COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Thursday, June 1, 2006 9:40 a.m. - - - PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JACK KELLY COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN BRIAN J. O'NEILL COUNCILMAN JUAN RAMOS COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO BILL 060007 - An ordinance amending Chapter 18 19-1500 of The Philadelphia Code, entitled "Wage and Net Profits Tax," by deleting certain special tax provisions and related definitions and rates, all under certain terms and conditions. - - - 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, everyone. This is the public hearing of the Committee of the Whole regarding Bill No. 060007, and I would ask Mr. McPherson to please read the title of the bill. MR. McPHERSON: An ordinance 9 amending Chapter 19-1500 of The Philadelphia Code, entitled "Wage and Net Profits Tax," by deleting certain special tax provisions and related definitions and rates, all under certain terms and conditions.
We did have very extensive public hearings on this bill sometime ago and I note that we have approximately 12 witnesses that would like to testify. We do have another public hearing scheduled after this and then, of course, we have our Council session today. So at this point, I would like to ask every one of the witnesses if they could please condense their remarks to 3 6/1/06 - WHOLE - BILL 060007 three minutes. If you can't say it in three minutes, in my view, it's just not worth saying. Are we having someone from the Administration testify? Is someone from the Administration here to testify? Good morning. Please identify yourself for the record and proceed with your testimony. MR. McNEELEY: Good morning, Council President. My name is Sean McNeeley. I'm the Director of Policy for the City of Philadelphia. We're waiting on Joyce Wilkerson, Chief of Staff. She should be on her way up, but I'll begin with our remarks in the meantime. With me here today are Dianne Reed, Budget Director, and Nancy Kammerdeiner, Revenue Commissioner.
Good morning. MR. McNEELEY: We appear before you today -- here she comes, if you could 4 6/1/06 - WHOLE - BILL 060007 wait a moment.
Good morning. Sorry. My name is Joyce Wilkerson. I'm Chief of Staff to the Mayor of Philadelphia. I appear before you today to offer testimony on the Administration's proposed amendment to Bill No. 060007, which amends the schedule for funds and forgiveness from the wage tax currently scheduled to take effect beginning January 1, 2009 that was passed through Bill No. 040397. Bill No. 060007 as introduced would have eliminated the schedule for refunds and forgiveness entirely, while today's amendments would instead delay the effective date of this schedule to January 1, 2012. The proposed FY07 to '11 Plan and the revised version of the Plan being submitted to PICA today both assume that 5 6/1/06 - WHOLE - BILL 060007 Bill No. 060007 as amended is enacted. If Bill No. 8 million, which, based upon discussions with PICA, would likely result in the Plan being considered imbalanced in FY10 and '11 and, therefore, rejected. At this time, we do not have alternative scenarios prepared for balancing the Plan, and based on the magnitude of this potential shortfall, such alternative scenarios may require tax increases or operating budget reductions by Council or line item vetoes by the Mayor in order to meet with PICA approval. Current law calls for sharply accelerating wage tax relief even without considering projected additional wage tax relief through state reform. Legislation passed in 2004 scheduled the bulk of this additional relief beginning in 2010, 6 6/1/06 - WHOLE - BILL 060007 after the Five-Year period that was relevant at that time. These laws are now increasingly impacting our ability to balance our Plan. The combination of accelerating annual wage tax rate reductions scheduled after 2009 and the phase-in of the low-income wage tax credit are projected to reduce wage tax revenue by ten percent in only two years. Taken together, between 2009 and 2015, these two laws are projected to eliminate 30 percent of the City's wage tax collections, the source of the majority of the City's tax and discretionary revenue, without any plan to offset the loss of collections. The combined revenue reduction from wage tax relief currently scheduled in law is projected to be over $130 million in FY10 and '11 alone, increasing to 670 million from FY10 to FY15, and that schedule of reductions is set forth in my testimony. Please note that the annual 7 6/1/06 - WHOLE - BILL 060007 wage tax relief reductions now in law, as well as accelerated rate reductions that would follow from state-wide tax relief, benefit low-income Philadelphians at least as much as other residents and workers since the flat wage tax is a regressive tax. Our estimates of the impact of the refunds passed are based on 2003 tax year information provided by the Pennsylvania Department of Revenue. This is the most recent data available from the State on the Tax Back/Tax Forgiveness program, which forms the basis of the eligibility of the City's refund/forgiveness program. However, since the State expanded eligibility for the program in 2004 by increasing the value of dependent exemptions and considering that the wage tax base used to produce these estimates was an outdated base from the FY05 to '09 Five-Year Plan, the impact estimate is actually conservative and does not 8 6/1/06 - WHOLE - BILL 060007 reflect the true revenue risk to the City from this program. It's been suggested that our impact estimates are overstated because fewer eligible workers would apply for the City's refund than for the Commonwealth's.
