COUNCIL OF THE CITY OF PHILADELPHIA2 COMMITTEE ON FISCAL STABILITY AND3 INTERGOVERNMENTAL COOPERATION4 5 6 Room 400, City Hall7 Philadelphia, Pennsylvania Tuesday, October 26, 20108 1:30 p.m. 9 10 PRESENT: COUNCILMAN DARRELL CLARKE, CHAIR11 COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR.12 COUNCILMAN BILL GREEN COUNCILMAN CURTIS JONES, JR.13 COUNCILMAN JAMES KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI14 15 RESOLUTION 100524 - Resolution authorizing the16 Committee on Fiscal Stability and Intergovernmental Cooperation to hold hearings17 regarding the City's Operating Budget for Fiscal 2011.18 19 - - -20 21 22 23 24 25 2 1
Good2 afternoon. This is the hearing of the3 Committee of Fiscal Stability and4 Intergovernmental Cooperation based on a5 resolution introduced on the last day of6 Council this particular year.7 Mr. Carter, please read the8 title of the resolution.9
Resolution No.10 100524, a resolution authorizing the11 Committee on Fiscal Stability and12 Intergovernmental Cooperation to hold13 hearings regarding the City's Operating14 Budget for Fiscal 2011.15
Thank you.16 Mr. Dubow, would you please17 come forward.18 (Witness approached witness19 table.)20
Good21 afternoon, sir. 23 First, I want to -- as the24 Committee Chair, I would like to25 3 10/26/10 - FISCAL STABILITY - RES. 1005241 apologize to the Committee members. When2 we did our rules for this particular term3 of Council, part of the responsibility of4 the Committee on Fiscal Stability was to5 have quarterly budget briefings to give6 us an opportunity to have a snapshot of7 where we stood fiscally. There were a8 number of reasons why we weren't in the9 position to do that. One, because of the10 financial challenges that caused us to11 have a number of rebalancing throughout12 the course of the fiscal year, and it13 seems like we were always responding to14 the challenges associated with the15 current recession. But I will make sure16 that we continue to have these in a17 reasonable timeframe, because I think18 it's important given what has actually19 happened over the last couple of years,20 the uncertainty and some of the changes21 that we in Council were asked to do both22 during the budget and throughout -- and23 during the interim timeframe as it24 related to fees, both increases and25 4 10/26/10 - FISCAL STABILITY - RES. 2 I want to say, not necessarily3 speaking for my colleagues but at this4 point speaking for myself, and I assume5 some will concur, that this has been a6 very difficult time for members of7 Council, understanding the challenges8 associated with the City and our9 dwindling revenues, but unfortunately,10 what's happening to the City is also11 happening to individuals. There are12 dwindling revenues within their own13 budgets at home. 20 I say all that to say to the21 Administration -- and I believe that you22 are equally challenged in terms of some23 of the decisions that you all have had to24 make -- that at this particular time,25 5 10/26/10 - FISCAL STABILITY - RES. 1005241 it's important for us to ensure as a2 result of this hearing that we get a3 clear sense prior to the budget, the FY114 budget -- I'm sorry, the FY12, that we5 have a clear sense of where we are6 fiscally so we don't fall in a pattern of7 having to replicate what we did last year8 at the last minute, imposing a9 significant either fee increase or a tax10 increase. Because I can speak for this11 particular Councilperson, I am personally12 not in the mood to vote for any13 additional increases on the residents of14 the City of Philadelphia, be it business,15 on a personal note. I'm just -- I think16 we are taxed out and fee'd out. 20 And I do want to say -- and I'm21 going to be as nice as possible -- I am a22 little concerned that given what we did23 last year -- and, believe me, there were24 some very difficult votes, particularly25 6 10/26/10 - FISCAL STABILITY - RES. 1005241 the real estate tax vote, where we in our2 minds delivered what we believed to be a3 balanced budget with a fund balance, and4 I believe during the course of the5 discussions leading up to that final6 vote, we worked in the true spirit of7 cooperation based on the information that8 was provided to this Council, and when we9 passed the final budget, it was done with10 the sincerity that we had actually given11 the City the ability to move forward in12 FY11. But I'm a little concerned, as13 I've spoke to you earlier, about some of14 the references that Council didn't raise15 enough revenue, that Council put the City16 in a position where they had to make17 dramatic cuts. 21 I think that we passed a budget22 that was responsible. And I'm not trying23 to relive the past, but I just want to24 for the record, because we were out of25 7 10/26/10 - FISCAL STABILITY - RES. 1005241 session and we didn't have an opportunity2 to respond to some of the comments that3 were made with respect to, quote/unquote,4 our unwillingness to give the City enough5 money to operate. 9
I have some10 testimony. 14 Good morning. Actually, good15 afternoon. Sorry. 18 The hearing is actually well19 timed, because it comes during the same20 week as our annual financial report for21 FY10. That will be released later this22 week. The report will show that the City23 ended FY10 with a negative fund balance24 of about $115 million. That's an25 8 10/26/10 - FISCAL STABILITY - RES. 5 While, as I'll discuss a little6 later, that change from what was7 projected in the Five-Year Plan and the8 actual deficit is caused entirely by9 delays in state payments, the negative10 fund balances show that some fundamental11 weakness in our budget remain. Perhaps12 the best way to explain how that weakness13 developed is to look at what's happened14 to our tax revenues since the beginning15 of the recession. As you know, the16 recession led to job losses, weaknesses17 in the real estate market and reduced18 business activity. 20 Before the recession began, the21 BPT was generating about $435 million22 annually. Last year it generated under23 365 million. 25 9 10/26/10 - FISCAL STABILITY - RES. 9 So in total, those three taxes10 generated $220 million less in revenue in11 FY10 than they generated just three years12 earlier. 15 Those rapid declines in tax16 revenues and increases in our pension17 costs -- our FY11 pension costs will be18 the highest in our history even though19 we're deferring a substantial amount of20 our payments until 2015 -- help explain21 why Council and the Administration have22 spent the last two years looking at the23 painful decisions that you were talking24 about, Councilman, and those included25 10 10/26/10 - FISCAL STABILITY - RES. 9 And as we discussed, FY10 will10 end with an approximately $115 million11 deficit. The entire variance between12 that and the roughly 51 million that we13 had in the Five-Year Plan is caused by14 delays in reimbursement received from the15 Commonwealth. In fact, if the impact of16 those late reimbursements were17 eliminated, the fund balance would have18 been slightly better than the amount19 included in the Plan. The reason that20 negative fund balance would have been21 smaller than anticipated if the state22 payments had actually been received on23 time is the tax amnesty program. That24 program generated about 12 million more25 11 10/26/10 - FISCAL STABILITY - RES. 9 And during the first quarter,10 our revenues remain fairly consistent11 with the projections we included in the12 Plan, but they also show that the economy13 is still showing signs of weakness. 