, and with 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 the Gas -- and I thank Councilman O'Neill, because it was at his insistence some time ago, a few years back, that any expenditures above and beyond what we have approved by this Committee have to come back for approval, because they were coming back to us after the money had been spent. So prior to any expenditures, they have to bring the request to the Gas Commission, and then the Gas Commission prepares the order and asks -- the amendment and brings it to Council. So it's a bigger -- we're looking at just a small portion of what is a much, much larger picture.
So some of the questions and information you might want may not be the way you think it might. But you can still ask that question. Any other questions or comments? (No response.) 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634
Thank you. Is there anyone else here to testify on this bill?
There being no further questions, this hearing is adjourned and we'll go into our public meeting. Bill 080626 will be held and heard on Thursday, November the 20th at 1:00 p.m. The Chair calls on Councilwoman Blackwell to report Bill No. 080627 out.
Thank you, Madam Chairwoman. This is to move that Bill No. 080627 be reported out of Committee with a favorable recommendation and also a recommendation for suspension of the rules so that it may be heard at our next session of Council. (Duly seconded.)
Thank you. It has been moved and seconded that Bill 25 080627 be reported out of this Committee 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 with a favorable recommendation and a request for the suspension of rules so that this bill can be heard at the next session of Council. All in favor will say aye. (Aye.)
There being none, the motion is carried. The Chair recognizes Councilwoman Blackwell to report out Bill 15 080634.
Thank you, Madam Chairman. We move that Bill 18 No. 080634 be reported out of Committee with a favorable recommendation and also a request for a suspension of the rules so that this may be heard at our next session of Council. (Duly seconded.)
It has been moved and seconded that Bill 080634 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated 10/14/08 - FINANCE - BILLS 080626, 627 & 634 be reported out of Committee with a favorable recommendation and that the rules of Council be suspended so that this bill can be heard at Council's next session. All in favor will say aye. (Aye.)
There being none, the motion is carried. This now adjourns this Committee. Thank you all, Committee members. We never have a problem with a quorum. Thank you. (Committee on Finance adjourned at 1:35 p.m.) - - - 75a16462-e5de-4641-b8f8-39783f9936fe (215) 561-2220 V A R A L L O Incorporated CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on October 14, 2008, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (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.)