We continue to believe that our impact estimate is valid and perhaps even conservative considering the City's wage tax is significantly higher than the State personal income tax, that the tax forgiveness program is not a new concept, but a longstanding one that over 150,000 Philadelphia taxpayers are familiar with, and that the eligibility standards for the wage tax base used for the impact estimations are outdated and understate the potential exposure by millions of dollars. Finally, the Administration's estimates of low-income refunds and forgiveness as proposed in Bill No. 24 020092 and 030163 and enacted through Bill No. 040397 were developed in 9 6/1/06 - WHOLE - BILL 060007 cooperation with the Controller's Office using agreed-upon methodology and have been previously accepted by PICA. PICA staff is now, after discussions with both the City's Budget Office and the Controller's Office, PICA staff estimates that this bill would further reduce City revenues from 150 to 160 million over the Five-Year Plan period. PICA staff does not believe these monies are available. Should this bill be enacted prior to the approval of the Five-Year Plan by PICA, PICA staff would recommend rejection of the Five-Year Plan. I would be happy to answer any questions you have, and I'd like to offer the amendments. My understanding is the amendments have previously been circulated to members of Council.
Thank you. The Chair recognizes Councilman Nutter.
Thank you, 10 6/1/06 - WHOLE - BILL 060007 Madam Chair. Good morning, Ms. Wilkerson.
First, a couple things in your testimony. On , could you give a little bit more information about -- there's a bullet point, the Tax Back/Tax Forgiveness program. Can you tell us a little bit more about that?
Mr. McNeeley can talk about the State program. MR. McNEELEY: The eligibility guidelines for the City's program --
I'm sorry. Can you identify yourself? MR. McNEELEY: I'm sorry?
Identify yourself. MR. McNEELEY: I already did. Sean McNeeley, Director of Policy for the City. The City's refund forgiveness program is based on the State's Tax 11 6/1/06 - WHOLE - BILL 060007 Back/Tax Forgiveness program, and our estimates are based on the numbers we've gotten from the State on participation in that program.
I'm sorry. I was asking you, what is this program? I was asking for details on the program. MR. McNEELEY: It's a program where you file your income tax return. You file a supplementary schedule. If you're at a low-income level --
File your income tax return with whom? MR. McNEELEY: With the State. You file your annual income tax return with the Commonwealth. You file a supplementary schedule claiming the tax back/tax forgiveness based on a sliding scale of your income and how many dependents you have. Based on that sliding scale, you get a refund. If you paid, you might get a credit. The Revenue Commissioner can elaborate. And the numbers indicated 12 6/1/06 - WHOLE - BILL 060007 here are actually a little low. According to the 2003 tax year data, over 160,000 Philadelphia filers applied for tax back or tax forgiveness out of about 450,000 total Philadelphian filers.
And this is something you do as a part of your filing of your State income tax? MR. McNEELEY: That's right.
So you already have a form that you have to send back to the State? MR. McNEELEY: Yes.
Is it a separate schedule? Do you check a box? MR. McNEELEY: It's a separate schedule, yes.
It's a separate schedule, because you have to provide income information for your entire household and indicate that you fit the guidelines. There's a sliding 13 6/1/06 - WHOLE - BILL 060007 scale. You can get 100 percent forgiveness or it can gradually decrease to ten percent forgiveness depending upon your income and the number of members in your household. There's so much in terms of eligibility for one taxpayer, a taxpayer and spouse, and then each dependent is also a separate dollar amount in terms of how much income you can have and still be forgiven from the PIT.
It's been around for a while. I know it's at least ten years. We'd have to go back and check.
But it's been around for a while, and the participation has been increasing, and the State from time to time has increased the dollar amounts for the taxpayer and 14 6/1/06 - WHOLE - BILL 060007 particularly for dependents. And so you end up with a situation where depending on how many dependents you have -- you can have a relatively high income and still have some forgiveness under the program.
And the last question, I think, on the testimony, Ms. Wilkerson, at the bottom of the same page, you mention the Administration's impact estimates for low-income refunds and forgiveness as proposed in Bill No. 14 020092. I don't recall Bill 92 having anything to do with low-income refunds or forgiveness.
I think those were the earlier versions of the bill that ultimately passed as 040397. There were two bills that had hearings and were, I believe, approved by Council, vetoed by the Mayor and veto was not overridden before the one that actually was enacted, and those should be the bill 25 numbers of those earlier versions. 15 6/1/06 - WHOLE - BILL 060007
I'm sorry. My recollection is that Councilman Cohen had one bill, and I think Bill 92 was the wage tax bill.
I remember testifying on three different iterations of the same legislation. They changed the years of implementation slightly as time passed, but it was essentially the same legislation.
We may have different recollections. So how many other cities have programs like the one proposed here?
I don't know of any. MR. McNEELEY: We looked at this a few years ago. As you know, we talked about, over the years in the tax debates, relatively few local jurisdictions have local income or wage taxes in the first place, so your sample is pretty small, but my recollection is 16 6/1/06 - WHOLE - BILL 060007 that New York City might have a local program like this, but jurisdictions in Ohio, Maryland and Michigan that have local income taxes I think do not.
San Francisco and Denver. Councilman Kenney mentioned San Francisco and Denver. Do we know anything about their programs? MR. McNEELEY: No, and I actually didn't recall that San Francisco has a local income tax.
So the $47 million for FY10 and '11, that's the cost estimate on this?
Our numbers were based on the State's numbers, so 17 6/1/06 - WHOLE - BILL 060007 they were based on participation of essentially the same number of households. Given that our wage tax is nearly double the Pennsylvania income tax and you're already dealing with a population that's attune to applying for such a refund, I think they would have a great deal of incentive to apply for ours as well.