20 The first quarter's fairly21 stable tax revenues make it less likely22 that we will have to impose a new round23 of severe budget cuts during this year,24 but the lack of real strength in those25 12 10/26/10 - FISCAL STABILITY - RES. 1005241 revenues will mean that we will continue2 to tightly control all costs to ensure3 that we can end this fiscal year with a4 positive fund balance. 8 If revenues continue on their9 current trajectory and we carefully10 contain our costs to ensure they remain11 within the FY11 budget, we should be able12 to avoid having a third straight year end13 with a negative fund balance. 24 A second major risk is the25 13 10/26/10 - FISCAL STABILITY - RES. 13 With labor costs comprising14 about 60 percent of the City's budget,15 any increase in those costs beyond the16 amounts included in the Five-Year Plan17 could present significant challenges to18 the City's budget. So as you can see,19 while we're not suffering the same kind20 of downward budgetary spiral that we had21 been enduring this time last year and the22 year before, we're not close to the23 strength we showed just three years ago,24 and some very real threats could make our25 14 10/26/10 - FISCAL STABILITY - RES. 5
Thank you.6 Thank you, Mr. Dubow.7 Mr. Dubow, a couple of quick8 questions, and I know my colleagues have9 a number of questions. I want to talk10 about the recession and its impact on the11 City of Philadelphia, because I just want12 to get an accurate picture of why our13 revenue production was dramatically14 decreased over the last three years given15 the type of economy that we have, and is16 that reflected in the increase in the17 unemployment rate in the City of18 Philadelphia, which normally in the City19 of Philadelphia we are the last to20 experience the uptick in the national21 economy because of the type of industry,22 and it's said that we are the last to23 experience the downturn in the economy24 because we have an economy that's25 15 10/26/10 - FISCAL STABILITY - RES. 1005241 significantly dependent on institutional2 healthcare, the type of industry that is3 not affected by a lot of the factors that4 affect the national economy.5 And when you're looking at the6 reduction in revenue, what exactly do you7 think caused that on a local level in8 such dramatic fashion? I mean, was it9 just the national economy or was it10 anything else that was going on?11
I think it really12 was the national economy. You could see13 the impact pretty directly. Our14 unemployment rate, I believe, was under15 six percent when the recession began.16 Now it's close to 12 percent. Sales of17 real estate really just dove. You could18 see the transfer tax going down by a19 third, and obviously businesses suffered20 too, both on their amount of sales and on21 their profits. So you could see our22 major taxes taking substantial hits.23 I mean, I think we did get a24 little protection in healthcare and25 16 10/26/10 - FISCAL STABILITY - RES. 1005241 education. I don't think they went down2 as much as other places in the economy.3 So it may have been worse for us if we4 didn't have that strength, but I think5 we --6
So you7 think that if we had industry that was8 more directly impacted as in another9 locales, we would have been much worse10 off?11
Well, I think if we12 were -- for example, Phoenix is really13 dependent on the sales tax. So when14 sales went down, they got hit really15 dramatically. There are other16 jurisdictions that are really dependent17 on property tax and their property values18 went down really quickly, so they got hit19 a little faster than we did.20 It also hits us differently21 because we have a Five-Year Plan. So a22 lot of governments tried to do one-time23 things to get through a year or two. We24 can't do that with our Five-Year Plan.25 17 10/26/10 - FISCAL STABILITY - RES. 1005241 So we kind of have a difficult set of2 circumstances.3 But I think the other thing4 that this recession shows in the way it5 hit us is that our economy has evolved6 over time. We're more service oriented7 than we were 20, 30 years ago. So I8 think that it hit us differently than a9 recession would have the 1982 recession,10 for example.11
Okay. A12 couple of things with respect to my13 earlier statements, and I notice you14 haven't responded yet.15
In your17 testimony, you reference the fact that18 there were delayed reimbursements. And19 correct me if I'm wrong, the budget that20 we passed, did it have those numbers21 factored into our final version?22
Yeah. There were23 some changes. One of the big changes and24 difference between the budget passed in25 18 10/26/10 - FISCAL STABILITY - RES. 1005241 May and what we presented to PICA a2 couple of months later was some of the3 timing of state payment. We spent a lot4 of time working with them. So if you5 compare the two cash flows, you'll see6 that the later cash flow assumes that we7 get more of the state payments that are8 due in '11 by June. That was based on9 some conversations we had with the state.10 So I think that's one of the11 big differences between the two12 documents, is the timing of payments from13 the state.14
So that15 sounds to me that if we had anticipated16 those reimbursements and you simply add17 those reimbursements to the budget that18 we adopted, we would have been where you19 ultimately were as it relates to the20 PICA-approved budget.21
Well, you have to22 remember, one big difference between23 where we were in May and where we were24 when we submitted the final budget to25 19 10/26/10 - FISCAL STABILITY - RES. 1005241 PICA is we had a state budget.2
So without a state5 budget, it's hard to make good6 assumptions about when you're getting7 state payments.8
But given13 what happened, my question is -- and I14 hate to keep belaboring this issue, but I15 kind of took offense to the fact that we16 were criticized about the budget we17 passed.18 Had we anticipated those19 reimbursements, worst case/best case,20 simply added those numbers to the budget21 that we adopted, we would have been22 pretty much where you were, not to23 mention the fact that we had during the24 course of those negotiations, we had25 20 10/26/10 - FISCAL STABILITY - RES. 1005241 talked about making certain reductions in2 the budget, the expenditures in certain3 departments, which we were told during4 the course of those conversations that5 they were untouchable, we couldn't do6 that, and subsequently that in fact is7 what you did in your budget, in your8 PICA-approved budget.9
Let me go back to10 where the discussions were then.11 During the discussions that led12 towards the adoption of the budget, we13 said we needed a specific level of14 revenue. We said that -- your15 consultants, Econsult, said basically the16 same thing. We said if we didn't get17 those level of revenues, we'd have to do18 additional cuts because we were worried19 about cash flow.20 We didn't get the level of21 revenues we wanted. I understand and22 agree with what you said before, that23 Council made a series of really hard24 decisions, including raising the property25 21 10/26/10 - FISCAL STABILITY - RES. 1005241 tax. And I know it wasn't easy for2 anybody. But we still didn't get the3 level of revenue that we had been4 requesting, and so we needed to make5 additional cuts.6
Correct,7 but the question I asked you was this8 whole issue about delayed reimbursements,9 and where I'm trying to understand is,10 how do those reimbursements factor into11 the PICA-approved budget versus the12 budget that we approved?13
By the time -- as I14 said, by the time we had a PICA-approved15 budget, we had an approved state16 budget --17
