In terms of how Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. to catch up for '12?
We need to see strong growth for the remainder of the year. So we've had like 0.6 percent growth the first quarter and 2.1 percent the second quarter. So we need to see upwards of 3 percent growth to hit that.
So as we look at sales taxes, we're at 2.5. When we look at real estate transactions, 4.4. So all of these are down, aren't they?
Under the PICA report, according to PICA. We're a bit down. So I don't know -- someone asked who our economists are and that somehow regionally we were going to do better than the national average. I want to know where you get that optimism from.
I think that for '12, projections are similar to what we Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. have in terms of that the transfer tax is expected to be down slightly for the year and the wage and sales tax are also supposed to be dampened, but then as the rebound occurs over the next few years, it is supposed to grow to more moderate levels. So there is a consensus on that.
I make those two points, who we're not collecting on and who we're expecting to get monies from, and say there is a disparity there between some people who -- in one instance I met with a small business association and they said to me that they run the risk of getting audited, that they have a better shot of getting a hit on the lottery and that it pays off to them to let the roulette -- what is that, roulette wheel go around. I don't gamble. So to go around and for them to get lucky or unlucky and then pay the fine and principal. It is better on average just to not do it. We have to -- and I want to say Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. that the Revenue Commissioner does a great job with what he has. I'm going to say it again. We need to give him more resources so he can collect the monies that are on the street. This same individual said, Councilman, if you're going to pass another tax that you're not going to collect, what's the point? Thank you, Mr. President.
Thank you. Thank you, Councilman. The Chair now recognizes Councilwoman Tasco.
Thank you. On , along the line of Councilman Jones, you in the proposed Five Year Plan, wage tax, what's with 2017? Everything seems to decline 2017. Do you suppose that if we're going to move the economy forward, that it might be higher at that point?
Because Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. all of the issues, all of the wage tax, sales tax, real estate transfer tax, seem to be going backwards in 2017.
There's an expectation that there will be a rebound, and then that after the rebound occurs, which is really sort of catch-up years, for the economy to pick up some of the growth that has not been occurring and then it will moderate. So the 3 and a half percent sales tax in '17 and 3.1 percent growth in wage tax in '17, that's getting to more moderate growth levels in a stable economy. So there's several years that ramp up where the economic recovery occurs, and then the theory is that it will taper off into a stable economy with growth that is close to inflation.
And if it doesn't and it goes up, it's better for you, right?
If it goes up? Yeah, sure. Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC.
Let me just ask you another question. I notice in all of your testimony, Mr. Gillison, with the advent of the proposed budget cuts of the state, where in our budget are we able to adjust for those cuts?
So what happens to those individuals, the homeless? What happens to all of the programs that the state funds? I mean, they still impact on the people who live in the City of Philadelphia. What do we do about that?
It's very true. We will not be able to absorb those dollars once cut by the state. Those programs would go away, because they're completely funded by the state. That's why we're spending a lot of time being as aggressive as we can, partnering with our surrounding counties, partnering with as many people that will listen in Harrisburg in order to say that these Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. kinds of cuts, especially to our most vulnerable, really need to be taken a second look at. But there's nowhere that we would be able to come to the rescue. We don't have the dollars, and those programs would go away.
Well, they go away, but we still have the folk here in Philadelphia who have the problems.
Particularly those who are dealing with mental problems that go through the -- and substance abuse problems from the Department of Behavioral Health. So don't you think we ought to look at how we might -- because those people will not get the services. They will probably increase our folk on the street, which you're trying to deal with at this point.
So I think Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. there ought to be some contingency to deal with -- and maybe you don't want to talk about it because then you won't have your lobbying in your Harrisburg to be as effective, but there's got to be some way that we look at what we do with our citizens who will be severely harmed by those budget cuts.
I agree totally with you. I know that we are bracing, but I think that we're trying to be as aggressive as we can in our strategy to make sure that everyone understands that these kinds of cuts would have an impact and that we would come together on the local level where rubber always hits the road. We will try and do what we can to mitigate, but there's no dollars for us to mitigate in our budget. We just have to try and work with our partners as best we can to mitigate the extent of the devastation that those kind of proposed cuts would have. I agree with you. I don't want Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. to see where they would normally end up, which is back in the prisons, where I don't want them to be. We don't need more people who are mentally ill in prison. We don't need more people out on the streets. We've been trying to deal with this homeless matter for a long time, and it pains us, it pains me specifically. I've been in this area for over 30 years trying to help people get out. I can't imagine what's going on in Harrisburg where they would actually put together that kind of matter, that kind of budget. But it is literally -- we don't have the ability to respond financially, but we will have to respond and work together to find a different way should it come to pass. I'm just praying that it won't.
