Committee Hearing, February 14, 2000

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COMMITTEE OF THE WHOLE Operating Budget - - - Room 400, City Hall Philadelphia, Pennsylvania February, 14, 2000 9:35 a.m. - - - BILL 000003 - An ordinance to adopt a Capital Program for the six Fiscal Years 2001-2006 inclusive. BILL 000004 - An ordinance to adopt a Fiscal 2001 Capital Budget. BILL 000005 - An ordinance adopting the Operating Budget for Fiscal Year 2001. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE L. BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN W. THACHER LONGSTRETH COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN BRIAN J. O'NEILL COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 249 12/14/00 - WHOLE - Operating Budget - 05 I N D E X Stephanie Franklin-Suber . . . . . . . . . . . 3 Mayor's Chief of Staff Linda Orfanelli, Acting Director of Finance. . 40 Vince Jannetti, Secretary. . . . . . . . . . . 47 Sinking Fund Commission Robert Dubow, Acting Budget Director . . . . . 51 Nancy Kammerdeiner, Revenue Commissioner . . . 53 Karen Yancy, Deputy City Treasurer . . . . . . 63 Paula Weiss, Deputy Ombudsman. . . . . . . . . 82 Tax Lien Sale James Roundtree, Director. . . . . . . . . . . 95 Minority Enterprise Council Joseph Perrello. . . . . . . . . . . . . . . . 105 Deputy Director of Finance, Risk Management Jane Lewis, Deputy City Solicitor. . . . . . . 120 250 12/14/00 - WHOLE - Operating Budget - 05 P R O C E E D I N G S

Good morning, everyone. This is the continued public hearing on the Operating Budget, Bill No. 005, and I would ask Mr. McPherson to again read the title of that bill.

Bill No. 000005, an ordinance adopting the Operating Budget for Fiscal Year 2001.

Thank you. May I ask that whoever's testifying approach the witness table, please. (Witnesses come forward.)

Good morning.

Good morning. Council President Verna. My name is Stephanie Franklin-Suber. I'm Chief of Staff. Before I begin my formal testimony, I would ask your permission to extend an invitation to Members of the Committee.

Certainly.

Thank you. Mayor Street has asked me to extend an 251 12/14/00 - WHOLE - Operating Budget - 05 invitation to all Members of the Committee to join him for lunch today in Room 225 for an informal briefing on the status of the Eagles practice facility.

Thank you.

Thank you. It will be at noon, Room 225. Lunch will be 9 served and the Mayor will bring you up to speed in 10 answering any additional questions that you may 11 have with regard to the transaction. 12 Madam President, should I proceed?

Please do.

Thank you. Good morning. Thank you for this opportunity to provide testimony regarding the Fiscal Year 2001 Operating Budget for the Office of the Mayor. The good news is that my testimony will be very, very brief. Essentially, the proposed budget for the Mayor's Office is a carry-forward budget. We are still in the process of formulating and finalizing our staffing plans and our organizational structure, so we anticipate that we may need to return to City Council if budgetary 252 12/14/00 - WHOLE - Operating Budget - 05 changes are necessary to support our new structure, operational structure. At this point, the total amount requested for the Mayor's Office from the General Fund for Fiscal Year 2001 is $2,492,176. This is an increase of $51,739 from Fiscal Year 2000 estimated obligations. Of this amount, $2,292,176 is for employee compensation, purchases of services materials, supplies, and equipment. The largest portion of this amount, the Class 100 Budget, includes $1,879,969 for 46 positions and represents an increase of $51,739. And that basically covers the annualized costs of negotiated wage increases for Fiscal Year 2000. The remaining portion of the General Fund, $200,000, is for the City Scholarship Program. This is an existing scholarship program that we will continue. It's for Philadelphia students who attend classes at area colleges and universities. You will be hearing directly from the Mayor's Office of Community Services and the Office of Labor Relations on their Fiscal Year 253 12/14/00 - WHOLE - Operating Budget - 05 2001 Operating Budgets later in the hearings. We greatly appreciate City Council's support during this transaction period. And as I stated previously, we are still in the process of formulating our staffing plans and organizational structure. This concludes my testimony, and I would be delighted to answer any questions you may have.