-- that gave us19 additional information about when we20 could expect revenue. And we worked with21 DPW quite a bit around that budget that22 was approved. And, yes, if we had had23 that information in May, things would24 have looked different, but we didn't have25 22 10/26/10 - FISCAL STABILITY - RES. 1005241 it and that's not where the state was.2
Well, have3 we ever not gotten reimbursements from4 the state?5
We've gotten them6 at different pays. Remember, we were7 talking about where we'd be at the end of8 June, not whether we'd get them ever, but9 just whether we'd get them at the end of10 June. And there have been lots of years11 that we don't get them by the end of12 June, including the year that just ended.13
So I see14 you're not going to answer it the way I15 want you to answer it.16
On both24 sides.25 23 10/26/10 - FISCAL STABILITY - RES. 1005241
-- of many2 Administrations.3 Okay. I think those of us who4 are here get the point, that the reality5 is is that our assumption -- because just6 like you've been here for a while, we've7 been here for a while, and we anticipated8 that there would in fact at some point be9 reimbursements coming forth. We didn't10 know what the number was, we didn't know11 what the timing was, but based on what we12 did, we believed that, no, we would not13 be in the best shape imaginable, but we14 would be in a position to reasonably move15 forward as it relates to the fiscal year.16
Bill was24 first.25 24 10/26/10 - FISCAL STABILITY - RES. 1005241
I see my2 colleague over here is sitting up in the3 chair. Councilman Green.4 I'm going to defer to5 Councilman Green right now. I'll come6 back to you, Mr. Dubow.7 Sir.8
Just to pick13 up on -- I have some questions here, but14 to pick up on Councilman Clarke's point,15 why didn't the City know what its16 reimbursement from DPW would be?17
Well, isn't20 it also because we submitted forms in a21 very different way than we had in the22 past and that cost us tens of millions of23 dollars in DPW reimbursement?24
No. There was a25 25 10/26/10 - FISCAL STABILITY - RES. 1005241 change in the statewide billing system.2 So it wasn't an issue that was specific3 to Philadelphia. It was a statewide4 issue, and there were problems with5 counties throughout the state as they6 went to this new billing system. It7 wasn't that we came up with new forms8 that we decided to submit.9
Well, our10 level of reimbursement dropped from like11 in the 80's to we were potentially being12 told it was going to be in the 60's.13
There were also --14 one of the things -- I think you're15 talking about Title IV-E, which is a16 federal reimbursement. The reimbursement17 is tied to poverty rates, but the poverty18 rate -- they're using an index that's19 maybe like 20 years old. So each year20 the reimbursement rate is going down.21 That, again, is not specific to22 Philadelphia. That's a federal issue.23 So there are a lot of issues24 around billing. Some of them are25 26 10/26/10 - FISCAL STABILITY - RES. 1005241 statewide, some of them are federal. We2 also did have a change in who -- we had a3 change at DHS, because the old person who4 was kind of in charge of our billing5 died, so we had someone new. So there6 was a transition there, too. So that was7 a little piece of it, but there were a8 few things going on with billing.9
And it's my10 understanding that a large part of the11 delay and a large part of the loss in12 funds was due to the fact that we had not13 trained somebody to do things -- there14 was no redundancy in the ability to15 submit those bills the way they've been16 done in the past, and so --17
I want to correct18 one thing. You're saying that there's19 not a loss of revenue. It's a timing20 issue.21
Which25 27 10/26/10 - FISCAL STABILITY - RES. 1005241 relates to the discussion you were just2 having with Councilman Clarke.3
Well, no, because4 that was timing of bills coming in in '95 and '10, and we're talking about '11.6
Okay. So I7 understand that the Administration8 doesn't make mistakes.9
We make a lot of10 mistakes, and I think we've acknowledged11 that. I just think there are legitimate12 differences here.13
When you say "the16 PICA report," which report are you17 talking about?18
PICA -- and22 this is once again, I guess, a timing23 issue or an execution issue. PICA said24 that it is problematic, that basically in25 28 10/26/10 - FISCAL STABILITY - RES. 1005241 each of the past two years, the City has2 not been able to identify a comprehensive3 solution to closing the budget gap prior4 to the year's end when the gap has been5 identified in mid year or later. In6 other words, if you identify a gap early7 in the year, as you did, in your own8 minds, right after we passed the budget,9 you take corrective action. If a gap10 comes in October, November, December,11 later in the year, according to PICA, you12 have been unable to take corrective13 actions, thus sort of compounding the14 size of the fund balance deficit at the15 end of the year, and I'm just wondering16 if you've changed any processes to make17 sure that that doesn't happen again this18 year.19
Well, we took a20 number of actions during the course of21 last year, including stopping purchases22 of materials and supplies, tightening or23 hiring freeze, but clearly they weren't24 enough, because we still had a deficit.25 29 10/26/10 - FISCAL STABILITY - RES. 1005241 So we have changed our2 processes. We're starting actually next3 week, we're sitting down with each4 department, going through where they are5 compared to budget. If they're over6 budget, seeing why and seeing what we can7 do to correct it.8 So, yes, we are taking actions9 next week, as early as next week.10
That are11 different than actions you took in the12 past or that are the same?13
Different. I mean,14 we're meeting with departments a little15 earlier.16
So next week17 you'll have the projected spend -- you'll18 have the actual spend of each department19 compared to budget and projected spend20 for each department through the end of21 the year?22
We are meeting with23 them to go through that. I wouldn't say24 they will have them finalized by next25 30 10/26/10 - FISCAL STABILITY - RES. 1005241 week. We'll have them finalized by the2 time we do the quarterly report in3 November, but that's part of the process4 of getting --5
Okay. Would6 you please provide the results of that7 analysis to the Chair.8
Right. We will.9 That will be the quarterly report.10 You'll see it in that quarterly report11 that comes out on the 15th of November.12
On the 15th13 of November? Okay.14 And in that quarterly report,15 you'll be identifying the very things you16 discussed which --17
Yeah. It shows18 each department, what their budget was,19 what their projected spend is, what the20 difference is.21
Okay. The22 quarterly report has often overstated the23 number of employees that you intend to24 hire or created confusion at least25 31 10/26/10 - FISCAL STABILITY - RES. 1005241 between my office and your office.2
Yeah. And if you6 noticed, we tried to get to that in the7 budget document this year by showing what8 we anticipated to actually fill during9 the year and showing what that would look10 like on that percent. So, yeah, that's11 something we're addressing.12
The, I13 guess, 125 million Five-Year Plan IT14 investment, 25 million was allocated for15 this year. What's been spent and what is16 on the table to be spent?17
