Committee Hearing, June 10, 2011

They can do this24 within their existing budget.25 132 6/10/11 - WHOLE - 110135, ETC.1

Boy,2 that's surprising.3

They're efficient.4

Okay.5 If you say so, we'll believe you.6 What is the Administration's7 tax policy rationale for the8 implementation of this tax?9

Well, we prefer10 this tax to a broad-based tax because11 it's a more targeted tax and we think12 would not have as broad an impact as a13 property tax, and it's also an item14 that --15

I'm16 sorry. I was distracted.17

There are a couple18 of reasons that we prefer this to a19 broad-based tax. One is that it's more20 targeted. Also, it's imposed on21 something that's a matter of choice.22 People could buy different beverages that23 are not sugar-sweetened.24

I'm25 133 6/10/11 - WHOLE - 110135, ETC.1 not a lawyer, but I do believe it's2 discriminatory. Would you say that it3 is?4

I'm going to avoid5 getting into a legal discussion with you.6

I7 just --8

I think the City9 Solicitor is coming to respond to that.10 (Witness approached witness11 table.)12

Hello.13

Hello14 again.15

The question is16 whether the tax is discriminatory?17

Yes.18

Based on any -- I19 mean, do you have a belief that it's20 discriminatory based on any particular --21

Well,22 last year we were asked to raise this23 tax, the soda tax, and at that time, it24 wasn't a matter of the taxes but obesity.25 134 6/10/11 - WHOLE - 110135, ETC.1 Now we don't hear anything about the2 obesity issue. We're just hearing about3 this tax. And I don't know how this4 could ever be implemented. If it's5 sugar, it's sugar, and there are many6 other items that have sugar. So are we7 just saying, Oh, well, we're going to go8 back to soda? Well, how about so many9 other items that have a sugar content?10

Well, to me that's11 not --12 (Applause.)13

To me that's not --14 from a legal perspective, that's not a15 discriminatory -- that's not an issue of16 discrimination in any way. Certainly17 classes of foods that contain sugar are18 not classifications that are suspect19 under the law such that they can't be20 treated differently. All the tax law21 requires is that there be a rational22 basis for a distinction, and there23 certainly is a rational distinction24 between sugar-containing beverages and25 135 6/10/11 - WHOLE - 110135, ETC.1 those that do not and between --2

Let3 me ask another question, if I may. If I4 were a member of this industry and this5 bill passed, do you think I would take it6 to court and do you think we would be7 involved in litigation for several years?8 And during that period of time, would you9 be able -- would we be able to collect10 the taxes?11

I think that, first12 of all, the fact that someone might13 threaten to sue us neither speaks to the14 actual legality of the issue over which15 they might sue us or the merit of the16 issue itself. So --17

But18 I'm sure they would find an attorney to19 think so.20

There's --21

And22 there would be litigation.23

Philadelphia has24 more lawyers per capita than almost any25 136 6/10/11 - WHOLE - 110135, ETC.1 city in the country. So there's no2 question in my mind that anyone who wants3 to sue us about anything could find a4 lawyer to take the case.5 COUNCIL PRESIDENT VERNA:6 Certainly.7

I think based on8 the level of lobbying activity and legal9 activity that has surrounded the beverage10 industry in relation to this tax both11 here in Philadelphia and in other places,12 I think it's certainly more than possible13 that we might get sued, but I don't think14 that means that the tax would be15 overturned, and I don't think that16 necessarily means that the impact of the17 tax would be stayed while they figured it18 out. It's impossible to say that sitting19 here today. So I don't think -- but I20 believe the tax -- our opinion is that21 the tax is in fact legal, and so I think22 that ultimately --23

But24 that's your opinion. It may be the25 137 6/10/11 - WHOLE - 110135, ETC.1 Administration's opinion, but as I said,2 if you're a member of the industry,3 you're going to find an attorney who will4 take your case and --5

Sure, but --6

Can I7 finish?8

I'm sorry. I9 apologize. I thought you were finished.10 I apologize.11

And I12 just don't understand how we would be13 able to actually collect this tax while14 this particular case is under litigation.15 But you say it can be done?16