I can understand that, but they obviously can't do it on a State form, and no one files a tax form as individuals with the City of Philadelphia because, of course, our wage tax is taken directly out of our pay. So how would you propose to implement this program and how would people apply?
I have to be honest and say that with its implementation so many years out, it's something that we haven't done full planning on. The expectation is that, first off, we would be getting files from the State of those who are eligible. We 18 6/1/06 - WHOLE - BILL 060007 wouldn't otherwise know which households were eligible for the forgiveness program, and I would expect that something would be developed using that information. And from there, I really can't say because we haven't tried to develop the full plan on it with so many years until it actually would take place.
So at the moment, it's fair to say there is no 12 implementation plan, we don't really know how this is going to work. Would you anticipate getting files from the State and then, what, sending everyone a letter and saying that you might be eligible and, therefore, you should apply?
And it may actually be that with verification from the State and W-2 information in terms of how much wage tax was withheld, that we 19 6/1/06 - WHOLE - BILL 060007 might be doing something on a more automatic basis instead of having a very labor-intensive program. It's hard to say right now because there's so many things that could change in the way tax returns are filed between now and then.
I understand. Last question. So based on the State history, which you indicate has grown over time, the fact that at the moment there is no plan to figure out how to get people either to apply or notify them, do you foresee any scenario under which participation could be less, if not significantly less, at least at the beginning, for a program that no one has ever heard of, we have not planned for, there is no way of at the moment to contact those individuals and we have no 21 idea who is ultimately going to respond?
She didn't testify there's no -- we do have a way of identifying people. One of the things that the City has done over the years is 20 6/1/06 - WHOLE - BILL 060007 worked closely with the State, and so we exchange filing information. We probably have an unusually accurate way of identifying people. These are people who are actively filing taxes. We would be reaching out to those people. We do that because we want people to know about the benefit, but also because it's something that would end up being efficient for us.
I understand. So out of the four things that I mentioned, we do have the ability to identify. Leave the other three things on the table. Is there any scenario under which you think that participation could be less, if not significantly less, at least at the start, for a brand new program that we at the moment don't know how we're going to implement?
Any program that is new has a phase-in time period, so the scenario you're identifying certainly could happen, but with a lot of 21 6/1/06 - WHOLE - BILL 060007 lead time for putting it together and with working with the State -- and I already have an informal agreement with them that they would share those files with us -- that would have to be developed and put into a formal program, but as we would do that, we would identify and determine how the process would work. And I think with the kind of lead time we're looking at, there would be some drop-off, but probably not significant drop-off. I would expect most of it would be people who moved and we couldn't locate more so than that they wouldn't be applying for it. And in those cases, they would still have a potential of getting that at a later date.
This is absolutely my last question. I know the first bill was, of course, to repeal this bill. I'll assume that a calculation was made that that might not be possible. So next step, just push it back. The third 22 6/1/06 - WHOLE - BILL 060007 alternative, of course, is just reducing the rates. Was there any discussion or thought given to that?
No. When we look at the Five-Year Financial Plan, we don't see a way of funding anything substantial at all. We have substantial risks in our Five-Year Financial Plan already. We don't have wage increases for some of the out years. We don't have all the potential pension costs in the out years. And so it occurred to us prudent when we were putting the Plan together in January that we can't afford it over the long term, that we proposed the repeal of the bill. There was not support for that and so we proposed that it simply be moved back as opposed to reducing the magnitude of the --
So it comes down to after we did our budget last week and we took some stuff out, put some stuff back and kind of made everybody 23 6/1/06 - WHOLE - BILL 060007 happy about that, but that at the end, in the $3.6 billion budget, we're left with the last thing to do is to push back or eliminate for some period of time the tax cut for low-income people.
That, and there's also a proposal to increase the parking fines and some of the parking tickets. As you know, we've been in an ongoing dispute with the Parking Authority about money that we claim is due that we haven't received since the takeover of the Parking Authority. In order to balance the Five-Year Financial Plan, we're also proposing that those fines and fees be increased, and are working trying to secure a commitment from the Parking Authority that additional revenue generated would go to the City. It's all a part of an effort to close gaps in the Five-Year Financial Plan. So this is not a Plan that's a wash in cash. We're having to identify 24 6/1/06 - WHOLE - BILL 060007 additional revenue just to make it through the five years of the Plan.
You're welcome. Councilman Kenney, did you want to be recognized?
Do we have any other questions of this panel? (No response.)
Thank you very much. Our next witness is Stanley Shapiro.
I have written testimony I'd like to distribute. MR. McPHERSON: Could you identify yourself for the record and proceed, please.