Well, we don't have18 authorization yet. I think that's on the19 ballot November 4th, I guess, whenever20 the Election Day is. So we can't start21 spending until after we get that22 authorization. So nothing has actually23 been spent yet.24 One of the kind of key steps in25 32 10/26/10 - FISCAL STABILITY - RES. 1005241 that, as you know, is the ERP process,2 and we have posted for a position for3 someone to be in charge of that and to4 help us implement that. So that's kind5 of the next big step. The next two big6 steps are getting someone on board and7 getting authorization to start spending.8 And there's other spending other than9 that, but we haven't been able to start10 yet.11
So do you12 have a list of how we're going to spend13 the 25 million this year?14
I think there's a15 prioritization list that DOT has put16 together. We can get something to you.17
If you'd18 please provide that to the Chair.19 With respect to the person that20 you're hiring, is this going to be what21 happens when the Administration makes a22 transition, and, that is, the person will23 come in, want to put together their own24 plan, it will be six months more before25 33 10/26/10 - FISCAL STABILITY - RES. 1005241 we actually have any action taken, or are2 we going to build on what we've created?3
We're going to4 build on what we've created. As you5 know, we've been trying to work with the6 Private Sector Outreach Board on this7 process to make sure that it goes8 smoothly, and we'll continue to do that.9
Well, on10 of the PICA report, what PICA11 suggests is that a major shortcoming of12 the Plan is that it makes no assumptions13 about likely personnel reductions that14 will occur over the Plan period. It also15 does not set goals with respect to cost16 services and taxes. The Plan falls short17 somewhat in this regard, because it does18 not recognize the potential for savings19 that exist as a result of the various20 initiatives of the City. Future Plans21 should incorporate reasonable estimates22 of the impact of management initiatives23 on personnel levels and costs. Such a24 change would allow the Plan to be a25 34 10/26/10 - FISCAL STABILITY - RES. 1005241 clearer statement of policy priorities,2 an instrument for clarifying financial3 and management goals, and a mechanism for4 holding City agencies and the City as a5 whole accountable for progress towards6 these goals.7 Has the City done any planning8 in terms of what the savings will be from9 our $25 million technology spend, and do10 you plan to incorporate savings in the11 Five-Year Plan next time, as requested by12 PICA?13
Right. We've had a14 number of conversations with PICA about15 that issue, and where we have kind of16 come down is that we'll include savings17 so long as we can show them that the18 savings are reasonable. So we hope to be19 able to do that in the Plan.20
So I have a21 simple question for you. What is the22 City's return on investment for the first23 $25 million in technology spend, which24 should take place this year? In other25 35 10/26/10 - FISCAL STABILITY - RES. 1005241 words, how much --2
I don't -- given3 the fact that we're not going to start4 spending until December or whenever the5 results are certified, I don't think6 we'll be spending 25 million this year,7 and because we want to get someone in8 place to actually run the ERP.9
I don't have that12 with me. As we kind of get you the13 details of the Plan, we can --14
When you15 spend the $125 million over the next five16 years, what is the return on investment17 to the City of that capital expense?18
And we don't have19 the 125 million laid out. We don't know20 what that all is yet, so we can't give21 you an ROI.22
So you plan23 to spend $125 million and it may or may24 not have a positive return on investment25 36 10/26/10 - FISCAL STABILITY - RES. 1005241 for taxpayers?2
We won't spend it3 until we've developed a plan, and as we4 develop that plan, we'll know what the5 return is.6
Will specify what9 our return is, our investment. I don't10 think we'd limit it to five years,11 because it will take longer than that.12
Sure.13 Right. Of the five-year spend.14 So you will be able to give us15 essentially an internal rate of return16 for what you're going to spend in17 technology over the next five years?18
Right, but it may19 not all be that it translates into dollar20 savings. So, for example, if we're21 improving our HR system, one of the22 benefits might be that we have more23 predictability on when people come on24 board or we might be able to develop our25 37 10/26/10 - FISCAL STABILITY - RES. 1005241 workforce so that it's more effective.2 That's all not just straight dollars.3
So that just8 looking at an ROI really won't tell you9 the whole story of what we're getting10 from our $125 million.11
I couldn't12 agree more. Really what we're talking13 about is what will we achieve through14 that spending and whether it's freeing up15 people who now push paper to serve16 citizens in a different way as employees17 of the City. That's something that18 you'll be prepared to lay out?19
Yeah. Yeah.20 That's right. We have to -- when we21 develop that plan.22
So I have23 two bills that I understood the24 Administration was opposed to that call25 38 10/26/10 - FISCAL STABILITY - RES. 1005241 for just this sort of thing. One is a2 five-year IT plan where we're asking the3 Administration to specifically lay out4 exactly what you described you're going5 to deliver to us, and the other is a bill6 to require program-based budgeting, which7 is something the Administration said they8 would do since 2008 and which I called9 for in my election in 2007.10 Do we now have agreement on11 those bills?12
We don't have13 agreement on the bills. We have an14 agreement that it makes sense for us to15 put together a plan and show you what16 we're getting for it. I don't think that17 needs to be in legislation. I think it's18 something we should give you.19 On program budgeting, as you20 know, I mean, we want to kind of sit down21 with you and go through what we think we22 can do and when we can do it.23
But we'll24 get something that looks like that for25 39 10/26/10 - FISCAL STABILITY - RES. 1005241 this year's budget?2
So today we5 learned that there's a continued6 reduction in the prison population7 because of policies implemented by the8 courts, the DA, the Administration and9 with, I would argue, a lot of push and10 help from Council, and the population is11 basically 7,975, consistent with 200312 levels in the prison system, and it13 appears to me that this will result over14 the course of the year in savings in15 excess of those the Administration16 expected in the prison system, especially17 if we continue on this trend through the18 rest of the year.19 Do you currently have an20 estimate of how much additional savings21 we're going to have from the prison22 system and how that will affect the fund23 balance at the end of the year, and if24 not, can we expect to see that kind of25 40 10/26/10 - FISCAL STABILITY - RES. 1005241 answer in the November 15th quarterly2 manager's report?3
Okay. So6 the Five-Year Plan continues to project7 in each year -- and I know we had this8 debate during last year's budget cycle.9 In each year the Five-Year Plan shows a10 growth in the cost of the prison system11 rather than a reduction in the cost of12 the prison system.13 In this year's Five-Year Plan,14 can we now expect to see a reduction in15 the cost of the prison system, as many of16 us on Council tried to have put in the17 budget last year, which would have18 prevented some of the tax increases that19 we had to undertake?20
Well, in the end,21 we did -- the costs came way down in the22 Plan. So a substantial amount of the23 savings we took were from prisons.24