Yes.17

And I18 know you're an attorney and you would19 not -- I know you wouldn't -- lead us in20 the wrong direction.21

I would not. I22 have no interest in doing that.23

But I24 suspect that that's possible, and I'm not25 138 6/10/11 - WHOLE - 110135, ETC.1 a lawyer.2 Did you want to say something?3

Yes.4 COUNCIL PRESIDENT VERNA:5 Councilman Green.6

Thank you,7 Madam President.8 I just wondered if there are9 any comments on uniformity issues under10 Pennsylvania law with respect to such a11 targeted tax, and then also under the12 Commerce Clause of the U.S. Constitution13 targeting a particular tax and stopping14 the free flow of commerce between states.15 It's an issue that's been raised by the16 Law Department with respect to17 legislation I have that is trying to18 protect Philadelphians or put19 Philadelphia first, and I just want to20 make sure we've done a thorough U.S.21 Commerce Clause analysis and Pennsylvania22 Uniformity Clause analysis. So that's my23 question.24

We have done a25 139 6/10/11 - WHOLE - 110135, ETC.1 Commerce Clause analysis. We have -- we2 would obviously continue to research that3 issue, but we think that -- the Commerce4 Clause issue is essentially whether or5 not it imposes an unreasonable burden on6 interstate commerce, and this tax is not7 so unreasonably burdensome, from our8 perspective, that it does that.9 Secondly, as to the uniformity10 issue, Pennsylvania courts have explained11 that the Legislature actually has12 discretion in matters of taxation, and as13 long as there's some legitimate14 distinction between the classes that15 provides a non-arbitrary and reasonable16 and just basis for difference in17 treatment, there won't be a Uniformity18 Clause problem. And as to the19 sugar-sweetened beverage tax, we think20 the distinction between sugar-sweetened21 beverages and non-sugar-sweetened22 beverages is a legitimate and fair23 distinction.24

Thank you.25 140 6/10/11 - WHOLE - 110135, ETC.1 So I think the point that the President2 was trying to make earlier, that it's not3 clear to this body that there is a4 distinction between orange juice which5 has sugar and a drink that where sugar is6 removed and then it is reconstituted, has7 sugar, from a Uniformity Clause8 perspective. It doesn't seem like -- it9 seems like we're taxing two drinks that10 sell sugar, one from a concentrate, one11 naturally or otherwise, and that that12 doesn't necessarily make -- I'm not13 trying to have the debate with you. I'm14 just trying to explain some of the15 concerns we have and get them on the16 record. It doesn't seem to be that much17 of a distinction.18 And then under the Commerce19 Clause, do you have any written opinion20 or memo regarding Commerce Clause21 analysis?22

I don't believe one23 has been requested, so, no.24

And you25 141 6/10/11 - WHOLE - 110135, ETC.1 didn't do it internally. You didn't2 actually --3

There's not been --4

There's no5 writing in the Law Department about a6 Commerce Clause?7

I don't want to say8 there's no writing, but I've had9 discussions. I have not seen a -- I10 haven't discussed a written document on11 the issue. I've had oral discussions12 about it.13

Who in the14 Law Department has done the research on15 the Commerce Clause analysis?16

Well, our Appeals17 and Legislation Unit would have done that18 research. If you would like an opinion19 on it, we're happy to give you one.20

I'm just21 asking. I'm trying to understand how22 much effort has been put into determining23 its legality.24 How about the Uniformity Clause25 142 6/10/11 - WHOLE - 110135, ETC.1 analysis, who did that?2

Our Appeals and3 Legislation Unit.4

And did they5 do a writing on that?6

We issued an7 opinion to Councilman Jones who requested8 one and waived the privilege.9

Does that10 opinion include --11

It includes the12 Uniformity Clause.13

Does that14 opinion include a Commerce Clause15 analysis?16

It does not.17

Okay.18 Thank you, Madam President.19 COUNCIL PRESIDENT VERNA:20 You're welcome.21 Mr. Dubow, what is the revenue22 estimate that this tax will generate and23 how was it calculated?24