Good morning, Council President Verna, Charles, other 25 6/1/06 - WHOLE - BILL 060007 members of Council. My name is Stan Shapiro and I am testifying today as Second Vice-Chair of Neighborhood Networks, a City-wide group seeking to raise issues of equity and justice to the forefront of public and political discourse in our City. Other witnesses will speak today about the minimal impact that enactment of Bill 060007 would have on any fiscal concerns of the City. But even if Councilman Cohen's family tax forgiveness program would cause a fiscal problem, it should still not be delayed or repealed. First, we should be clear. Delay amounts to virtual repeal. Once it is established that budget issues can be routinely eased by postponing this program, doing so will become as ordinary a part of Council's calendar as adoption of School District taxes. A seven-year delay in starting a program which has a six-year phase-in is no program at all. 6/1/06 - WHOLE - BILL 060007 But why would Council choose this, of all the tax cut programs it has enacted over the past decade for repeal? Early and often in the debates over earlier wage and business tax cuts, advocates have claimed that these tax cuts would never cause problems with the budget, because if they did, these cuts would simply be repealed. So now we do have an apparent problem and the one tax cut that is being targeted for repeal is the only one that focuses its benefits on people who most need a tax cut, including, of course, those small business owners who pay the net profits tax. To single out this one tax program as the one to sacrifice would simply be unconscionable. Last week Council passed a tax cut that would benefit all businesses, including Sunoco, Comcast and large law firms, and do nothing for struggling working families. The Mayor made no complaint that that cut 27 6/1/06 - WHOLE - BILL 060007 would create a hole in the Five-Year Plan. But that cut is even more likely to cause a problem in the budget than the working families cut, since it requires no special paperwork to take advantage of it. If it passes this legislation, Council will be stating its belief that, A, simple fairness doesn't count, and, B, putting money in the pockets of regular people has no beneficial economic impact. Neither of these ideas is defensible. Please send a message to the citizens of this City that they do count by defeating Bill 060007. Thanks for the opportunity to testify. (Applause.)
Marc Stier is here with me from Neighborhood Networks and will add his comments.
Thank you, President Verna, members of Council. It seems to me the key issue 28 6/1/06 - WHOLE - BILL 060007 before us today is not whether the working family wage tax rebate is a good idea or not or even whether the City can afford it over the long term. These issues are important, and I would encourage Council to consider them at some time, but it hardly makes sense to be discussing the benefits and costs of the program that under current law is not going to go into effect for three years in the last couple of weeks of the Council's yearly session. No. The reason we're here today is because the Administration claims that a delay in the wage tax rebate is necessary if the City is to propose a balanced Five-Year Plan. And the City claims that they will save $47 million in the last two years of the Five-Year Plan by delaying the wage tax rebate. I've studied this claim very carefully in the last few days, and given what I've learned, I believe the 29 6/1/06 - WHOLE - BILL 060007 Administration's projected savings from delaying the wage tax rebate are very problematic. I should add that there are a lot of uncertainties in the world of social science. An old teacher of mine once said, Predictions are hard, especially about the future. And I'm sure the Administration did the best it could in coming up with their projections, but I think they're fundamentally mistaken in one way. They assume that pretty much 100 percent of those eligible for the wage tax rebate will in fact know about the program and then fill out the forms correctly to claim their rebate. For a number of reasons, this seems very unlikely. First, we know that in Philadelphia only 78 percent of those eligible for the federal earned income tax credit actually file an income tax return to claim it. Second, we have the experience of two other cities in the country that 30 6/1/06 - WHOLE - BILL 060007 have enacted programs very similar to this. In 2002, Denver introduced a local EITC, and in 2005, San Francisco introduced a working families tax credit. However, in San Francisco, only 37 percent of those eligible for the program actually filed for it, and in Denver, the figure is actually lower. Only 10 percent of the people eligible for the 11 program actually filed for it. 12 For a couple of reasons, I 13 think our experience is like to be much 14 closer to that of Denver than of San 15 Francisco. First, Philadelphians tend to 16 file for the federal EITC at lower rates 17 than they do in San Francisco or Denver. Secondly, the San Francisco program was accompanied by a massive public relations campaign that was partly privately funded by the H&R Block company. Third, neither Denver nor San Francisco programs were phased in over six years. 31 6/1/06 - WHOLE - BILL 060007 The Administration claims that because of the high rebate levels, people have an incentive to file for the rebate, but, in fact, that incentive in the first couple years, the years under consideration in this Five-Year Budget Plan, is very low because the rebate is phased in very slowly. It seems to me that the most likely scenario is that only percent 12 of the people eligible for this benefit 13 will file for it, which means the 14 projected savings will not be $47 15 million, but $10 million. 16 One more comment, if I may. 17 I know the Administration says 18 they want to be conservative, and I think 19 that's a good idea, but if we're going to 20 have worst-case scenario planning, then shouldn't we build into this budget, Five-Year Plan, money to rebuild this building in case a terrorist bombs it? Because, frankly, the likelihood of that happening is far greater than the 32 6/1/06 - WHOLE - BILL 060007 likelihood of the Administration's projections being accurate. Thank you.
You're welcome. Our next witness. McPHERSON: Is a panel. Jonathan Stein and Sister Mary Scullion.
Thank you, gentlemen. Good morning, Sister. Please identify yourself for the record and proceed with your testimony. SISTER SCULLION: I'm Sister Mary Scullion from Project HOME, and I'm going to see that Jonathan goes before me, because I'm just going to say a sentence or two.