Well, on , you have the $1.2 million for the Office of Supportive Housing to relocate those beds at the Ridge Avenue Center.
That's correct. Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC.
Is there a time limit on when you have to move those residents, and why are you moving from that center?
The center is closing down, and we are trying to put together the contracts that we would need in order to make sure that the people who are serviced at that center would be able to go elsewhere, and as we said to the Council President, we are trying to -- we're on target. We understand we're on target so that the center would close on June 30th and we'll have the ability with these dollars to put those folks in different areas.
Is the closing generated by the City or is the closing generated by the possibility of that site being sold to a developer?
I don't know the answer to that specific question. I would have to get back to you, Councilwoman. Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC.
I just know that that center is going away, so we have to have the ability to make sure that we're providing for those people in different places.
One point five million to move these folks from one center. Don't know how many people will be impacted as a result of the budget cuts, but we have no provision in the budget to deal with relocating them. Thank you.
Thank you, Councilwoman. The Chair now recognizes Councilmember Kenney.
Thank you, Mr. President. I think AVI is going to be -- Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. and I've said it. I was quoted in the paper saying that AVI is going to be the most difficult issue that we deal with this year. And let me bring it to the street level for a moment. I ran into a young man the other day who I happen to know, who is a professional, married, has a small child, lives in Queen Village. His taxes right now are $4,000 a year. Based on the purchase price of his house and the comparable sales in recent months, he estimates between $8,000 and $10,000 his real estate taxes are going to be. What do I tell him? What's the answer that I give that person, who is committed to urban life, who wants to live in the City, who can pay $10,000 living in Bryn Mawr and is going to face a doubling or more than double their real estate taxes next year? What do I tell him and how do I keep him in the City?
There's not -- obviously that's going to be a real issue Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. for him. It's one of the reasons that we want to put smoothing and a homestead exemption in place to hopefully help with that sticker shock, but there will be people whose assessments relative to other people have been too low for years and --
While I recognize that, his tax bill now is $4,000. It's not that his tax bill is $850 and he's been -- I mean, he's clearly not been underpaying based on at least the $4,000 that he pays every year in real estate taxes. His child is not school age. So these are folks that don't really -- aren't needy when it comes to City services and are paying $4,000 now and could potentially be paying $8,000 next year. How do I keep them living here? Why would they want to live here?
Right. I'm not sure that they really would go up to 8,000 in the year -- Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC.
Based on what he bought the property for and what the comparables are in the community in the last six months. He's an accountant. He did the calculations. He thinks it could at least double.
Right. And I don't know what he's assuming about where the rate will go or -- so I'm not sure that that's accurate, but --
Are you telling me that scenario is just totally out of the question?
No, I'm not saying that at all. But I am saying I think that's why we do need some kind of buffering in here to kind of --
While I understand folks in other neighborhoods have been overpaying for years, that overpayment is not as high as the payment the folks are making in other neighborhoods where they're paying and and $5,000 a year. I mean, there's got Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. to be a cap. There's got to be some limit to what we're going to whack people with, because they can move. I want them in the community. I want them contributing to the playground and to the home and school and to the civic association and everything else, but you can't expect somebody to have their real estate taxes doubled when they're paying 3 or 4 now and expect them to want to still be Philadelphia residents. I would just move to the suburb, send my kids to a public school there and that's part of my tuition payments I pay in my real estate taxes. They send their kids to private school, which it's their choice, but I just think that that's the issue. I mean, that's --
Right, and that's why we have to look at ways -- I mean, I know you're not satisfied with that answer, but --
I mean, my problem is, I didn't know what to tell Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. him. I'm standing there going, I don't know. I mean, I don't know. I mean, that's the issue and that's the --
I think that one of the things that we all have to kind of remember is that, first off, I understand his projections. I would say, I understand your projections, but we're at the point now where we can't really say that those projections -- we're going to find out what the projects are and we'll deal with it in reality. But, second, that's why we're so insistent on getting kind of like the smoothing aspect of the bill as well as the homestead exemption, because we recognize we don't want that sticker shock to send you away. We need good people to be here in order to do what we need to do. And the last piece is fairness, that just that's always got to be brought back. We've got to understand this from a fairness point of view of what really Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. should be the true rate. And I think that taking and asking them to just stay with us as we straighten this out, this has been a long time coming. It didn't happen over night, but we can actually try and fix it this year.