Thank you. The Chair recognizes Councilman Cohen.

Could you, Miss Suber -- Franklin-Suber --

Thank you.

Could you outline generally the structure that you're seeking to arrive at in the Mayor's Office? I mean, how would it differ in concept from in the last administration? I know you've stated that you're in the process, but could you give us a general idea.

Well, I can give you a very concrete example. There are several areas within the Mayor's Office that we are 254 12/14/00 - WHOLE - Operating Budget - 05 developing. For example, we have administration, we have constituent services and correspondence, we have communications, we have the Chief of Staff's Office, and we have scheduling and advance. Within each of those areas, we are evaluating our staffing needs. Fundamentally, the Mayor's Office functions to support the needs of the particular mayor. And as you might imagine, Mayor Rendell and Mayor Street have different operational and management styles, their agendas are different. And so we are building out the office to support and complement the needs of the Mayor, and also just being, I think, a bit clearer in terms of the functional areas. In the Communications Office, for example, many of you may recall that under the prior administration, the bulk of that function was handled by Deputy Mayor for Communications Kevin Feeley. At certain points in time, he had maybe one press secretary. In getting feedback from him and doing research during the transition, it -- it, you know, it was not feasible to respond to the volume of media inquiries, and so we are 255 12/14/00 - WHOLE - Operating Budget - 05 exploring ways that, from a cost effective standpoint, we can increase the staffing to allow us to be more responsive and, frankly, to work better in coordination with the departments to get accurate information and to disseminate it to the media in a timely fashion. So the idea is to make sure that we put into place -- we're not there yet, but to put into the place of kind of staffing levels and procedures and protocols to enable to us function as efficiently as possible, with a great deal of reliance on technology, and making sure that we are networking and can communicate efficiently within the office.

Is there going to be, for example, as many deputy mayors, or is the concept going to be different?

The concept is going to be different. We do not envision even using the title of "Deputy Mayor."

All right, thank you. Thank you, Madam President.

The Chair 256 12/14/00 - WHOLE - Operating Budget - 05 recognizes Councilman Kenney.

Thank you, Madam President. Madam Suber, of the 46 positions that are listed in the Mayor's Office, are any of them deputy managing directors? And are we going to utilize deputy managing directors in a way in which we have them assigned to duties and functions of the Mayor's Office? And if we have or if we are, how many of them are there, and what is the aggregate amount of their salary, and how many positions does that represent?

The list of positions you have currently is a preliminary one; we're still going through the review of all of the positions and their functions. There are some new positions that we've already created that are reflected in this, but it is absolutely going to change.

I mean, in the past -- and maybe I'm mistaken -- but in the past, I believe that other administrations, including the Rendell Administration, had utilized the ability to appoint what they called "deputy managing 257 12/14/00 - WHOLE - Operating Budget - 05 directors" normally at higher salary rates than perhaps the deputy mayors or people working in the Mayor's Office had been earning, but they are actually functionary as directly to the Mayor and to the Mayor's Chief of Staff as opposed to the traditional managing director role. I mean, are there -- so are the 46 positions right here, even though it may change, are any of them designated as deputy managing directors?

No. 13

Are there any current deputy managing directors that are working directly for the Mayor or directly for you?

I think the only one --

For example, I'll give you an example. In the last administration, former Deputy Richard Zappile was designated as "the Gun Czar."

Right, right.

I don't know if he still is or he isn't, but I understand he may be a deputy managing director as opposed to a deputy 258 12/14/00 - WHOLE - Operating Budget - 05 mayor.

Right. He is not. It is my understanding he's at PHA.

But what I'm saying is before he left to go to PHA.