It's estimated that25 143 6/10/11 - WHOLE - 110135, ETC.1 it would generate $80 million in --2

I'm3 sorry.4

It's estimated it5 would generate $80 million for a full6 year and that it would generate $607 million this year, because it would not8 be in place for the full year. The9 estimate assumed that there would be10 about a 20 percent falloff in sales of11 sugary-sweetened beverages.12

And13 that's how you calculated that we would14 be generating 60 million?15

Right. Yes.16

Could17 we have a copy of that calculation that18 you made?19

Yes. We can get20 you that.21

Thank22 you.23 The Chair recognizes Councilman24 Goode.25 144 6/10/11 - WHOLE - 110135, ETC.1

Thank you,2 Madam President.3 Good afternoon, Mr. Dubow.4

Good afternoon.5

On of6 your testimony, you refer to the7 Administration's preferred method of8 revenue generation. Without getting into9 how you are going to generate the10 revenue, can we talk about how much11 revenue you expect to be generated from12 it in Fiscal Year '12?13

From this tax?14

Total.15

Total, okay.16

The question17 more specifically is, what is your total18 request from this Council in terms of19 your preferred revenue generation for20 Fiscal Year '12?21

For '12, it's22 really that $60 million. Locally we also23 include $6 million from the parking24 increase.25 145 6/10/11 - WHOLE - 110135, ETC.1

So your2 request to this Council is actually $66.13 million?4

In our preferred --5 that's for '12, that's right.6

Not the $1027 million that the School District8 mentioned?9

The School District10 gave a range of 75 to 110, but we get --11 if you look, that 60 million plus the 612 million from parking, plus the TransPass13 deal has about a $25 million benefit.14

I understand15 the Administration's math and what it16 adds up to. That's still separate from17 the School District's request today. The18 School District essentially requested --19 they can correct me if I'm wrong -- they20 requested us to raise $102 million in new21 revenue.22

Yes. That's right.23 So they're different.24

Shouldn't25 146 6/10/11 - WHOLE - 110135, ETC.1 the Administration and the School2 District be on the same page at this3 point?4

Yeah. I think5 we're on the same page on the items that6 would be restored.7

I'm not sure8 we're on the same page with regard to9 that either, because Mike Masch gave us a10 list that had nine items. We originally11 were at four items.12

Right. In the --13

Actually had14 11 items when you count the full-day15 kindergarten and the other transportation16 costs.17

Right, but if you18 go to the list on , which is Option19 3(a), which is the two-cent sweetened20 sugar, and the School District's list of21 what they would restore, it starts with22 the $11 million that they assume we would23 pick up, then it has transportation,24 reduced class size, alternate education,25 147 6/10/11 - WHOLE - 110135, ETC.1 early childhood. That's consistent with2 what were our top priorities, although I3 think there's a little difference on how4 alternate education would be structured.5

They also6 include school nurses, extended-day7 programs, counselors, and art and music8 programs.9

That's right.10

So the lists11 are not the same.12

Well, we had a list13 of our top priorities for what we wanted14 restored, and those are all here. We15 are --16

And they're17 contained within their longer list.18

Yes.19

Let me end20 with this. I'll ask the question just21 one more time before I move to my second22 line of questioning. What is the23 Administration's request in terms of new24 revenue from this Council for Fiscal Year25 148 6/10/11 - WHOLE - 110135, ETC.1 '12?2

Our request is or3 preferred request --4

Your5 preferred request.6

Is for7 sugar-sweetened beverage tax.8

I'm talking9 about the dollar amount.10

Sixty million11 dollars.12

I'm talking13 about the dollar amount. What is the14 preferred request?15

Sixty million, plus16 the parking rate increase, 6.6, and then17 the TransPass deal, assuming that they18 get the equivalent of 25 million from19 that.20

