COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON APPROPRIATIONS - - - Room 400, City Hall Philadelphia, Pennsylvania Thursday, November 3, 2005 9:15 a.m. - - - PRESENT: COUNCILWOMAN JOAN L. KRAJEWSKI, CHAIRWOMAN COUNCILMAN DARRELL L. CLARKE COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JUAN RAMOS COUNCILMAN FRANK RIZZO COUNCILMAN MICHAEL A. NUTTER BILLS 050822, 050823, 050824, 050825, 050826 and 050827 - - - 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. 2
Good morning. The Committee on Appropriations is now in session. Will the Clerk please read the bills.
Bill No. 050822, an ordinance authorizing transfers in appropriations for Fiscal Year 2006 within the Grants Revenue Fund from the Director of Finance - Provision for Other Grants to the Department of Records; and Bill No. 050823, an ordinance 14 authorizing transfers in appropriations for Fiscal Year 2006 within the Grants Revenue Fund from the Director of Finance - Provision for Other Grants to the Fire Department; and Bill No. 050824, an ordinance 20 authorizing transfers in appropriations for Fiscal Year 2006 within the Grants Revenue Fund from the Director of Finance - Provision for Other Grants to the Director of Finance; and Bill No. 050825, an ordinance 3 11/3/05 - APPROP. - BILLS 050822 - 050827 authorizing transfers in appropriations for Fiscal Year 2006 within the Grants Revenue Fund from the Director of Finance - Provision for Other Grants to the District Attorney; and Bill No. 050826, an ordinance 8 authorizing transfers in appropriations for Fiscal Year 2006 within the Grants Revenue Fund from the Director of Finance - Provision for Other Grants to the Police Department and the Department of Public Property; and Bill No. 050827, an ordinance 15 authorizing transfers in appropriations for Fiscal Year 2006 within the Grants Revenue Fund from the Director of Finance - Provision for Other Grants to the Department of Public Property.
Thank you. Is there someone from the Administration here? Good morning.
Good morning, 4 11/3/05 - APPROP. - BILLS 050822 - 050827 Councilwoman Krajewski and members of the Appropriations Committee. I am Dianne Reed, the Budget Director for the City of Philadelphia, and I'm here this morning to testify before the Committee on Bills 050822, 23, 24, 25, and 27. Five of 8 these bills are transfers within the 9 Grants Revenue Fund for Productivity Bank 10 loans and one is a transfer to enable the 11 Fire Department to take advantage of 12 grants that they've gotten from the 13 state -- 14
Just 15 one moment. I just want to recognize 16 that we have a quorum here. To my left, 17 we have Councilman Rizzo, Councilman 18 Nutter, Councilman Clarke. To my right 19 is Councilman Ramos and Councilman Goode. 20 Thank you. 21
Before 23 we go any further, most of these bills 24 are Productivity loans? 25
Can you explain to this Committee exactly what it is, because there may be members that are new here, that we can understand what it is?
The Productivity Bank itself? Is that what you are asking about? I'll assume that. The Productivity Bank is a fund that was set up with proceeds from their original PICA borrowing which are used to fund either efficiency or service enhancements within departments that they pay back over five years with three percent interest. So that they are likely to be something where a savings can be achieved that will allow us to decrease budgets in future years. In some cases, it's just 6 11/3/05 - APPROP. - BILLS 050822 - 050827 something where we can't quantify necessarily at the moment what the efficiency or effectiveness benefit is going to be, but we know that there's going to be one, and in some cases, if it's professional services, the consultant will be quantifying what the potential savings are.
I think what we'll do, we'll have your testimony read into the record. Okay? Thank you. Are there any questions from members of the Committee? Councilman Nutter.
Thank you, Madam Chair. I'll be brief. I just have a couple of questions. Ms. Reed, what is the source of the funds for the Productivity Bank?
These were, as I understand it, funds set aside from the original borrowing from PICA.
So there 7 11/3/05 - APPROP. - BILLS 050822 - 050827 are no General Fund dollars that go into the Productivity Bank?
And how much money is there or was there set aside from the original PICA borrowing?
I don't have that information with me today. I think at this point there's about 30 million in the Productivity Bank.
Well, let's walk back through that again. You're saying from the original PICA borrowing, which was, I think, sometime in 1992, certain dollars were set aside specifically for the Productivity Bank?
Because I don't think the Productivity Bank came into existence until a few years later. Do you know when the Productivity Bank was created?
No, but let me see 8 11/3/05 - APPROP. - BILLS 050822 - 050827 if someone over here does know. No. We don't have that with us today, but we can get back to you on that.
Okay. No 7 one knows when the Productivity Bank was created?
All right. Just a couple quick questions. What was the FY05 projected fund balance that was in the budget that we passed for FY06?
26.7 19 million would be the number. Okay. 20 And you recently closed the 21 City's books, and I think there's a 22 report out now. What's the actual FY05 23 fund balance? 24
So that's 9 11/3/05 - APPROP. - BILLS 050822 - 050827 about $70 million more than was projected. Why is that?
Well, I think that the chief reason is, our revenue is higher than projected in a couple of taxes, like the business privilege tax was about 60 million more than we expected, and some of that had to do with the fact that some funds that were being set aside we actually realized were now proceeds of the City. They did not have to be paid back to people. There was a whole complicated transaction with people paying in advance and perhaps more than they needed to.