But then25 41 10/26/10 - FISCAL STABILITY - RES. 1005241 each year it goes up instead of each year2 going down.3
But obviously we4 will work with the people in the prison5 system and the criminal justice system to6 get their best estimate of where the7 census is going to figure out what we'll8 put in the Plan.9
Do you have10 any estimate of what mothballing the11 Cannery will save the City of12 Philadelphia?13
Okay. I18 guess, finally, when I look at your19 testimony, it clearly says if the economy20 gets worse in the City or if we get less21 funding from the state government, that22 we have two choices. We can cut23 revenue -- I mean, we can raise24 additional revenue or we can cut services25 42 10/26/10 - FISCAL STABILITY - RES. 1005241 to citizens or face severe reductions.2 That's basically the gist of what you're3 saying.4
I think actually5 what it said is a new round of painful6 budget balancing actions.7
It will be most13 likely based on what the Councilman was14 saying before, most likely it would be15 more cuts in expenditures.16
Cuts in17 expenditures? So we've learned through18 three years that the Administration knows19 how to do one of two things, raise20 revenue or cut services. Is there --21
Well, we've also22 done a number of other things in terms of23 finding efficiencies, improving24 delinquent collections, but if there's a25 43 10/26/10 - FISCAL STABILITY - RES. 1005241 substantial falloff in what we get from2 the state or what we get in terms of tax3 revenues, I mean, we're going to have to4 make some additional decisions. It's not5 going to be pain free.6
But it's one7 or the other things, right? It's either8 cuts or raising revenue?9
Yeah. You either10 cut your expenditures or increase your11 revenues. Those are the two choices.12
And those13 are your two solutions for how to deal14 with this?15
Yeah. It's going16 to be one or the other. You have to cut17 your expenditures or increase your18 revenues.19
Well, in24 part, potentially, but that's part of25 44 10/26/10 - FISCAL STABILITY - RES. 1005241 what the technology investment is all2 about.3
That won't be8 something that happens in two months or9 three months. That's going to take a10 little time.11
Is there12 anything else you can think of that we13 could do to avoid painful -- I don't14 remember your exact quote.15
Well, like I said,16 there are always ways you can find17 efficiencies. We can improve our18 collections, but if there is a19 substantial falloff, it's going to --20 there's going to be pain involved.21
In May, I22 sent the Mayor a letter asking him to23 appoint a commission to look at the24 strategic utilization of the assets owned25 45 10/26/10 - FISCAL STABILITY - RES. 1005241 by the City of Philadelphia. And2 basically we take our assets, such as our3 parking garages, our airport, et cetera,4 that are essentially not core municipal5 functions and we would potentially6 investigate what they would be worth to7 the City of Philadelphia.8 Now, I would not ever propose9 to use sale of those funds or asset sale10 money for operating expenses. So one of11 the simplest ways to put hundreds of12 millions of dollars into the General Fund13 every year is to fix our pension problem,14 and we can fix our pension problem,15 Mr. Dubow, very simply. We can raise a16 billion dollars from selling parking17 garages. We can raise several billion18 from getting Congress to change the law19 to allow another hub airport to be part20 of the pilot program. And for each21 billion dollars we add into the pension22 system, we get a hundred million dollars23 less from the General Fund that we have24 to contribute, and it's good for25 46 10/26/10 - FISCAL STABILITY - RES. 1005241 everybody, because the employees then2 know they have a secure pension system3 and we're not doing this through service4 cuts or on the backs of our employees and5 we're not doing this through raising6 taxes on the backs of our citizens.7 Why can't we get creative8 thinking like that out of the9 Administration, moving assets that are10 doing us no good into assets that are11 going to shore up our pension system and12 create hundreds of millions of dollars in13 free cash flow for the City of14 Philadelphia every year?15
We look at asset16 sales on an ongoing basis. I mean, there17 are particular challenges with the two18 that you mentioned. One is, we don't19 own our -- the Parking Authority actually20 owns the parking. And it's really the21 parking meters that would generate the22 most money for us. We don't own them.23
The garages24 at the airport would generate a billion25 47 10/26/10 - FISCAL STABILITY - RES. 1005241 dollars in and of themselves.2
But the airport, as3 you said, that requires a change in4 federal legislation.5
Not for the6 garages, because our ten-year agreement7 with the FCC expires in a few years where8 we agreed for a period to allow that to9 be airport revenue. It's my position and10 should be the position of the City of11 Philadelphia that when that agreement12 expires, we will not renew it, and that13 if they want to take us to court, they14 can.15 We built those garages. And we16 would have to pay off some airport17 revenue bonds, I'm sure, in connection18 with the sale, but we can take that19 money, shore up our pension fund and put20 a hundred million dollars in the General21 Fund.22 That's the way we have to be23 thinking, creatively, not just cut or24 raise taxes. I guess that's not really a25 48 10/26/10 - FISCAL STABILITY - RES. 1005241 question, but I just wanted it on the2 record, that there are many other options3 available to us than cutting or raising4 taxes.5
-- those are things8 that are not real simple to get done and9 may be impossible and --10
A journey of11 a thousand miles begins with a single12 step. Let's do, not talk.13
Thank you,17 Mr. Chairman.18 Just one question. We are19 sitting here mystified. Councilman20 Green, what is the Cannery?21
I believe22 it's a holding facility that is near23 Hunting Park in Councilwoman24 Quinones-Sanchez's district.25 49 10/26/10 - FISCAL STABILITY - RES. 1005241
Oh, it's a6 nickname. All right. Thank you.7 Mr. Dubow, just let me real8 quickly, every time I get a chance to9 have this discussion with either you or10 L&I or Revenue, somewhat on a different11 scope than Councilman Green's line of12 questioning relative to airport garages13 and the like, we seem to be always14 reacting to what we're getting from the15 state or not getting from the state, what16 the state budget foretells for us and17 what our revenue projections are, sales18 tax, real estate tax. We seem to be19 oftentimes necessarily reactionary,20 because it's just kind of part and parcel21 of being in municipal government.22 I keep on bringing up this23 ongoing and extensive underground economy24 in the City that is here now. It's not25 50 10/26/10 - FISCAL STABILITY - RES. 1005241 some projection. It's not some possible2 budget deal with the state or the feds.3 I mean, I have continually raised the4 issue of unlicensed contractors, nail5 salons, cash businesses, valet parking6 operations, parking garages, unlicensed7 parking lots. I mean, just a plethora of8 unregulated and untaxed businesses. And9 while every time I raise the issue I get10 a nod of the head of agreement, there11 seems to be no strike force, flying12 squad, group of consultants with City13 employees who get together and try to14 figure out a strategy to identify the15 revenues that these businesses are16 bringing in, tax them, bring them into17 compliance and have an