I'm talking21 about new revenue you're asking from this22 Council. Is the number 66 million?23

Yes, but I just put24 that in context. That assumes25 149 6/10/11 - WHOLE - 110135, ETC.1 Accountability Block Grant comes back and2 the charter school funding is there,3 because if those items aren't in the4 state budget, it won't be possible to5 restore all these things, because this6 will be making --7

It also8 won't be possible to raise new revenue,9 unless we find out by that time.10

That's true.11 That's true.12

So your13 request is what? I'll ask it one more14 time.15

Again, it's the 66.16 I keep saying it's 66.17

Let's move18 on, then. On the issue of accountability19 and transparency, in the Five Year Plan20 submitted to Council by the21 Administration, were there any new tax22 increases in the Five Year Plan?23

There were not.24

Were there25 150 6/10/11 - WHOLE - 110135, ETC.1 any tax reductions in the Five Year Plan?2

There are tax3 reductions in the out years of the Five4 Year Plan, yes.5

And what are6 those tax reductions in the out years of7 the Five Year Plan?8

The tax reductions9 in the wage tax and the business10 privilege tax.11

What are the12 projected fund balances over the five13 years?14

One second. Let me15 just get that out.16 You want it for each year?17

Yes. I have18 it in front of me, but I want it for the19 record.20

No. I understand.21 You usually do. I just want to grab the22 Plan, which I have in here somewhere.23 The fund balances in the Plan24 were 51 million in '12, 63 million in25 151 6/10/11 - WHOLE - 110135, ETC.1 '13, 69 million in '14, 42 million in '152 and 46 million in '16.3

And the drop4 in the last two years are tax reductions;5 is that correct?6

I'm sorry?7

The drop in8 the last two years are tax reductions; is9 that correct?10

Well, I mean, the11 drop is the variety of kind of everything12 that's happened in the Plan, but there13 are tax reductions in the Plan that14 contribute to the change in the fund15 balance.16

But has the17 projected fund balance for Fiscal Year18 '12 changed? Is it still 51 million?19

Well, I think what20 I should do actually, we haven't updated21 those projections. We've updated '11,22 which was 13.5 million in the Plan that23 we've proposed back in March. It's now24 down to about 5 million.25 152 6/10/11 - WHOLE - 110135, ETC.1

Okay. Are2 tax collections up or down in Fiscal Year3 '11?4

Tax collections are5 slightly up. Local generated non-tax6 revenues are slightly down. And revenue7 from other governments are down.8

In terms of9 net revenue, are tax collections up or10 down?11

Hold on one second.12

I believe13 they're up 9 percent.14

Nine percent? Did15 you say 9 percent? Total revenues are16 now --17

I'm working18 with the PICA April report.19

Total revenues are20 now projected to be thirty-nine21 twenty-eight. In the Five Year Plan they22 were projected to be thirty-nine23 thirty-three. So they're actually --24 they're slightly down.25 153 6/10/11 - WHOLE - 110135, ETC.1

I'm2 referring to tax revenue, not revenue3 from other governments.4

Yeah, revenue --5 oh, tax revenues, yes. Tax revenues are6 slightly up.7

How much? I8 know as of April it was up $174 million;9 is that correct? A hundred seventy-four10 million over Fiscal Year '10, not over11 projections.12

Oh, over Fiscal13 Year '10. I'm sorry. I was looking at14 projection.15

So the16 question is, how much are they --17

That's right.18

How much are19 they up over projections?20

They're roughly21 actually consistent with projections,22 because some taxes are up and some are23 down. So we didn't change that from the24 Plan.25 154 6/10/11 - WHOLE - 110135, ETC.1

So what do2 you expect the fund balance for Fiscal3 Year '12 to be when adjusted?4

Well, probably not5 that much different from what's in the6 Plan. I mean, it will change slightly,7 but probably not that different.8

It might be9 higher?10

I don't think it11 would be higher. It may come down a12 little based on what's happening.13

So how much14 of a millage shift could the City afford15 in the Five Year Plan?16