Okay. I mean -- all right. Just so long as you know what we're getting on the street out there.
Thank you, Councilman. The Chair now recognizes Councilwoman Brown. (No response.)
Councilwoman Brown has officially lost her spot. The Chair now recognizes Councilwoman Sanchez.
Thank you. Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. I have a few questions, and I know they were noted somewhat in your testimony. Can you tell us how much federal cuts the City of Philadelphia is receiving in both CDBG and HOME funds this year?
You asked for the cut in CDBG and HOME funds, Councilwoman?
Yes. Actually, in your testimony you note $7.8 million.
Can you tell us what are some of the things that are going to be cut as a result of that $7.8 million in reductions?
I think that is being worked on right now and will come before you in the Consolidated Plan, but that is still being worked on.
In the state funds we've received -- and we had hearings the other day -- about $44 Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. million in cuts. Can you tell me if any of those cuts are going to be added on through the City's General Fund?
Do we know the total impact of what those cuts will be to services as the one our President mentioned earlier, Office of Special Needs?
I know that there was a -- we have actually passed around an impact statement where those -- I think it was about $41 million, where those cuts were given out. I can actually provide that to you again if you just give me an opportunity.
I have that. I want to make sure we said it for the record --
-- the amount of cuts that we're receiving from the state. In your Five Year Plan, there's Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. $160 million in business cuts, and we appreciate the Administration's work with us in getting these cuts. If we are not successful passing this AVI, are these cuts in jeopardy, $160 million in business cuts in the Five Year Plan?
If we are not successful passing AVI, are these cuts in jeopardy?
And we went back to the amount of collections years go? They would be in jeopardy, but we'd also have to look at everything in the budget to figure out what we would do to bring it back into balance.
We had a briefing the other day with members of the Real Estate Association where one of their members reminded me that they have lawyers on standby. Can you give us an update of where our lawsuits are currently?
Are you talking Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. about the STEB issue?
So the State Tax Equalization Board has to basically validate the common level ratio we use. That common level ratio is a part of how our tax is calculated. We take the market value, multiply by that common level ratio and then multiply it by the millage rate. What STEB found was that the ratio we're using at 32 percent was too high and that we should be using 15 percent. We got about 2,000 appeals from 16 people saying that they want that 18 17 percent used against their taxes. If all 18 those appeals are successful, it will cost the School District $45 million and the City 35 million. We have appealed to STEB, saying that we don't think that 18 percent is right. They had a hearing last week, at which we presented our case, and we're waiting to hear back from Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. them. So we think that it won't wind up percent. We think that we've made 5 progress with them, but there's a big 6 risk there, and that risk would continue 7 in the year in which we hadn't gone to 8 actual value. 9
So we 10 lost this the first time around. Why are 11 you guys so positive we're going to win 12 this on the appeal? 13
We think that we've 14 provided them additional information on 15 sales, sales that they may have thought 16 weren't at arm's length that we think 17 were that should have been included in 18 their calculation.
And so this budget reflects us being successful in our appeals of $35 million for us, for the City of Philadelphia, and 45 million for the School District?
Yes, it assumes we'll be successful. Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC.
Plan B is then we have to reopen the budget and look for ways to balance. We would assume that it's a one-time impact, because we assume that we're going to actual value. If we don't get to actual value, then it's a multi-year impact.
Thank you, Mr. Chair. I'll come back on the next round.
Thank you, Councilwoman. The Chair recognizes Councilmember Squilla.
Good afternoon, guys. Thank you for coming here today.
My question is with the Actual Value Initiative, when do we think that the public is going to be receiving their Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. assessments in the mail?
We think that they'll be receiving their assessments in September.
And is there any possibility that they would be getting it before then or after that time?
The one risk to the timing is if there are more appeals and the BRT has --
From the current -- from the existing assessments, particularly if we wind up -- I guess whatever happens with STEB may actually wind up to an increase in appeal activity. Because one of the things the BRT has said is that if the STEB ruling goes our way, they will allow people who Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. appealed on the basis of STEB to come back and appeal on other issues. So if that happens, then assessors who could get out in the field may have to go back to hear other appeals. That could affect the timing. If we don't have that effect, the September date looks really good.