Yes. Good morning, Council President Verna and Councilmembers. I'm Jonathan Stein, 33 6/1/06 - WHOLE - BILL 060007 general counsel at Community Legal Services. The working families wage tax rebate ordinance that is a law -- this is not a proposal; this is a law that will take effect in 2009 -- is not only a rebate for the working poor, but also, like Pennsylvania's tax forgiveness program, is also for working-class and middle-income families, something that is not well understood. It also will have an impact in lowering the net profits tax, which is key to the wage tax, and, therefore, unincorporated businesses, mom and pop stores in your neighborhoods as Councilpeople will also be beneficially impacted. These are all your constituents. The many compromises that finally won support of the veto-approved Council majority has already delayed its effective implementation to Fiscal Year 2010 and then gradually implementing it 34 6/1/06 - WHOLE - BILL 060007 over six more years to minimize fiscal concerns. The Mayor's sole reason, and I emphasize sole reason, for further three-year delay that's before you this morning is an assumption that there will be a $47 million, quote, saving in Fiscal Years 2010 and 2011 that's needed to balance the over $15 billion Five-Year Plan. The problem is that the Administration has erroneously assumed a 100 percent take-up rate of all those eligible for the program and that those people will claim the rebate in the very first two years of this entirely new unprecedented program. The experience in other cities, as Marc Stier has set forth, and we've done very detailed research, which the City of Philadelphia has not done -- that was very clear from the statements of Ms. Reed and others this morning, they have not researched this. The experience 35 6/1/06 - WHOLE - BILL 060007 in other cities like Denver and San Francisco and the federal EITC experience, and that's been around for 30 years, shows that especially with an entirely new program, if I may have another minute, which one must affirmatively apply for will have a take-up rate of no more than percent 10 for this program. That means less than 11 $10 million, not 47 million, will be the 12 realistic cost in the outer years of 13 2010, 2011. Ten million or less is a 14 mere rounding era when you're talking 15 about a $15 billion Five-Year Plan. And 16 as every veteran lawmaker in this Chamber 17 knows, there are 101 ways to, quote, 18 balance the Five-Year Plan and a balance 19 that shouldn't be done directly on the 20 wallets of working families and small businesses in the City. Finally, let me say that the working families wage tax rebate should be viewed as one of the most historic and proudest achievements of this City 36 6/1/06 - WHOLE - BILL 060007 Council in Philadelphia City history. The law injects for the first time -- and it is a law now, it's not a proposal. This law injects for the first time a measure of progressive equity into the wage tax. It honors the legacy of the late Councilman -- (Applause.)
It honors the legacy of the late Councilman David Cohen, who was eulogized not very long ago in this very Chamber. And the rebate will also complement other economic growth stimuli set in motion by this Council. A vote to support this amendment this morning will take away a rebate that your constituents already have in law. The proposed amendment is both unnecessary and grossly unfair to your constituents. Your constituents will expect you to vote no against this amendment, and I thank you for hearing my statement this morning. 37 6/1/06 - WHOLE - BILL 060007 Here's Sister Mary Scullion.
Thank you, Mr. Stein. Sister. SISTER SCULLION: Thank you, Council President. It's great to be here this morning, and the reason that I'm here on behalf of this bill is because so many people we see in neighborhoods that are really struggling, low income, moderate income, working families, property taxes are rising, housing costs are rising, utility costs are rising, healthcare costs are rising and people are just being hit in every single direction, and I think to recognize that so many of our citizens are really under serious economic pressures, that this bill would be a real statement to the working-class folks of our City and also that we see it as an effort to prevent homelessness. People just don't have enough money to pay their bills today, and sooner or later that can translate 38 6/1/06 - WHOLE - BILL 060007 into homelessness. So we see this as an effort by the Council to help us and to help our citizens prevent homelessness and put more money in people's pockets that need it to meet the increasing costs that people need today to live. Thank you.
Are there any questions or comments of members of the Committee of these witnesses? (No response.)
Thank you very much. MR. McPHERSON: The next witness is Sherrie Cohen.
And after Sherrie Cohen would be? MR. McPHERSON: Pedro Rodriguez. 39 6/1/06 - WHOLE - BILL 060007
Mr. Rodriguez, would you please join Ms. Cohen at the witness table. Good morning, Ms. Cohen. Please identify yourself for the record.
Yes. Hi, Council President Anna Verna, members of Council. I have a statement to distribute, and I would also like to distribute an op-ed that appeared in today's Daily News. That's related as well. My name is Sherrie Cohen and, as you know, I'm the daughter of the late Councilman David Cohen. I come to urge you, don't let this bill out of Committee today. You supported my father in passing this legislation because you believed it was the right thing to do. It was the right thing to do because residents of Philadelphia who would benefit from this law are important to you and you knew you could help them and you did. It was still the right thing to 40 6/1/06 - WHOLE - BILL 060007 do when you voted overwhelming to override the Mayor's veto. And this past January when the Mayor announced he wanted to repeal the law so soon after my father's death, many of you were appalled and you reaffirmed your support of this law. It is still the right thing to do today. Why delay the law now? Because my father is not here to remind you that it is the right thing to do? Because I am here and I will remind you why you passed this law and why you should not compromise it away. As my father said, the federal government provides a tax credit to the working poor. Our state government does the same. Philadelphia, a city with a democratic Mayor and democratic City Council, should at least provide the same help to our working families. The law gives to those who work hard only to earn a low wage. It imparts dignity to work. Under our State Constitution, 41 6/1/06 - WHOLE - BILL 060007 Pennsylvania cannot tax the working poor, working class, middle class and upper class at different rates. The only way to achieve some tax equity is through the credit you passed, a targeted tax credit, targeted to the ones who need it the most. For example, a working family with two children and income of up to $32,000 will get a full refund of their City wage taxes, once the refund kicks in, which under current law is not even until 2014. Plus, working families spend their money to pay for necessary bills, like gas and electricity, and in their neighborhoods and in our City. These refund checks will make a difference to our City's families and all of our City's neighborhoods. Don't fool yourselves. The people of this City will not be fooled. Delaying this law, which is not even scheduled to take effect until 2010, is tantamount to a repeal. You know this law is one of my 42 6/1/06 - WHOLE - BILL 060007 father's last major legislative achievements. It was a triumph for tax equity and justice, a victory for working families. Do not destroy it. It will help create a more equitable Philadelphia if only you allow it to take effect. Vote no on the amendment today. Vote no in the memory of my father. Vote no for all the people you represent who will benefit from it. Vote no for a more just Philadelphia. Thank you. (Applause.)