Well, that's a17 broad answer. I think the first thing I18 would say is that the fund balances that19 are included in the Plan are much lower20 than what the Government Finance Officers21 Association recommends. They recommend22 that you have a fund balance that's at23 least 5 percent of your revenues. So24 from what they project, what they25 155 6/10/11 - WHOLE - 110135, ETC.1 recommend, we'd be looking more like at2 175 million in terms of a fund balance,3 and the reason they recommend that is4 because things go wrong during the year.5 You have a big snowstorm. The economy6 slows down like it's looking like it7 will. So fund balance --8

I understand9 that, but if your answer is going to be10 zero, that's fine, but last year you told11 us we were going to run out of cash12 because we didn't leave you enough of a13 fund balance. I believe we left you14 about 20 million.15

Well, we made -- we16 actually made changes to the budget to17 make sure that that didn't happen, and we18 had some cash conservation measures early19 in the year. So we did have some real20 cash constraints.21

Okay. So22 you believe with a $50 million fund23 balance in Fiscal Year '12, a $60 million24 fund balance in the two years and with a25 156 6/10/11 - WHOLE - 110135, ETC.1 fund balance healthy enough to restore2 tax reductions, there's no room for a3 millage shift at all?4

I think if we did a5 millage shift, we would kind of just be6 setting ourselves up to have to make more7 cuts in our General Fund, and I think8 that's the choice we would be making.9

But not10 necessarily. But you would make the cuts11 if you believe that you needed to?12

Yes. We would have13 to go back and make cuts, the kind of14 cuts I think that we laid out what they15 would look like in one of the documents16 we gave to Council.17

But if18 Council believed that we couldn't19 necessarily go to the 60 percent share20 that the School District got four years21 ago through my legislation but went to a22 59 percent share for the School District23 and added, let's say, roughly $25 to $3024 million, that that would create severe25 157 6/10/11 - WHOLE - 110135, ETC.1 cash flow problems.2

Well, it would3 create fund balance problems.4

It would5 reduce the fund balance.6

Well, probably by7 if you're talking, yeah, 25 to 30 by8 FY -- probably in FY12, definitely in9 FY13 we could have real severe problems10 and we'd have to figure out how to11 compensate for that.12

It would cut13 the fund balance in half for a few years.14

Well, no. It would15 be recurring. It wouldn't just cut it in16 half. So if you did 30 million, for17 example, by the end of '13, assuming18 everything else went right, you've gone19 from 63 million to 3 million on a $3 and20 a half billion budget. And then if21 anything else goes wrong, like we have22 another bad winter, we're negative.23

Okay. I get24 that. I also get the fact that the tax25 158 6/10/11 - WHOLE - 110135, ETC.1 revenue projections are very2 conservative. I'm not suggesting that a3 millage shift can absolutely be done4 without any cuts. I am suggesting that5 it is an option and that as we talk about6 options and we talk about leadership7 moments, that everything should be on the8 table.9

Right. It's a10 trade. You're going to trade whatever11 you're restoring in the School District12 most likely for cuts on the General Fund13 side.14

Thank you.15 Thank you, Madam President.16 COUNCIL PRESIDENT VERNA:17 You're welcome.18 The Chair recognizes Councilman19 Greenlee.20

Thank21 you, Madam President.22 Good afternoon, everyone.23

Good afternoon.24

I just25 159 6/10/11 - WHOLE - 110135, ETC.1 want to get back on the sugar-sweetened2 beverage tax again. I have to say, I3 agree a lot with what the Council4 President said. I do have questions on5 the whole fairness of the tax, but,6 Ms. Smith, I don't want to get into a7 debate, because I'm not equipped to do8 that legally with you on the tax, but9 there is one thing --10