And what is the timeline for when people can appeal the new assessments?
Typically appeals have to come in by beginning of October. We would probably want to work with BRT to push that back to give people more time to let them appeal. If it comes in late, we want to give them a chance to look at their bills and figure out whether they want to appeal. So I'm not sure how far we'd push it back, but we'd want to push that back.
The Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. Chair recognizes Councilmember Green.
The property tax assessments under state law must go out ten days before October 1st. So they can't be pushed back to a date after that. So that is the outer limit of when they must go out. Also, they have to be returned within a certain amount of time under state law, and there is no authority of the BRT or anybody else to have them not be returned within the amount of time required by state law.
The question was about appeals, and BRT does have the right to let appeals after October 1st. They've done that before.
Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. Thank you. Councilman Squilla.
Okay. That's just the one part that may be unfair to the public from getting the assessments at a very late time, if it goes out on that time. The other issue is, in Fiscal Year 2012 we had a $1.1 billion, I guess, real estate tax revenue stream, and then Fiscal Year '13 we are now increasing that to 1.2 billion?
Fiscal Year '14 in the bill shows about another 3 percent increase, assuming that that's what happens with market values. That's built into the bill. But we're actually hoping that we have this process done and we actually wind up just setting a millage Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. rate next year based on assessments.
But the plan is about a 3 percent increase a year in assessments.
It projects that assessed values will increase by about 3 percent.
Oh, only in '14. So not only do we raise $90 million in this year for this, the following year it's closer to 4 percent increase in real estate taxes built into the bill; is that correct?
That's right, but, again, I think we're -- our hope is that by next year, we'll have a new bill that will set a millage rate. Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC.
All right. Because it seems like right now we don't have any information to tell anybody anything and we're hoping we can do this in the future. It just seems really irresponsible to go forward coming up with, well, it may happen and we don't know how it's going to affect this person. We don't even know what our safeguards are. You're proposing a $15,000 safeguard that's going to be put in place for all residents across the board.
And that doesn't protect -- we have senior citizens and people on low income that are living in neighborhoods that may have increased in value. The $15,000 Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. homestead that you're proposing would -- people may have bought their house for $50,000 and now it's worth $200,000 -- really doesn't help them.
There's a low-income senior citizen freeze. So if you're a senior citizen, low income, your property tax can't go up. So that protection already exists. One of the things that we need to do is publicize that so people know that it's out there and so that they apply for it. There are also kind of hardship payment terms that let people stretch out their payments. Those are already existing, and we need to do a better job of letting people know about them.
Or low-income people who are now in their phase of their life where they can't afford the increase.
All right. I'll ask more questions the next session. Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC.
Thank you, Councilman. The Chair recognizes Councilwoman Brown, who stepped out of the room earlier.
Thank you, Mr. President. Good morning, everyone. (Good morning.)
Two questions. The last page of your testimony you mention that the Office of Equal Opportunity has had a 50 percent increase in the registration of DBEs; is that accurate?
My question is, given that great progress, how does that impact and what does that translate into with regards to more DBEs doing business with the City of Philadelphia?
I believe that the opportunities obviously have been Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. expanded and the opportunity -- I know that we've actually done some great work this past year in explaining how to do business with the City of Philadelphia. So I think that with an expanded opportunity and with an expanded base, we are hoping that more people will be able to do business. I know that we have set our own internal goals that you're very well aware of. We have met those goals, and we will be setting again internal goals again to see if we can stretch and make even more. So progress is being made, and that's what we are dedicated to do or seeing. And having more people eligible is really where we will be able to have more people take part and take part in this particular effort.
So the second question -- and I guess it is an FYI to all department heads. I've introduced a resolution saying that we Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. Councilmembers will look at women on corporate boards or lack thereof. The Mayor has expressed an interest in this area. I'm of the view that government has a responsibility to lead by example. So I am asking that all City department heads include in their testimony a breakdown of top-level management or top deputies, whatever that equals, by ethnicity and by gender, so we don't have to ask for it and we don't have to hear, I'll get back to you. The ask is that that be a standard operating -- a standard paragraph in everybody's testimony. And further, unlike past years, I would like to see the last four years under the Mayor's Administration what that looks like so that we can see if there have been progress or not. I should, in the interest of being forthcoming, let you know that I've actually sent letters to a couple of departments, because there's a big Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. concern about their department top-level staff not looking like Philadelphia, and in 2012, that's unacceptable.