Correct. The only position that I can think of right now that has not been thoroughly evaluated that may exist is the Deputy Mayor for Management and Productivity, which is Linda Berkowitz's position. We are still going through, as I said, the overall review of various positions from a functional standpoint. So I -- to my knowledge, there are no deputy mayors currently that are in the Mayor's Office, apart from Linda Berkowitz. There might be one or two others. We do not estimate continuing to use the title "Deputy Mayor" or even "Deputy Managing Director." I mean, we're moving in a different direction in terms of the Administration. I can't -- from a legal standpoint, there may be people that are appointed Deputy Managing Director, but they would not hold that 259 12/14/00 - WHOLE - Operating Budget - 05 title. One example of that would be Estelle Richman's position. She is Director of Social Services, but in terms of her Charter appointment, she is a deputy managing director. She reports to the Managing Director and is housed in the Managing Director's Office, and her functional responsibilities are oversight and supervision of a variety of different departments.

Well, I guess, then, what I would request -- and I know you're still in period of transaction -- would be a list of deputy managing directors, their names, their salaries, and what their duties are.

Certainly. We have not gone through and reviewed the deputy-- the Managing Director's Office, and I think when the Managing Director testifies tomorrow, he will also be clear with you that his testimony is preliminary. We're still reviewing all of those offices.

Can I ask a question. Do we anticipate that this preliminary review that you guys are going through now would be completed prior to our final passage of this 260 12/14/00 - WHOLE - Operating Budget - 05 budget?

I -- I really don't know. I mean, we're -- there are a number of positions that we are evaluating. The focus has been on the cabinet-level positions, the commissioner-level positions. We are starting to get into each of the offices, and so I can't tell you that we will be finished with that review. It's going to be an ongoing process.

But we would anticipate that those positions that are either acting or unfilled today throughout the government would be filled prior to our final passage of the budget for next year?

I actually -- I can't answer that today. We have a Transition Team meeting tomorrow where we'll get a report on the status of all of this, and I would be able to get back to you and give you a better sense of what we anticipate the timing to be.

That's fine, thank you. Thank you, Madam Chair.

Thank you. 261 12/14/00 - WHOLE - Operating Budget - 05 The Chair recognizes Councilwoman Brown.

Good morning. Thank you, Madam President. Good morning.

Good morning.

My question was really a comment regarding the City Scholarship Program.

Yes?

The good news is that, based on the information you've provided, the funding for that has remained stable at $200,000 over the last several years.

That is correct.

The bad news, of course, is that college tuition costs are going through the roof, really growing faster than inflation. And it would be important at some juncture for the Administration to reexamine the funding to for the Scholarship Program to at least respond to what's happening with college tuition rates. And then let me seize the moment to say 262 12/14/00 - WHOLE - Operating Budget - 05 thank you. I did get information, my first five days here, on the City Scholarship Program, so I'll be paying particular attention over the next several years to see if, indeed, the Administration is attempting to increase the funding for that and respond to the college going rates.

We will certainly evaluate that. It was very easy to make the decision. This was a program we wanted to keep, and we wanted to make sure that we moved forward with it at least at its current level, and we will go through an evaluation process to see how we might be able to expand it.

Thank you.

Thank you. The Chair recognizes Councilman Clarke.

Thank you, Madam Chair. Good morning, Miss Franklin-Suber.

Good morning.

I actually have questions along the lines of Councilman Kenney that I want to ask with maybe a little more 263 12/14/00 - WHOLE - Operating Budget - 05 specificity. As it relates to the last paragraph when you talked about finalizing the organizational structure, is it a sense that -- although I understand you won't have it final yet, is it a sense that the change in the budget would be considerable? I mean, is there any possibility of that?

It is difficult for me to even predict that, and let me try to give you another example of why. Mayor Street has expanded his cabinet, so we have a Secretary of Education, who will have some staffing needs. We have a Secretary of Strategic Planning and Initiatives, who will also have certain staffing needs. We have a Secretary of External Affairs, we have a Secretary of Agencies and Authorities. And so, first and foremost, we don't have all of the individuals in place. And as they come into government, we are in the process of assessing their role and responsibility and potential staffing needs, and whether or not they would be within the Mayor's Office budget or separate budget treatment. And so it's a little 264 12/14/00 - WHOLE - Operating Budget - 05 difficult at this point to estimate where we may end up. We will certainly do everything possible to make it cost-effective and efficient, but I don't have a sense of the number yet.