Thank you very much. Sherrie, is your mother in the audience?
Okay. Thank you. Are there any questions of Ms. Cohen? (No response.)
43 6/1/06 - WHOLE - BILL 060007 Seeing none, thank you very much for coming in to testify.
Is Mr. Rodriguez here? (No response.) MR. McPHERSON: Gloria Gard? (No response.)
Is Gloria Gard here? (No response.) MR. McPHERSON: Representatives from SEIU. (No response.)
Madam President, Gloria Gard did submit testimony, which certainly we ask to be included in the record for her statement.
Thank you. 44 6/1/06 - WHOLE - BILL 060007 MR. McPHERSON: Representatives from Local 1776.
Good morning, sir. Please identify yourself for the record and proceed with your testimony. MR. McGROGEN: Good morning. My name is Don McGrogen. I am a representative of the United Food and Commercial Workers, Local 1776. I am here on behalf of Wendell Young, IV, who was unable to attend today. I do not have a prepared statement, so I will be brief. As many of you know, we represent approximately 9,000 people who live and work in the City of Philadelphia and their families. I'm here to strongly urge Council to continue to support the bill that was passed here in City Council. Many of the people that we represent in some cases are folks who have been displaced from other employment and are working as part-time clerks at 45 6/1/06 - WHOLE - BILL 060007 Acme, Shop Rite, Super Fresh, Strauss Discount Auto. And I don't have to explain to the people in this room what folks are up against today with the rising costs of gasoline and everything else that we're faced with today. This is an important piece of legislation that will directly impact many of the folks that we represent in the retail industry. A lot of these jobs in the retail industry are part time. So I strongly urge you. I know that Wendell Young has sent a letter to all members of City Council earlier in May. If you do not have that letter, I can provide one to you, but strongly urge your continued support of David Cohen's legislation. Thank you. (Applause.)
I have some 46 6/1/06 - WHOLE - BILL 060007 materials I'd like some help distributing, please. Good morning. My name is Sydelle Zove and I'm a policy analyst and advocate with PathWaysPA. Thank you, Council President Verna and Councilmembers, for giving me a few minutes to talk about the critical need to support our low-wage working neighbors. This year, PathWaysPA will serve 4,000 low-income women and their children in Philadelphia and Delaware Counties. Across the State of Pennsylvania PathWays is best known for The Self-Sufficiency Standard, which is just being released in its fifth edition. I have given each of you a copy and would like to draw your attention to the table on . If you would please turn to . As you can see from the table at the top of that page, a Philadelphia family consisting of one adult and one 47 6/1/06 - WHOLE - BILL 060007 pre-school aged child requires an annual income of $33,635 to get by. No fancy vacations, no car, no eating out, just a two-bedroom apartment with heat, food on the table, safe child care and car fare to get to the job. That works out to a wage of just under $16 per hour, far beyond the reach of many, far more than the wage of most low-income Philadelphians. Tax breaks for low-wage workers function as a work support, and the dollars that go back into their pockets circulate many times over in the local economy. On April 4, 2006, PathWaysPA sent each of you a letter urging that you stand firm against any attempt to repeal the wage tax rebate, and now the debate has shifted. Councilmembers Rizzo, Nutter and Kenney graciously responded to that letter and each acknowledged the importance of this modest tax break, but that's not good enough for Philadelphia's 48 6/1/06 - WHOLE - BILL 060007 low-wage workers. As we wrote in April, leaders with vision must take a stand in support of justice for the vulnerable among us. Where there is a will, there is a way. On behalf of low-wage Philadelphia families, PathWays urges each of you to search your souls and those thick budget documents and find a way to keep this ordinance on course for implementation as approved for Year 2010. Thank you. (Applause.) MR. McPHERSON: The next witness is Joseph Powell.