Thank you, Councilwoman. The Chair now recognizes Councilmember Oh.
Thank you very much, Mr. Chairman. Good afternoon. (Good afternoon.)
Thank you. Going back to and to the issue of the property tax that are anticipated to be collected in Fiscal Year '13, I am curious just for your comments and perhaps a little more explanation. We have a new assessment, new assessments. We have a new AVI system. We have increased collections, possible homestead exemption and a possible smoothing Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. process, and I'm curious how it is that you've come to the point where you believe that the revenues collected in 2013 will be the same as 2012.
So what we did to try to determine where revenues should be in '13 was go back to the last time there was a full assessment and then try to figure out what's actually happened to values since then. That last assessment was in 2004, the last real full assessment. We went to IHS Global Insight, our outside consultant, asked them what's happened since 2004 in terms of market values in Philadelphia. They said that the market value on average has increased percent since 2004. 20 We've captured some of that, 21 but not all of it. So looking at that 22 growth and what we think we've captured, 23 looking at the difference got us to 24 calculate about a 9 percent increase, 25 which is the 94 million that you see in Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. increase in total revenues.
Okay. Thank you very much for that explanation. Thank you.
It seems a little fantastic, but I'm going to contemplate the answer, and I appreciate it. Thank you very much.
Thank you. The Chair now recognizes Councilmember Johnson.
Thank you, Mr. President. I just had a couple of questions. I guess in preparation for the departmental hearings that will be coming up, the first one is the investment of a million dollars to the Managing Director's Office to fund anti-violence initiatives throughout the Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. City, and obviously that's a key issue that we're facing at this particular time in the City. And so I expect -- what I would like when the Managing Director's Office does their presentation, an actual overview of how that million dollars is going to be laid out and what type of program, during the hearing part. So we won't be asking the questions and you don't have the information, so I'm not going to try to set y'all up that way, but hopefully by the time the hearing does come, get an overview of how those initiatives are going to be laid out as it relates to violence prevention. The other one was under the Office of Economic Opportunity. And I think it's great the work that Ms. Angela Dowd-Burton was doing in terms of increasing minority, women and disabled-owned business participation, but I also want to see the enforcement component. A lot of times I've met small businesses who say they may have Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. partnered with a prime on an actual project, but they don't receive the actual funding from the prime in terms of the rollout of their actual partnership on the actual project. And so if there can be information on how you actually -- I don't want to ask you to go into what company names specific, but you actually caught one of the companies some time ago that actually had a woman standing in saying that they were -- I don't want to put the company name on the record, but y'all actually shut down one actual major individual for actually having someone on their rolls that they're supposed to be sharing business with and everything wasn't forthcoming. So I wanted to see the enforcement component under this particular department. And under L&I, the Vacant Property, Windows and Door Court program, which is deemed very successful, the actual numbers, what actually has been Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. done across the City, how many houses sealed, how many property owners, private property owners, you're going after to make sure they're outer -- I mean the facade of their buildings are actually sealed. That's pretty much it.
Thank you. I would say, Councilman, if you -- I'm sure the Inspector General, Amy Kurland, would be happy if you have additional persons that would need to be investigated. We would be very happy to partner on something like that, believe me. So if you have anything, I'd be glad to just take the call.
Thank you, Councilman. The Chair now recognizes Councilman Henon.
Thank you, Mr. President. I have a question regarding the Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. pension fund. Council President Clarke started talking about in reference to the new hybrid type of pension options that the City is offering, and he had asked a few questions about individual accounts. Is there an excess administrative cost to managing individual self-directed accounts in our pension fund or is this going to be a class opportunity for educating the members of the City on what their options are?
I think -- one second. I just want to make sure I'm getting it straight. So there are group seminars, but they also provide individual counseling if people -- when people seek that out. So you have both options.
Yes, it is. It reduces the unfunded liability in the long term. That then reduces the size of Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. the MMO, the amount that we have to pay each year to pay off our unfunded liability.
It seems a little costly administratively, I think, to manage individual accounts for folks, as I think the Council President raised some valid questions. As being a layperson on self-directing funds, most people just get up and go to work every day and try to feed their family and raise their children right here in the City of Philadelphia. Another question on the --
Can I just -- I think that there'll be some increased administrative cost. I think that will be more than offset by the savings to the fund in general, savings to the fund in terms of the liability.