Thank you. That kind of led to my next question with respect to the deputy mayors, and I understand at one time, the last administration had upwards of deputy 11 mayors? 12

Right. 13

And when I 14 initially saw the way you were -- this administration was structuring its government, I kind of thought that these secretaries -- the Secretary of Strategic Planning and the Secretary of Education and so on and so forth -- kind of were going to replace the deputy mayors. Is that how that --

Well, there certainly were quite a number of deputy mayors. I think the difference is that you will have fewer secretaries. They are cabinet-level positions, and they will have significant responsibility. 265 12/14/00 - WHOLE - Operating Budget - 05 The majority of deputy mayors, I believe at this point, are no longer with the Administration, so we do see a difference, a significant difference between the secretary position and the deputy mayor position, which is why they are not referred to as "deputy mayors."

Is that a difference in terms of responsibility or --

The difference is in terms of position within government; they are cabinet-level.

And the staffing of the former deputy mayors, did they have staff?

Some of them did have staff, some of them did not. There were a number of them. Some of them had more significant responsibilities than others. The majority of them are no longer with the government.

Okay, all right. Thank you.

The Chair recognizes Councilwoman Blackwell.

Thank you, 266 12/14/00 - WHOLE - Operating Budget - 05 Madam President. On -14, on Line 8-14 -- I mean -- I'm sorry, the line is 234 on that page, 8-14, and the -- I'm sorry.

I'm sorry, 8?

I'm rushing it along. That's all right, I got to wait till you get to that department, sorry. I'll -- I think I'm rushing too fast. We're not ready for that department, so I'll pass. I was in the wrong section, Madam President, I pass.

Okay. The Chair recognizes Councilman Cohen.

How many cabinet-level positions do you anticipate having?

In addition to the Charter-created cabinet positions of --

According to the Charter.

Managing Director, City Solicitor, Finance Director, Commerce Director, Mayor Street has on his cabinet Chief of 267 12/14/00 - WHOLE - Operating Budget - 05 Staff, Secretary of Strategic Planning and Initiatives, Secretary of Education, Secretary of External Affairs, and Secretary of Agencies and Authorities.

What's that last one?

Secretary of Agencies and Authorities.

Who would that be?

That position has not been filled, but the function would be to better coordinate and monitor the City's interaction with all of the various quasi- agencies, organizations, nonprofits that we fund and that actually promote the City in a variety of different ways, whether it's, you know. . . Some of it will be under Commerce, like, you know, "Welcome America" and that kind of thing. But there are other agencies and organizations that the Street Administration would just like to have a better understanding and appreciation of what exactly they're doing, particularly if there's a financial impact to the City, and we are funding them. 268 12/14/00 - WHOLE - Operating Budget - 05 So it's intended to be a position that provides for better interaction with monitoring coordination among those agencies. Many of them are independent legal entities, so we can't legally supervise them. But to the extent that we are funding them, we can better monitor what they are doing with the dollars that flow to them.

In addition to funding them, isn't it a fact that all of their boards are appointed by the Mayor?

Um --

Or substantially so?

I think, generally speaking, the Mayor -- you know, depending on the organization you're referring to, we tend to have appointments. There are some boards that we may have a majority, there's some boards where we may have one representative, and I think it varies, depending on the board agency or entity that you're referring to. But we generally have some degree of representation, that is correct.

In the last administration, there was -- I don't know what the 269 12/14/00 - WHOLE - Operating Budget - 05 title was, but it was equivalent to what I would now regard as the Secretary of Transportation, someone working just on transportation.

That was the Deputy Mayor for Transportation, correct.

Is there going to be that emphasis in this administration on transportation?