This was the double payment that some people were making on the BPT?
Right. And some people are using that to roll into the next year, so that was a huge accounting exercise that got completed. And another is the realty transfer tax, which was 12 above what we 10 11/3/05 - APPROP. - BILLS 050822 - 050827 had already in the budget, and we had increased that to 180 at the time that the budget passed, which was way higher than what we originally budgeted at, which was 127. And then the sales tax was about six above what was in the budget as passed. And in addition to that, we did have the position reduction, which took us down by about 13.
So tax receipts were significantly higher than even your own anticipation?
You're familiar with the recently released PICA report?
They have a series of recommendations as to what should be done, I think a section called "What is the fiscally prudent response to higher-than-anticipated fund balances." You're familiar with that? 11 11/3/05 - APPROP. - BILLS 050822 - 050827
I agree with some of them. I mean, in principal, yes. I mean, we still have to look at the whole stretch of the Five-Year Plan and see what some of the consequences are now that we are doing the analysis and starting to see what the financial picture is going to be, including Fiscal Year '11.
And they have, I think, about five recommendations, one of which in particular talks about reducing the City's tax burden. What's your view on that particular recommendation?
I don't have a view on that. I don't speak for the Administration on that. I mean, I think that overall the reductions that are in the plan -- 12 11/3/05 - APPROP. - BILLS 050822 - 050827
-- so far for the wage tax, I mean, clearly that's been a tax that has put the City at a disadvantage and continuing to reduce that, and the other provisions that are already in the plan we support.
Okay. I just want to make sure we're clear. When you say that you don't speak for the Administration, you are the Budget Director, right?
I understand, but you have a particular view as the Budget Director?
I pretty much will work with the policy-makers given the constraints of our financial situation.
Okay. Last question, so the bottom line is that the fund balance is $70 million more than was 13 11/3/05 - APPROP. - BILLS 050822 - 050827 projected in the budget that we passed and the Five-Year Plan that we passed; is that right?
I have a question. On Bill 050824, it involves the hiring of a private consulting firm to conduct a study on efficiency. How will this selection process, how will it be handled?
That process has already been completed. That process took place early in the year. There was an RFP that was widely circulated. Many major firms responded. Three firms were invited back for orals. They also made presentations to senior officials, and one firm was selected based on their responsiveness to 14 11/3/05 - APPROP. - BILLS 050822 - 050827 the scope of work that was requested for the engagement.
Thank you. Are there any other questions from members of the Committee? (No response.)
Is there anyone else from the Administration here?
There are others here to testify on specific numbers of the bills, if you had questions for them.
I'll just have that testimony read into the record.
Wait. I do have one 15 11/3/05 - APPROP. - BILLS 050822 - 050827 other request, and, that is, if these bills could be suspended and put on First Reading today.
That ends our public hearing on Appropriations. Now we will go into our public meeting. Councilman Nutter on 050822.
Thank you, Madam Chair. I move that Bill 050822 be reported out of this Committee with a favorable recommendation and a further recommendation that the rules of Council be suspended so as to permit first reading at our next session. (Duly seconded.)
Opposed? 16 11/3/05 - APPROP. - BILLS 050822 - 050827 (No response.)
Therefore, Bill 050822 will be reported out of this Committee with a favorable recommendation and the rules of Council be suspended as to permit first reading at the next session of Council. Councilman Nutter on Bill 10 050823.
Thank you, Madam Chair. I move that Bill 050823 be reported out of this Committee with a favorable recommendation and a further recommendation that the rules of Council be suspended so as to permit first reading at our next session. (Duly seconded.)
17 11/3/05 - APPROP. - BILLS 050822 - 050827 Therefore, Bill 050823 will be reported out of this Committee, with a suspension of rules as to permit first reading at the next session of Council. Councilman Goode on 050824.
Thank you, Madam Chair. I move that Bill 050824 be reported out of Committee with a favorable recommendation and a further recommendation that the rules of Council be suspended so as to permit first reading at our next session of Council.
Therefore, Bill 050824 will be reported out of this Committee, with a suspension of rules so as to permit first reading at the next session of Council. Councilman Clarke on Bill 18 11/3/05 - APPROP. - BILLS 050822 - 050827 050825.
Thank you, Madam Chair. I move that Bill 050825 be reported out of Committee with a favorable recommendation and a request for a rules suspension as to allow reading at the next session of Council.
Therefore, Bill 050825 will be reported out of this Committee, with a suspension of rules so as to permit first reading at the next session of Council. Councilman Rizzo on Bill 21 050826.
On Bill No. 23 050826, I would like this bill to come out of Committee with a favorable recommendation and a suspension of the 19 11/3/05 - APPROP. - BILLS 050822 - 050827 rules.
Therefore, Bill 050826 will be reported out of this Committee with a favorable recommendation, with a suspension of rules so as to permit first reading at the next session of Council. Councilman Ramos on Bill 14 050827.
I move that Bill 050827 be reported out of Committee with a favorable recommendation and that the rules of Council be suspended for our next meeting.
Therefore, Bill 050827 will be reported out of this Committee with a favorable recommendation, with a suspension of rules so as to permit first reading at the next session of Council. Thank you all very much. Therefore, that ends our Committee on Appropriations. (Committee on Appropriations adjourned at 9:30 a.m.) - - - 21 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 November 3, 2005, 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.)