I always say that11 to her, too.12 COUNCILMAN GREENLEE:13 Absolutely.14 But there is one thing that15 kind of jumps out a little bit to me on16 your opinion to Councilman Jones. On17 , as you're talking about the sales18 tax question that Cozen O'Connor raises,19 you say, Most critically, there is no20 City intent that the tax will be borne by21 the consumer, nor is there any evident22 proof that it will be borne by the23 consumer. Yet Mr. Dubow's statement, he24 says we would expect that some of the25 160 6/10/11 - WHOLE - 110135, ETC.1 cost of this tax will be passed along to2 customers in the form of higher prices.3

Yeah.4

Wait.5 And if people are willing to pay more for6 the product, that is their decision.7 It seems like a little8 contradiction there.9

As soon as I heard10 him say that, I knew this question was11 coming. I think that what we -- I think12 that we don't intend that the tax will13 necessarily be borne by the consumer. I14 think we recognize that the tax was15 likely to be borne as a result of market16 forces by the consumer, among other17 entities. It's also likely to be borne18 by the manufacturer, by the distributor,19 by the retailers as well. And the point20 is -- and by consumers of other retail21 products, to the extent that the cost of22 the tax is spread around within the23 retailers' business or, for that matter,24 the distributors' or manufacturers'25 161 6/10/11 - WHOLE - 110135, ETC.1 business.2 The point, though, is that how3 the market allocates the tax is not4 really the point. The incidence of the5 tax is the point, and the tax is clearly6 imposed at the distributor/retailer level7 of the chain. It's not a sale on retail8 purchases. It's not conditioned on9 retail purchase. It's not imposed on10 retail purchasers, and it's not measured11 by the price of the product. Those are12 all the factors that determine whether13 something is a sales tax. It is not any14 of those things. And the fact that it15 incidentally might be reflected in some16 additional cost to the consumer, which17 might incidentally be a desired result18 for the purpose of collecting the tax,19 doesn't mean that it is in fact a sales20 tax.21 And while -- may I just clarify22 my answer to Councilman Green on the23 issue that he raised about the opinion.24 You asked me -- Councilman Green asked25 162 6/10/11 - WHOLE - 110135, ETC.1 whether or not the opinion addressed the2 Commerce Clause issue. The opinion was3 actually a response to Councilman Jones'4 request that we respond to the Cozen and5 O'Connor opinion. The Cozen and O'Connor6 opinion does not raise a Commerce Clause7 issue. So the opinion does not contain a8 reference to the Commerce Clause9 argument, because they didn't even make10 it, probably because the tax does not11 treat Philadelphia businesses any12 differently. It doesn't make a13 distinction or impose a preference. So14 there's no Commerce Clause problem.15

I'm not16 sure I followed all that, but okay.17

I just wanted to18 take the opportunity while I was talking19 to make that clarification.20

I got21 you.22 I guess you do bring up another23 issue, and Council President touched on24 this too, is this whole kind of intent or25 163 6/10/11 - WHOLE - 110135, ETC.1 who is going to pay the tax, because I2 remember last time Dr. Schwarz sat there3 for a long time saying one of the big4 goals was to have people consume less5 soda because of health reasons. As the6 Council President said, it's not being7 discussed right now or not being used as8 an argument why we should have this. I9 guess that leads to another question, to10 a general question.11 What's the difference between12 this year and last year as far as the13 tax, Mr. Dubow, either substantive or14 philosophical, or whatever?15

Mechanically16 there's a difference in that it's applied17 on the transaction between the retailer18 and the distributor, and last year it was19 on the sale. I think that's kind of the20 key mechanical difference between this21 year and last year. And the purpose of22 the revenues is different between the two23 years, too. Last year the purpose was to24 help fund a City gap. This would be25 164 6/10/11 - WHOLE - 110135, ETC.1 dedicated to the School District.2

Right.3

So that's a4 substantial difference.5

But there6 was that whole health issue last time,7 which is not apparently --8

I mean, we9 obviously still think that there would be10 health benefits if the consumption went11 down, but our main focus in asking for12 the tax this year is to provide revenue13 for the School District.14

Okay.15 Now, you said there would be a 20 percent16 falloff. What, from people drinking less17 soda?18