There will certainly be an emphasis on transportation. The position, the title of the position, and the position itself, we have not made a decision yet, but there certainly will be an emphasis on transportation. It could be that it's part of Commerce, it could remain its independent office. We have not made that decision yet.

The Secretary of Education, how does that differ from the Superintendent of Schools?

The Secretary of Education sits on the Mayor's Cabinet, and her responsibility is to be the Administration's representative on education issues, so the Secretary of Education deals directly with the 270 12/14/00 - WHOLE - Operating Budget - 05 School Board, the Superintendent, but has independent responsibilities. It is not the superintendent. It's intended to be the administration's representative on education issues. The Secretary of Education will work closely with the Governor's Secretary of Education. So on all education-related related issues from a policy standpoint, from an operational standpoint, given the significance and magnitude of the issues confronting the City with regard to public education, it is a cabinet-level position.

Is there any position which reports directly to the Mayor, other than your position?

All of the cabinet officials have direct access to the Mayor.

Well, I'm not sure that was the answer to the question I asked. They all have access, but do they report regularly to the Mayor? Would the Mayor be their direct supervisor, or would you be their direct supervisor? 271 12/14/00 - WHOLE - Operating Budget - 05

The Mayor is the direct supervisor, and we have regular cabinet meetings.

Say that again?

The Mayor convenes regular cabinet meetings. He meets with the members of his cabinet on a regular basis.

And how about individually or as a cabinet?

We meet as a cabinet at this point in time, and we are going through discussions now -- we do not have all of the cabinet positions filled, first of all. And while appointments have been made, not everyone's in place, not everyone's in their office. Some of the cabinet members have been working. There are going to be many times where they work very closely with me, there are going to be many times when they work very closely with the Mayor. We are going through all of the those communications and staffing issues now. But as a cabinet-level official, you report to the Mayor.

Do they have direct 272 12/14/00 - WHOLE - Operating Budget - 05 reporting responsibilities also to you?

I work closely --

It's hard to cross-examine a lawyer, especially a skilled lawyer such as yourself. I'm trying to find out, to whom do they basically report?

And I answered your question, Councilman Cohen.

Yeah.

I'd be happy to give you a copy of the job description for Chief of Staff, because when I met with the Mayor, ti was actually a job description that was developed by the Transition Team. My responsibility as Chief of Staff is to support the members of the cabinet, to coordinate communications. There are going to be many times where they do deal directly with me on issues as compared to the Mayor, but if you -- the organizational chart that was unveiled by the Mayor and announced publicly, cabinet-level officials report to the Mayor. Does that mean that they don't interface with me and interact with me? No, it 273 12/14/00 - WHOLE - Operating Budget - 05 does not mean that, and there are going to be many times where I work very closely with them.

All right. Thank you very much, Madam President.

The Chair recognizes --

Question on behalf of Councilwoman Krajewski as well as myself.

Yes, sir?

What does -- is it the Secretary of External Affairs?

Yes.

What does that person do? Who is it and what does that person do?

George Burrell has been appointed to the position of Secretary of External Affairs. He has not yet come into government; I believe his start date is tomorrow. And I believe the idea is that this individual is on the Mayor's Cabinet and has primary responsibility for promoting the City's agenda at the federal level, the state level, and at the local level, working very closely, of course, with 274 12/14/00 - WHOLE - Operating Budget - 05 the Chief of Staff's office and the Mayor's Office, and Communications. So, for example, when we had our meeting with the Governor on Friday, Secretary of External Affairs George Burrell and Secretary of Education Debra Kahn went along with us.

Does that mean that he will be, in effect, the chief lobbyist? I'm just trying to fit him in within the description of jobs that we're familiar with.

Well, I think that that's part of the problem. If you're trying to draw a correlation, I think we are doing some things differently. I don't know that I would characterize it as lobbyist. It certainly is someone that is going to make sure that in terms of the Administration's agenda, the City's agenda, and Harrisburg, for example, that we do what we need to do in dealing with members of the General Assembly, coordinating and working closely with the Governor's Office. So it really is -- it probably is a more expanded function than existed previously. 275 12/14/00 - WHOLE - Operating Budget - 05 He will monitor and oversee and supervise any lobbying contract that we enter into. We have not yet entered into any contracts.