ongoing, solid18 group of taxpayers that the City will19 then have a reputation as to not being a20 place to go to to do underground21 business.22 I mean -- and this is not this23 Administration's creation. This is24 something that's gone on for years, but25 51 10/26/10 - FISCAL STABILITY - RES. 1005241 it seems to me that if we were as2 diligent as the IRS in going after what's3 owed -- and I don't mean what's been owed4 on real estate taxes 35 years ago. I'm5 talking about the stuff that's going on6 on a regular basis, where unlicensed7 panel trucks are coming in and doing8 construction business, where people are9 doing cash businesses, where parking lots10 are operating and not paying the parking11 tax. All these things not only reduce12 our ability to maximize revenues, but13 gives the City a reputation as a place14 where it's a little loose and maybe we15 can go over and hang out there a little16 bit and make some money and then bring it17 back to our suburban and New Jersey18 communities.19 I need to know what20 conversations or do we need to have a21 meeting about putting together a serious22 group of folks who will go after the23 commerce that's going on now, not24 projected commerce, not asset sales, not25 52 10/26/10 - FISCAL STABILITY - RES. 1005241 budgetary deals, but what goes on day to2 day in the streets of the City?3 One of the things I raised with4 L&I a while ago is this issue of5 unlicensed contractors throughout our6 City and using entities like the Parking7 Authority to help us enforce these8 things.9 I mean, isn't it beyond the10 time that we need to squeeze every corner11 of revenue that's due to us, and what are12 we doing to get there?13
I know that in the14 Revenue Department they're going out to15 parking lots and going out to16 construction sites and checking, but17 you're right, we need a more coordinated18 approach to it. So I think we're getting19 people on kind of a spot basis now, but20 we need a better, more comprehensive --21
For22 example, not only on the unlicensed small23 contractor business, I'm talking about in24 the larger scale contracting business25 53 10/26/10 - FISCAL STABILITY - RES. 1005241 where they are paying people as2 individual contractors and giving them3 their 1099's, or whatever the tax form4 is, and they just pay them as a kind of5 an individual -- not as an employee on6 their books, but as an employee just for7 the day or for -- I mean, all that stuff8 is rampant, and I'm sad that we're having9 discussions about tax increases or10 service cuts and asset sales, and this11 might -- this is not hundreds of millions12 of dollars, as Councilman Green alluded13 to relative to potential parking lot14 sales, but this could be tens of millions15 of dollars that has just gone out there16 uncollected, and I don't sense -- not on17 your part, but on the Revenue18 Department's part, on L&I's part -- any19 sense of urgency in trying to find these20 folks and figure out a way to hold their21 feet to the fire.22
I mean, I think23 they understand how important it is. I24 think it's the coordination that we25 54 10/26/10 - FISCAL STABILITY - RES. 1005241 haven't done a good enough job of that we2 need to do.3
I mean, is4 it regulatory changes in the way we5 utilize our employees? Is there civil6 service changes we need? Is there7 consultants that we need to bring on? I8 mean, can we hire a slew of ex-IRS agents9 and pay them as consultants? I mean,10 these are the folks who know how people11 hide money. And I just think that we12 kind of allow this free flow of13 underground commerce without really going14 after it in a real sense, and I think not15 only do we not collect the money, but we16 perpetuate the image that the City is17 kind of lax on its collections.18 This is another opportunity to19 say something to someone in the20 government about it.21
Thank you,24 Councilman.25 55 10/26/10 - FISCAL STABILITY - RES. 1005241 Real quick, I actually want to2 piggyback a little bit on Councilman3 Kenney's reference to the underground4 economy. I actually think in addition to5 finding a way to ensure that people do6 meet their obligations as it relates to7 taxes, I actually think we should, in a8 very aggressive way, work with people to9 help formalize their operations, because10 there are large portions throughout the11 City where people, frankly speaking, but12 for that opportunity, they would have no13 wherewithal to live, and, frankly14 speaking, I thought with a little15 assistance, that they wouldn't mind16 actually having a formal barber shop. I17 mean, I know a bunch of guys, they cut in18 the basement. If they had the ability to19 formalize it and build their business --20 and I don't think -- and this is not just21 saying this Administration, but I don't22 think any of the Administrations -- and23 we have to take responsibility as a24 Council -- have aggressively gone after25 56 10/26/10 - FISCAL STABILITY - RES. 1005241 that, formalizing this underground2 economy that would have a twofold3 approach: One, make sure that the City4 gets the necessary revenues, but, two,5 put people in business so they can be a6 productive part of their community and7 actually employ people. So I --8
And I9 agree. I agree with Councilman Clarke10 about bringing people from the basement11 up into the above-ground economy. I'm12 not even talking about those folks. I'm13 talking about the guy who's got the panel14 truck up on street level who we don't15 even ask.16 I mean, there's two sides to17 this. One is bringing people into the18 mainstream economy, and that's a good19 thing, because they'll pay taxes and they20 can work above board, but another thing21 is, I got the guy sitting right in the22 middle of the street, I don't even bother23 asking him whether he's got a24 contractor's license. And it's just -- I25 57 10/26/10 - FISCAL STABILITY - RES. 1005241 know I sound -- this is like a one-night2 song for me in this particular subject3 matter, but it doesn't seem to ever get4 to the point where we're going to5 formalize this, again, flying team or6 strike force or something to go after our7 money. Because it sends a message -- and8 I get these letters or e-mails from9 people who are actually in the10 above-ground economy and paying their11 taxes and paying all their employees'12 benefits who think they're fools, because13 the guy doing the same work next door to14 him is laughing at him because he's15 taking his cash and going back across the16 bridge.17 All right? Thanks.18
Thank you,22 Mr. Chairman.23 To continue this discussion but24 taking a slightly different direction,25 58 10/26/10 - FISCAL STABILITY - RES. 1005241 the Chairman said -- and I think we all2 concurred -- that we're not looking3 forward to and don't expect to raise4 taxes and fees on Philadelphia businesses5 and residents. We may want to look at6 legalizing some businesses to capture7 that revenue that we should be capturing.8 But in June as we were ending budget9 discussions -- or actually in May when we10 were ending budget discussions, I floated11 an idea about actually raising the fee,12 the business privilege license fee, for13 out-of-town businesses that do business14 inside of Philadelphia. Where are we on15 that idea?16
We did come23 up with a number -- I forget what the24 number was.25 59 10/26/10 - FISCAL STABILITY - RES. 1005241
Wasn't that -- it2 was a modest number, if I remember3 correctly, right?4
It was5 hundreds of businesses. It may have been6 up to a few thousand businesses. I7 forget the specific number.8