My name is Joseph Powell. I'm a concerned citizen. I have been for a long time. And I came up with this that you see on the comparative overview of the proposed systems where you're going to the full value system in my letter to the Mayor dated July 21st of 2000. It was to overcome the Board of Revision's constant putting on the 49 6/1/06 - WHOLE - BILL 060007 record, getting the Law Department to back them that the assessed value is equal to market value, which is a lie, and that they continue doing that. And so anyway, I came up with this proposed system so they can convert -- instead of the eight percent tax rate, it's 1.9 percent. And it's interesting that I sent -- every member of City Council received this exhibit and the only response I had was from the Pennsylvania -- from a James Lombardo, Executive Director on behalf of Governor Ridge, who recognized the importance of what was being said. Not one member of City Council ever responded to anything sent to them, hand-delivered to their office. I'm bringing up a website, because three minutes isn't enough to deal with government for we the people, and we're not getting it. And the website will be coming up this month. 50 6/1/06 - WHOLE - BILL 060007 And I'd also like to know what happened to the -- why didn't City officials comply with the Item of the May 10, 5 1981 consent decree that suggested there 6 be a homestead exemption for all 7 taxpayers? And the other thing is, if someone has a $2 million condo and a homeowner in the Northeast, let's say, has a $100,000 home, delaying the tax increase for the condo owner is inequitable. You're not going to be -- the rest of the taxpayers will not get the benefit of the higher downtown values if you're going to delay taxing them. You don't have to collect it right away. You can charge them the tax and let it build up in their account, so when they sell the property, they collect it at a -- they'd have to pay a modest interest rate. But anyway, I have a lot more to say about this. You'll find it on my website. 51 6/1/06 - WHOLE - BILL 060007
Mr. Powell, I'm sorry. First of all, I think your testimony is not relative to the bill before us. Your time is up, and I would ask you to please come to some closure on your testimony. Are you finished?
Thank you very much. I have copies. Good morning, Council President, Councilmembers. Thank you very much for this opportunity. My name is Rosalind Spigel and I'm presenting this testimony on behalf of the Philadelphia Jewish Labor Committee. This is my fourth appearance over the years to present testimony in support of wage tax relief for 52 6/1/06 - WHOLE - BILL 060007 Philadelphia's working poor. In previous testimony, I admitted to some frustration with the City for making low-wage workers wait yet again for these wage tax cuts. As an organization, the Philadelphia Jewish Labor Committee understood the need for the Administration to plan for the bill's implementation. The wait until now 2010 seemed a reasonable amount of time for City Council and the Mayor to prepare for the implementation of this tax relief measure. Perhaps a little too reasonable. Then, as now, legislation making our wage tax more progressive is long overdue. Wage tax relief for low-wage workers would put money into the pockets of incremental amounts over a six-year period. This legislation is even more significant now since the minimum wage hasn't been raised since 1997. In addition, the this long overdue break for the working poor would help redress the horribly regressive tax 53 6/1/06 - WHOLE - BILL 060007 structure that now exists. Instead of taxing people and dequalifying for government programs and transfer payments, you would be doing something to have more low-wage workers receive a wage that would help them at least to get up to, if not up over, the poverty line. Neighborhood business and the Philadelphia economy would also benefit, because those extra dollars would be spent right in our neighborhoods. After taking into account the benefits to Philadelphia's economy, the cost to the City would be neutral. As Jonathan Stein cited, this projection is based on the results of state and federal programs which exempt low-wage workers from state and federal income tax. I would also like to say that there are many other cities that have a higher minimum wage than we do. Now the Council has set itself a choice between tax relief for working 54 6/1/06 - WHOLE - BILL 060007 families or yet another tax cut for business. How is this a choice when you've already made the decision and obligated yourself to it? Since you've already made the decision about tax relief, why not delay the latest set of business tax cuts until 2013? Before concluding, I would like to add that the Philadelphia Jewish Labor Committee is opposed to spending City revenues on business tax cuts not only because it imperils this wage tax relief, but also because it further threatens City services and the pensions of workers who provide those services. The Philadelphia Jewish Labor Committee favors these small tax cuts to the wage tax and urges Council to implement them as legislated. Thank you very much for your time.
You're welcome. (Applause.) 55 6/1/06 - WHOLE - BILL 060007
Thank you. Our next witness. MR. McPHERSON: Pam Africa.
Good morning. Please identify yourself for the record and proceed with your testimony.
My name is Pamela Africa. I'm Minister of Confrontation for the MOVE organization and I'm the President of the International Concerned Family and Friends of Mumia Abu-Jamal. The reason why I asked to speak here today -- I'll wait until you're finished. The reason why I asked to speak here today is because last week when we were holding a press conference in front of the Fraternal Order of Police office behind the fact that Congresswoman 56 6/1/06 - WHOLE - BILL 060007 Allyson Schwartz and Congressman Michael Fitzpatrick had asked for a resolution 4 stopping the naming of a street in Saint Denis on behalf of Mumia -- I have no 6 problem with anybody putting resolutions on the floor or legislations on the floor, but this is dealing with a man's life. And I know that it's before anybody making a decision. When you're dealing with a person's life, you should hear both sides. So I'm saying Mr. Kelly, Councilman Kelly, addressed this floor last week and asked people to uphold that resolution on Legislative 407 that Congressman Schwartz and Mr. Fitzpatrick had. I'm here asking for --
Excuse me, please. I think I'm giving you an awful lot of latitude. I don't think that -- just a moment, please. I don't think that your testimony that you're giving has anything to do with the bill that we are presently considering. 57 6/1/06 - WHOLE - BILL 060007
Well, I just put my name down to speak. I didn't know that you were dealing with a certain subject.
We are presently considering legislation, and what you're referring to has absolutely nothing to do with the legislation before us.
Well, you're right about that, but at the same time, since you had me here, maybe I can come back next week and we can deal with this issue.
Pam, I think you got your message across. I think your message has been heard, but I will reiterate that your testimony has nothing to do with the legislation that's before us presently. Thank you very much.