Well, will, for example, will anyone working for the City be permitted to work for any other -- for a client? I assume if they're working for the City, the people we're talking about at the cabinet-level will be employees of the City?

They will be employees of the City, and everyone will be required to adhere to all of the applicable ethical and legal requirements in terms of what they can and cannot do.

Well, help me on that. Does that mean that Mr. Burrell, for example, who, as I understand now, has many clients, does that mean he will not have any private clients during the time he works for the City?

He would have to sever his financial relationship with his existing employer, just like any other member of the Administration. So he can't -- I mean, he's 276 12/14/00 - WHOLE - Operating Budget - 05 subject to the Charter requirements and the state ethics requirement in terms of the extent to which you can have a financial interest and the extent to which you can engage in activities above and beyond your work for the City, so there isn't going to be anything different.

Well, could you define what that is? Instead of saying that's what he'll have --

I can't -- I can't at the moment. I can assure you, however, that in terms of what he is going to do and what he is going to be permitted to do, we are working with the City of Philadelphia Law Department, absolutely.

Well, again, I'm --

If there's something in particular that you have a concern about and I can try then to respond more specifically, I would --

Well, the question I ask is, will he or any other cabinet member be permitted to have any client at the time they are working for the City? 277 12/14/00 - WHOLE - Operating Budget - 05

No. 3

The answer is no, all right. Would they be permitted -- I'm concerned -- I am concerned by the relationship that David L. Cohen had with the previous administration. There seemed to be something even that went beyond what we talk about the swinging door at the federal level between, say, generals and those who manufacture for the Pentagon. Will -- I just find it difficult to understand the relationship when a private attorney representing private clients doing business with the City also appears to be simultaneously representing the City, and I find the role confusing. And I'm wondering whether your administration is dealing with that situation to kind of avoid any appearance of an impropriety or of a mixed-up relationship so that one doesn't know whether the person is a City official or is a private practitioner.

I can assure you that Mayor Street is very, very sensitive to that issue. That's one of the reasons why there is an 278 12/14/00 - WHOLE - Operating Budget - 05 extensive review of potential candidates for positions, to make sure that the individual coming into government is going to comply with all of the ethical and other legal requirements. So we're very sensitive to that.

Is the Administration thinking of making any ethical studies with respect to things like accepting campaign contributions when there is no campaign in effect or dealing with -- dealing with those general questions that seem so troublesome nationwide today, where there's so much attention being given to the questions of the relationships of money and government? Is there any attention being paid in that area?

Well, I can say to you that, generally speaking, the Administration is very sensitive to the issue. I can't say to you that we've had any discussion of actually conducting a study. We have a new acting City Solicitor that will be coming on board. The Law Department will continue to provide advice and counsel to the 279 12/14/00 - WHOLE - Operating Budget - 05 Administration on ethics issue, and certainly with my vantage point, having served as former City Solicitor, and a number of the members of the Cabinet are also attorneys, we're going to be concerned about potential appearances of impropriety and ethical issues and ethical considerations, and are going to make sure that we do everything possible to make sure that the citizens of Philadelphia have confidence in the Administration.

Well, I raise the question very specifically with reference to the chart that appeared in the Daily News, I think, within the last week of some approximate 50 contributors who contributed each $10,000, and one may have contributed more, I believe, with whole hosts of attorneys in the City from the major law firms all giving $10,000. I think from a sense of propriety and impropriety, I think that has been a very disturbing issue. It's as if dues are being paid, set at the $10,000 figure for membership in some kind of a society or something. I think -- I think it would be very 280 12/14/00 - WHOLE - Operating Budget - 05 good if the Administration were to pay a lot of attention to that area and give consideration as to what can be done to remove any sense of impropriety that something like that article might have proposed. And particularly for the law profession, of which you and I and others in the Council are part, I think the appearance is very unfortunate. Thank you, Madam President.