But that's11 not particularly relevant. It may have12 been 3,000, but that's not particularly13 relevant when you can decide whatever fee14 you want it to be to begin with. In15 other words, we could do a16 thousand-dollar fee. There are a number17 of different -- or higher. There's a18 number of different things we could do.19 Is that an idea that the20 Administration could support, and, if21 not, why not?22
So are we25 60 10/26/10 - FISCAL STABILITY - RES. 1005241 going to be ready by the time budget time2 comes around to discuss the idea in3 reality?4
That was the10 easy question. The second question is,11 in your testimony you say with labor12 costs comprising about 60 percent of the13 City's budget, any increase in those14 costs beyond the amount included in the15 Five-Year Plan could present significant16 challenges to the City budget.17 I'm sort of confused by that18 statement. I understand what it means.19 I understand that it probably means that20 you're not necessarily anticipating or21 don't want new costs within this budget22 year, but when you use the term23 "Five-Year Plan," we know there's going24 to be a new Five-Year Plan.25 61 10/26/10 - FISCAL STABILITY - RES. 1005241
And you're7 actually, to some extent, just referring8 to this fiscal year?9
That's right. The14 Five-Year Plan will change, but until15 then, we're still living with this Plan.16
So as we17 approach a new budget season and a new18 Five-Year Plan, what does that statement19 mean in that context?20
It means that we21 still need to live within the costs that22 are in our Plan and will be in our new23 Plan, that what we've assumed is that24 there will be labor savings, that there25 62 10/26/10 - FISCAL STABILITY - RES. 1005241 will be change in the pension plan that2 will control benefit costs, and we need3 to achieve that to hit the numbers in our4 Plan.5
And the6 additional revenue that was requested by7 the Administration last spring, that8 would have covered additional labor9 costs?10
No. That would11 have -- this is going to get Councilman12 Clarke. That would have meant that that13 last round of cuts didn't happen.14
So as we15 approach next year's budget and Five-Year16 Plan, that statement will hold true?17
Councilman24 Jones.25 63 10/26/10 - FISCAL STABILITY - RES. 1005241
Thank you,2 Mr. Chairman.3 And good afternoon, Mr. Dubow.4 First of all, let me give kudos to the5 Chairman for being consistent with his6 pledge to have a quarterly fiscal7 evaluation, which gives us some time,8 some runway before we have to land a9 budget, and even in discourse, we can at10 least come up with some general11 directions where we want to be in the12 discussions. So I applaud you for that.13 At some point, Bill, myself and14 Maria, God willing and the creek don't15 rise, won't have to be called freshmen16 again and that at some point we'll have17 to figure out some other moniker, but18 while we still have it --19
Sophomore?21 Okay.22 While we still have it, I'd be23 interested in looking at and what I heard24 consistently among the testimony, which25 64 10/26/10 - FISCAL STABILITY - RES. 1005241 is a result of the budget process, that2 each of us, freshmen and senior members3 alike, have asked about, alluded to,4 recommended changes that might increase5 our efficiency. Some of them were6 scoffed at, like the Freshman 15, as7 amateuristic attempts to do those things,8 and that's okay.9
I actually don't10 think that's what happened. I think11 there were some of those things that we12 actually did.13
Yeah. By18 the time we got done, it was 30.19 I'd be interested as we20 approach the budget cycle again looking21 at how many of them were vetted, how many22 of them were actually implemented, how23 many of them were discarded and for what24 reason. And I think that's true for each25 65 10/26/10 - FISCAL STABILITY - RES. 1005241 member of Council as we struggle with2 this thing.3 No one likes to raise taxes.4 No one likes to cut services, but all of5 us can agree at a place called efficiency6 and if indeed we are in earnest trying to7 do them. I can remember a couple of8 them. One of them was the bail9 collection and that with the transition10 from the Clerk of Quarter Sessions into11 the mainframe of the court system, how12 that aggressive collection effort is13 doing.14 So at the point that we come15 back and reconvene, progress reports on16 what those savings actually mean would be17 at least helpful to me and possibly the18 rest of the members of Council.19 Specifically, what I want to know about20 this year is that but for the slowdown at21 the state level of our reimbursements,22 pretty much are our revenues on track?23
Yeah. The first24 quarter of '11 tax revenues have been25 66 10/26/10 - FISCAL STABILITY - RES. 1005241 pretty much where we projected they would2 be.3
And once the4 ferreting loose of our payments from the5 state actually hit our coffers, we will6 be ahead of, slightly ahead of?7
Just a little8 because of amnesty, and it's one-time9 money, but, yeah, just a little bit.10
And are we11 considering -- and I want to commend12 Councilwoman Krajewski for her initiative13 to do that, which resulted in $12 million14 more that we had --15
And so if18 that trend continues, we won't be at19 crisis mode, if indeed the state did not20 do anything drastic by cutting us. And I21 understand they have their budget woes,22 but we will probably be right on par23 where we said we would be.24
Yes. That's right.25 67 10/26/10 - FISCAL STABILITY - RES. 1005241 If there's nothing -- if we don't get hit2 by the state, if there's no other3 downturn in the economy, we should be for4 this year around where we thought we were5 going to be, which is much better than,6 you know, seeing revenues fall off the7 cliff like they had two years ago.8
That's light9 at the end of the tunnel that may not be10 a train coming to hit us.11
Now, with13 that, we've taken a posture where we've14 slowed down in a cautious manner on some15 of the hirings that we could have done,16 and I'm not going to try to guess the17 motivations of that, whether it is in18 anticipation of some uptick of expense or19 some reduction in revenue. I don't know20 what those are, but at some point, we're21 going to have a reconciliation of those22 dollars and it will come in the form of23 transfer ordinances that will be put24 before us.25 68 10/26/10 - FISCAL STABILITY - RES. 1005241
In that3 regard -- and I'll piggyback off what4 Member Goode said -- that we aren't5 anticipating any settlement of the union6 contracts? I mean, does this --7
We're anticipating8 that if they're settled, they'll be9 within the framework laid out in the10 Five-Year Plan.11
All right.12 And specifically, that has nothing to do13 with the slowdown of hirings?14
The slowdown in18 hirings is to ensure that we actually19 stay within our budget.20
Okay. For21 example, in the EMS -- well, no; in the22 black-out situation --23
Brown-out.25 69 10/26/10 - FISCAL STABILITY - RES. 1005241 Black-out, brown-out, they're not in2 business. We could -- if my memory3 serves me correctly, would 25 new hires4 there solve that whole $3 million5 problem?6
I wasn't at the7 hearing, but if that's what came out at8 the hearing, then I'll --9