Excuse me. Will I be able to come back next week and -- explain to me how do I get on the floor 58 6/1/06 - WHOLE - BILL 060007 in order with this situation? Because we're talking about a murder, a conspiracy to commit murder here. I need you to tell me, Councilwoman Verna, what is it that I do as a citizen here. Because everything that happened here wasn't fair at all. You're going to present one side. And we're talking about a man's life. And I'm very much concerned about what's happening here as well, too. I'd like to get up and move from here, but I need to know from you, what is it that I do? I don't want to be disruptive or anything, but my brother's life is on the line.
No. You're City Council. You was a judicial system when Mr. Kennedy brought -- Kelly brought the resolution on the floor.
Which one is 59 6/1/06 - WHOLE - BILL 060007 Kelly? Which one is Kelly? Oh, this one. Well, this is what I'm saying. This man going to put a resolution on the floor to support something that he have no background with, and then people going to vote on it. This concerns a man's life. Without hearing the other side. That's all I want. I want due process. I want what's fair. I understand where I'm at. That's all I'm asking for, fairness.
Thank you. Thank you very much. Do we have anyone else to testify on the bill before us? Please approach the witness table. Good morning.
Good morning, Council President Verna and members of City Council. My name is Tim Carney. I'm a democratic party candidate for state representative in the 172nd District in Northeast Philadelphia, which 60 6/1/06 - WHOLE - BILL 060007 is made up by parts of Fox Chase, Bustleton, Mayfair, Academy Gardens, Holmesburg, Lexington Park and Winchester Park. Two years ago I ran for office and I got about 7,000 votes, and I'm here representing a lot of those people and a lot of the people that I met going door to door, and I'd like to just highlight three of those people who would benefit by the Cohen tax-back program, and I would urge City Council to leave it in place and have it start at the earlier date the way it's legislated right now. One person that I met makes $6.15 an hour who works on the third shift at the Hess Gas Station at Grant and Krewstown Road. They don't make enough money working 40 hours full time to meet the standard that the young lady set out from PathWays. Another person that I met campaigning works in the Shop Rite that's right across the street from where I 61 6/1/06 - WHOLE - BILL 060007 live. The person works part time, about hours, fits exactly the type of person 4 that was mentioned by the gentleman from 5 the United Food and Commercial Workers 6 Union, who doesn't make enough money to 7 keep body and soul together and can't 8 afford to pay the wage tax, and it's the 9 kind of working person that Councilman 10 Cohen's bill was designed to protect. 11 And the third person that I'd 12 like to mention is a person who's working 13 30 to 40 hours at Wawa on Oxford Avenue 14 in Fox Chase week after week after week 15 at under $8 an hour -- I think maybe now 16 it's up to $8.50 an hour -- working to 17 pay almost all the bills in their 18 household. And this is the low-income 19 working type of person of which there's 20 so many in Northeast Philadelphia that clearly will benefit by having this Cohen tax-back program left in place and starting in 2010. Thank you very much for the time, and I congratulate this City 62 6/1/06 - WHOLE - BILL 060007 Council, because unlike the body to which I'm running for, you hold hearings on bills and the public has a chance to speak. Thank you.
Do we have anyone else to testify on this bill? (No response.)
Do we have anyone else to testify on this bill? (No response.)
Seeing none, immediately after we consider this bill, we will have a Rules Committee hearing, and I would suggest that anyone in the audience who wishes to testify on the bills before us for the Rules Committee please give your name to Sharon Ortiz, who is back here. This concludes our public hearing. We will now go into our public 63 6/1/06 - WHOLE - BILL 060007 meeting. The Chair recognizes Councilwoman Blackwell.
Thank you, Madam President. I move that the amendment for this bill be adopted. (Duly seconded.)
It has been moved and seconded that the amendment as proposed be adopted. All in favor will please indicate by saying aye. (Aye.)
The record will indicate that Councilman Nutter voted in the negative. All other members voted in the affirmative. Again, the Chair recognizes Councilwoman Blackwell.
Thank you, Madam President. I move that Bill 64 6/1/06 - WHOLE - BILL 060007 060007 as amended be reported out of Committee with a favorable recommendation and also that the rules be suspended so as to permit first reading at our next session of Council. (Duly seconded.)
It has been moved and seconded that Bill No. 10 060007 be reported out of Committee with a favorable recommendation as amended; further, that the rules of Council be suspended so as to permit first reading at our next session of Council. All in favor will say aye. (Aye.)
We will have a roll call vote. MR. McPHERSON: Councilwoman Blackwell.
Aye. 65 6/1/06 - WHOLE - BILL 060007 MR. McPHERSON: Councilman Clarke.
Aye. MR. McPHERSON: Councilman DiCicco. (No response.) MR. McPHERSON: Councilman Goode.
No. 66 6/1/06 - WHOLE - BILL 060007 MR. McPHERSON: Councilman O'Neill.
Aye. MR. McPHERSON: The ayes are ten; the nays are four.
So the motion passes, and that will conclude our public hearing and meeting. I thank you all very much for your patience. 67 6/1/06 - WHOLE - BILL 060007 And, again, I would reiterate anyone that wants to testify on the Rules Committee hearings to please give your name to Ms. Ortiz. Thank you very much. (Committee of the Whole adjourned at 10:45 a.m.) - - - 68 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 June 1, 2006, 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.)