Well, I look forward towards the budget hearing to get into that in a little more detail. The pension fund now as I read Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. in the Five Year Plan is 50 percent funded?
And we have started making as a result of the MMO the partial and full payments towards the pension fund?
Yeah. Each year our actuary tells us what amount we need to pay into the fund to pay off our unfunded liability, and that's the amount that we pay.
But you've already set that? You've already set that through the MMOs; is that correct?
That's correct. I mean, the number will change each year depending on a variety of factors, like what we earn or changes when people retire. So there's a whole bunch of assumptions that go into it, so it does change each year.
I'm sure of that. So we're 50 percent funded now, Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. and towards the -- at the end of this Five Year Plan, what do you anticipate the fund being with making the partial and full payments moving forward?
In the last report we got from the actuary, I think they had us in the high -- still in the high 40's at the end of the Plan.
We're at 49.7, and it kind of moves up and down a little each year, not a whole lot of variation, but it's up in the high 40's each year, like 48, 49, somewhere around there.
So you don't see it moving significantly now that the City is starting to make payments?
No. We've been making payments consistent with the MMO Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. for years. So that's not new. But the unfunded liability is so large that it doesn't move quickly. And what we did -- because we earned percent last year, 6 it moved from 47 to almost 50. When the 7 actuary makes his projections, he doesn't 8 assume a year like that. He assumes that 9 we hit our earnings assumption, which is 10 8.1 percent. If we had other years where 11 we earned that much, then you'd see it 12 move up, but that was one of the highest 13 years in the fund's history in terms of 14 returns. 15
Okay. In 16 year FY15, the state sales tax is 17 dropping off and you see a decrease in 18 the revenue coming in. Is that because 19 of that sunsetting at that time? 20
Has the Administration thought about speaking with the state or having any conversations with the state moving Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. forward?
No. That was one of those things that we promised that we would let go, and we are going to stick with our promise.
Okay. I'll defer to another time. Thank you, Mr. President.
Thank you, Councilman. We're going to go on the second round. The second round is three minutes, and we want to make sure that everybody has an opportunity. So we will now start with Councilman Green.
Thank you, Mr. President. Mr. Dubow, do you have an answer to my question?
It's the same answer as before, which is we don't have a projection for the total amount of assessments.
You've said Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. publicly and you've said to PICA 70 percent of the assessments are done.
So the fieldwork scheduled is about 70 percent done, scheduled to be done the end of May or --
Thank you. What is the value of taxable real property for that 70 percent?
I don't know, and when I've talked to the Chief Assessment Officer about the values that they have so far and values that they'll have when they're done in May, he has stressed that those aren't reliable numbers yet, that they need to be validated, he needs to go and analyze them. So that number at this point wouldn't have a whole lot of meaning.
Well, I Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. frankly will be the judge of that. I would like to know today, before we leave this room, what the value of taxable real property is of that 70 percent. If you'd ask Mr. McKeithen to please get that information over here, I'd appreciate it.
I can ask. I'm not sure that it's been collected in that way, but if it is, we'll supply it to you.
The things that you've told the public and that you've told the PICA Board, are they reasonable assumptions, that it will be three to four times the current value of assessed taxable property?
I think it's too early for us to know what that multiple will be.
So what you've told PICA is not a reasonable assumption?
I don't know whether that's where we'll wind up. Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC.
So it is not reasonable for us to assume that it's three to four times the current value of assessed property?
Let me answer. We don't know where it will wind up. It could wind up three to four times. It could wind up two times. We don't know where we'll wind up.
Okay. So if it wound up two times, how much would we collect under the savings clause in No. 19 3?
Assuming and depending on what happens with collections and --
-- appeals, then Discover Works Global 888.557.8650 www.dw-global.com 3/26/12 - WHOLE - BILL 120164, ETC. you'd be around 500 million.
If it's exactly two times. But, again, I don't know where we'll wind up.
But you've publicly said and said to PICA it's three to four times?
I think what we've said is we have some estimates. We don't know where it's going to wind up. We've been consistent with we don't know where it's going to wind up.
So why are we then presented with a savings clause that could collect somewhere between 500 million and a billion dollars?
We had a fail-safe that we put in the bill to ensure that we would collect at least the amount that we collected this year for both the City and the School District.