You're welcome. The Chair recognizes Councilman Goode.

Thank you, Madam President. Good morning, Mrs. Franklin-Suber.

Good morning.

In the preliminary organizational chart, the position of Housing Director is no longer a cabinet-level position but appears to fall under the Commerce Director, which I think is actually a brilliant move as a final recommendation. My question is, is that a consulting recommendation, is that a Transition Team 281 12/14/00 - WHOLE - Operating Budget - 05 recommendation, and is it a final recommendation?

The organizational chart came out of the transition process. There was an extensive amount of work done, and it is my understanding that there were some experts on organization that were brought in to consult with the Transition Team and the transition cochairs. There is a recognition, however, that the organizational chart is our blueprint as we actually get into governing. You know, to the extent there are things that work or don't work, it still continues to be a work in process. We've already made a couple of adjustments, nothing that we consider to be significant or major. Once a number of the high-level positions are filled, there will probably be some additional changes and enhancements to the structure.

So you do anticipate that the Housing Director will not be a cabinet-level position but will --

That is correct, that is correct. It is not a cabinet-level position. 282 12/14/00 - WHOLE - Operating Budget - 05

Thank you.

You're welcome. The Chair recognizes Councilman Kenney.

Thank you, Madam Chair. Madam Suber, just one request and one question.

"Franklin-Suber" to you.

I'm sorry.

Thank you.

No problem. I learned from last week.

Sorry, Madam Franklin-Suber, I'm sorry. I didn't mean to -- I had no idea -- I didn't mean any slight at all, please. Madam Franklin-Suber, does there exist and can we get specific written job descriptions for all of the newly created positions of the secretary level, external affairs, education, agency authorities? I mean, is there something in writing so we could see what it is, like a mission statement or a job description? 283 12/14/00 - WHOLE - Operating Budget - 05

I would be happy to see if those exist. The one that I know that I've seen is the one that describes the Chief of Staff's position.

Right. Shouldn't they exist, though, before the position is created?

I'm not saying that they don't exist.

Okay.

That was part of the transition process, and I did not participate in the transition process.

Okay.

So if they exist, I'm sure we'd be happy to provide them to you.

And if they don't exist, could we get them created at least so we can --

Yes.

I think what's happening here is that we're basing a lot of our questions on the last administration and our historical experience. 284 12/14/00 - WHOLE - Operating Budget - 05

Yes.

You're telling me, and I understand, that things are changing and evolving differently. I think we would be on a better track of understanding what it is people are supposed to be doing if we could see it in writing.

Yes.

Okay. Secondly, I just want to move a minute to the City Scholarship City Program. Now, there's two scholarship programs: one's the Mayor's Scholarship Program and one is the City Scholarship Program.

Yes.

The City Scholarship Program deals with, as I understand it, with universities and colleges outside of the University of Pennsylvania, to the exclusion of the University of Pennsylvania.

Yes.

Okay. And there is a process that was established rating students and determining financial aid and all of those types of things that went on before the selection of 285 12/14/00 - WHOLE - Operating Budget - 05 these City scholarship recipients. Do we anticipate any of that changing in the way of process? Or is that maybe way too early? I guess to --

I think it's too early.

And the same question I would have with the Mayor's Scholarship, 'cause my understanding with the Mayor's Scholarships dealing with Penn, what they do is, they determine the child's abilities and test scores and other things.

Right.

But they also plug in the financial aid issue so that it's not a full four-year scholarship in the aggregate. It may be what the child's parents can afford to pay and then supplement it to get that kid through the University of Pennsylvania.

That's right.

And what I'd like to do is make a request that we get some information on whether -- if that program's going to change at all in its structure. 286 12/14/00 - WHOLE - Operating Budget - 05

Mm-hmm.

'Cause I think it's worked very well. It was very difficult to understand in the beginning for many people, but I think it really does work as fairly as possible and does, on the Mayor's Scholarship Program, expand to as many students as possible.

Right.