So, I mean,10 as we start to approach this -- and I'm11 going to anticipate at our next meeting,12 I'm going to ask that question a little13 harder. I don't need an answer right14 now, but as we start to realize these15 savings, as our plane is coming to at16 least stable airspace, anticipated17 revenues are there and some favorable18 surprises like amnesty, I know there's19 going to be something that kicks us in20 the shins, but pretty much I would be21 looking for us to solve some of the22 service problems, which the brown-outs23 are a problem, that we can anticipate24 that we've realized certain amount of25 70 10/26/10 - FISCAL STABILITY - RES. 1005241 savings due to late hirings, that we can2 hire out of -- what was the number of3 unfilled positions that we had, Charlie?4 What was that?5 MR. McPHERSON: 675.6
Out of 6757 unfilled positions, that we can manage to8 breathe easy and hire 25 more to solve a9 problem that has gotten so much attention10 from the public and one that concerns me11 deeply when we start talking about first12 responders and the safety of the public.13 So as we move from this quarter14 to the next quarter and we have this good15 news, I want to be also looking for us to16 do good things to pass that good news on,17 like maybe hire 25 firefighters to solve18 a major problem like that.19
I wouldn't actually20 call this good news. I would say it's21 the first time in a while we haven't had22 bad news, which is a significant23 difference. I don't think we're in a24 place where we can start adding25 71 10/26/10 - FISCAL STABILITY - RES. 1005241 expenditures, because we're kind of where2 we thought we would be. It's not like we3 have more money than we thought we were4 going to have when we --5
No. I6 wouldn't classify it as adding7 expenditures. It would just be doing8 what we said we were going to do in the9 Five-Year Plan and hiring the people that10 we have budgeted for. So, I mean --11
The Five-Year Plan12 assumes we don't incur those costs. So13 what we're doing now is consistent with14 the Plan.15
All right.16 I'll give you until the next quarter for17 us to come to common ground on that, but18 if the trend continues -- and I pray and19 knock on wood that it does -- we're going20 to look to see public relief in some21 areas as well, so that that good news22 gets translated into good services. All23 right?24 Thank you, Mr. Chairman.25 72 10/26/10 - FISCAL STABILITY - RES. 1005241
Thank you,2 Councilman.3 Mr. Dubow, let me understand4 this, in your most recent questioning.5 The PICA-approved budget and the6 positions not filled, 675, and let me7 understand, where is that money as it8 relates to our fiscal year?9
There is always in10 every budget, there's an assumption that11 positions won't be filled for the entire12 year. So if you have a General Fund13 that's 22,500 people, there's always14 going to be some turnover. So if you15 didn't have any vacancies, you would wind16 up going over budget. I mean, just17 because the way our process works, we18 always are going to have vacancies. So19 it's not surprising that you would find a20 large number of --21
Is this22 number consistent with the prior years,23 675?24
I'd have to kind of25 73 10/26/10 - FISCAL STABILITY - RES. 1005241 go back and look, but it's probably2 consistent with the last few years. I3 think we probably have a large number of4 vacancies each year.5
6 Following on the theme of getting7 creative -- and you're probably not the8 person to talk to this about, but you're9 sitting here. I personally had some10 issues with respect to the pace of an11 issue that I think affects two of these12 problem areas -- one is wage tax; the13 other is the transfer tax -- is the pace14 of development in the City, be it15 supported by the government, be it RDA,16 OHCD, PHDC, or simply allowing17 individuals who are willing to build in18 the City of Philadelphia, and it's19 unfortunately not as many that we are20 used to in the past. But I have a real21 concern because I think that, one, from a22 fiscal perspective, that our inability to23 generate activity has been diminished,24 because there seems to be this25 74 10/26/10 - FISCAL STABILITY - RES. 5 I'm all for transparency, you6 know, support it, in some cases probably7 in retrospect regret, every imaginable8 ordinance that relates to creating9 transparency, but my concern is when it10 then turns into paralysis, because I've11 seen too often where people submit12 projects or they come in and requesting13 publicly owned land, be it RDA, Public14 Property or some other agency, and they15 are "formed" to death. By that I mean,16 you get to a stack of forms and you can't17 even be guaranteed that you will end up18 with the property. 24 I think there needs to be some25 75 10/26/10 - FISCAL STABILITY - RES. 13 On the public side, we have14 been sitting on $50 million of NTI bonds15 for the last year. And I'm only saying16 the last year because that's the time17 that the audit was completed, where18 essentially all of the issues with19 respect to whatever concerns were had by20 either the RDA or the Administration as21 it relates to the type of bonds, the22 amount of bonds, any issues with respect23 to some potential criminality, because I24 believe that it was -- actually, at one25 76 10/26/10 - FISCAL STABILITY - RES. 1005241 point there was an attempt to hire a2 forensic criminal auditor to determine if3 there was some criminal activity. 18 The most recent round of19 funding from the state, I think we got20 the lowest amount of developments funded21 in most recent history, and the reality22 is is that a city in the western23 county -- and I don't know if that24 reflected on the fact of who might25 77 10/26/10 - FISCAL STABILITY - RES. 8 So if we want to talk about9 creative ways, other than cutting10 services and raising more taxes, which I11 said earlier, I don't think there's any12 appetite for that, we got to get, frankly13 speaking, a little more aggressive in14 these opportunities. 18 We in Council are always19 prepared to work with the Administration,20 because at the end of the day, as the21 Mayor actually likes to say, there are 1822 people who drive this particular train,23 and we want to be a part of that train in24 a very meaningful way. And while we're25 78 10/26/10 - FISCAL STABILITY - RES. 93 percent real estate tax was a very4 difficult vote -- we also want to be as5 aggressive and in the position to6 participate in a meaningful way in7 creating some of these ideas and some of8 these mechanisms that are going to drive9 revenue, other than simply putting our10 hands in people's pockets. And I mean11 that. 15
And at the17 end of the day, our ability to create and18 generate revenue on a local level is very19 important, and not simply being subject20 to the national recession. Okay? So21 that's pretty much that on that one.22 Any other questions by members23 of the Committee for this witness?24 (No response.)25 79 10/26/10 - FISCAL STABILITY - RES. 1005241
Mr. Dubow,2 thank you very much. That was pretty3 painless, wasn't it, sir?4
Anyone else6 to testify on this resolution?7 (No response.)8
There being9 none, thank you very much.10 This concludes the hearing on11 the Committee of Fiscal Stability and12 Intergovernmental Cooperation. Thank you13 all very much.14 (Committee on Fiscal Stability15 and Intergovernmental Cooperation16 concluded at 2:40 p.m.)17 - - -18 19 20 21 22 23 24 25 80 1 CERTIFICATE2 I HEREBY CERTIFY that the3 proceedings, evidence and objections are4 contained fully and accurately in the5 stenographic notes taken by me upon the6 foregoing matter on October 26, 2010, and that7 this is a true and correct transcript of same.8 9 10 11 12 --------------------13 MICHELE L. MURPHY14 RPR-Notary Public15 16 17 18 19 (The foregoing certification of this20 transcript does not apply to any reproduction21 of the same by any means, unless under the22 direct control and/or supervision of the23 certifying reporter.)24 25