Drinking less19 sugary, yes, sweetened drinks.20

Sugary21 drinks. Was something factored in also22 about the fact that there would be23 less -- that people might be buying24 elsewhere?25 165 6/10/11 - WHOLE - 110135, ETC.1

Yeah. Right.2 That's part of it.3

Because,4 I mean, if you look at the cost, I would5 think a lot of people might choose to go6 across the line somewhere and buy the7 soda or sugared-sweetened beverages for8 significantly less price, right?9

Depending on what10 the price of gas is.11

Well,12 yeah. True. But, I mean, it's not real13 far to get across the county line or14 across the bridge.15 So that 20 percent falloff16 is --17

Includes people18 going to --19

--20 included in that? Okay.21 I mean, just a quick statement,22 again, consistent with the Council23 President. I question the fairness of it24 just hitting like one section of an25 166 6/10/11 - WHOLE - 110135, ETC.1 issue, if you will, sugared-sweetened2 issue, if you will.3 And then, secondly, I think4 with all due respect, Ms. Smith, I think5 you make your argument, other people make6 their argument. I think to base helping7 the schools on something that's at least8 questionable, I think we could be putting9 ourselves in real trouble. Just my10 opinion.11

I don't think we12 think it's questionable. I think that's13 where we disagree. I don't -- we don't14 think it's questionable.15

It's16 certainly questionable.17

It's questionable18 from an industry perspective, but from a19 legal perspective, we're very comfortable20 that the tax is -- we're very comfortable21 that the tax is defensible.22

There's23 other lawyers that are very comfortable24 it's not. That's why, in my opinion, it25 167 6/10/11 - WHOLE - 110135, ETC.1 makes it questionable.2

As I said, the City3 gets sued over lots of things. It4 doesn't mean the issues have merit.5

Okay.6 Well, there certainly seems to be enough7 of at least merit to make a question, but8 that's between us.9 (Applause.)10

Thank11 you.12 MR. McPHERSON: Councilman13 Jones.14

Thank you.15 Solicitor Smith, I asked you16 for those opinions in anticipation of the17 possibility of a lawsuit. One thing I've18 learned as a freshman, that every time we19 pass something or propose something, some20 lawyer, some law firm benefits. Some21 consultants line up. We have bought22 summer homes based on the legislation23 that we have proposed.24

Summer homes for25 168 6/10/11 - WHOLE - 110135, ETC.1 other people, you mean?2

For other3 people. And I would say that to the4 credit of this body, we never make5 decisions based on the potential of a6 lawsuit. We make decisions based upon --7 (Applause.)8

-- the fact9 that it is either right or wrong. And10 I'll prove it to my colleagues and remind11 them about this process that we have.12 Yesterday we passed -- or this13 week we talked about the DROP amendment,14 and for sure there is a law firm and a15 lawyer somewhere lining up right now to16 challenge our rationale and theory.17 Would you agree, Counselor? Somewhere we18 are probably going to be sued at one19 point or another if we do nothing or20 something.21

That is correct.22

Correct. So23 when we pass that or when we did24 courageously the sick days/healthy family25 169 6/10/11 - WHOLE - 110135, ETC.1 bill, did it have the potential to be2 sued from a business perspective?3

It certainly has4 potential.5

But we did6 it anyway. And when we courageously7 looked at the Florida gun ban loophole,8 we moved forward, knowing full well that9 the powers that be that protect the right10 to bear arms could come down bearing on11 us, didn't we?12

And have in fact13 sued us.14

And have15 sued us, but we did it anyway. And we16 did those things because they were the17 right thing to do. So, Madam Solicitor,18 we have plenty of lawyers, don't we?19

We do.20

Not that we21 look forward to lawsuits or challenge and22 not that I say that we should in fact23 pass this tax, but I'm saying whatever we24 choose to do as a body, don't let it be25 170 6/10/11 - WHOLE - 110135, ETC.1 afraid of lawsuits and lawyers, because2 God loves lawyers, because he made so3 many of them.4 (Applause.)5

The6 Chair recognizes Councilman Rizzo.7