As opposed to giving one perhaps maybe moderately wealthy student a four-year full scholarship at Penn, what it does is allows that one four-year scholarship to maybe help three or four different kids.

That's right.

Okay, so if there's any changes in that, I'd appreciate knowing about it. Thank you.

Absolutely.

Thank you.

Are there any other questions? (No further questions.)

Thank you. 287 12/14/00 - WHOLE - Operating Budget - 05 The next department to be heard is the Finance Department.

Council President Verna, before I conclude my testimony, in the event there were Members of Council that arrived after my announcement, I wanted to extend again to all Members on Council, on behalf of Mayor Street, an invitation to join him for lunch today at 10 noon in Room 225, City Hall. Lunch will be served 11 and the Mayor will bring you up to speed on the 12 status of the conceptual agreement with the Eagles and the Phillies relating to the practice facility. Thank you.

Okay, thank you. The Department of Finance. (Department of Finance witnesses come forward.)

Good morning. Please identify yourself for the record and proceed with your testimony.

Good morning, President Verna and members of City Council. I am Linda 288 12/14/00 - WHOLE - Operating Budget - 05 Orfanelli, acting Director of Finance, and I am pleased to come before you today to present the Finance's Department's proposed 2001 budget. With me today is Rob Dubow, Budget Director; Deputy Mayor Dominic Cermele; and Risk Manager and Deputy Finance Director Joe Perrello. Other members of the staff are here to answer any of your questions. I will focus on the requested finance budget for Fiscal Year 2001 and the status of those initiatives undertaken by the finance group over the past year. The Office of the Director of Finance's Fiscal 2001 budget proposal for all funds totals $816.4 million. The General Fund budget request is $626.5 million. The largest component of the budget is employee benefits, which is budgeted as $568.6 million. Of this, $509 million is from the General Fund, where an increase of 3.8 percent has been budgeted over the Fiscal 2000 current projections. Other large elements of the finance budget include Legal Services, witness fees, hero awards, the Community College subsidy, refunds for 289 12/14/00 - WHOLE - Operating Budget - 05 overpayments of City fees, tax, taxes and indemnities. The Administration proposing to provide the Community College with a $1.5 million increase for Fiscal Year 2001. The Office of the Director of Finance's proposed direct appropriation General Fund budget for Fiscal Year 2001 is $17.5 million, a decrease of $7.2 million from the current projection for Fiscal Year 2000. Overall this budget anticipates 190 full-time General Fund positions. The Accounting Bureau has installed a computer-based payment system designed to pay vendors within 35 calendar days of our receipt of an accurate invoice once assigned contract is in place. Today, all City departments are on the new system. In the fall of '96, when the program began, a random sample of payments showed an average payment time of 68 days. Payments using the accounts payable system now average 35 days from the date the invoice was received. The Treasurer's Office anticipates that in Fiscal Year 2001, it will participate in the sale tax and revenue anticipation notes, general obligation bonds, and water and waste-water bonds. 290 12/14/00 - WHOLE - Operating Budget - 05 Among other things, the Procurement Department is working on procuring new electronic voting machines, in accordance with the November 3, 1998 Philadelphia referendum. As you know, the million necessary for the purchase is included 7 in the Fiscal Year 2001 Capital Budget. 8 The processes and systems for 9 collecting taxes in the Revenue Department 10 continues to be enhanced. One contributing factor 11 to the increased collections has been the state 12 legislation mandating the withholding of City wage 13 tax for Philadelphia residents who work outside 14 the City. Last year, the City paid $166 million 15 into the Pension Plan. In January '99, the City 16 closed on a $1.2 billion pension obligation bond. 17 The bond issuance is projected to save the General 18 Fund a total of $704 million through Fiscal Year 19 2019. 20 Despite continuing legal challenges, 21 the Minority Business Enterprise Council continues to ensure that businesses owned by minorities, women, disabled, and disadvantaged entrepreneurs are given equal access to business opportunities with the City. For example, the Airport 291 12/14/00 - WHOLE - Operating Budget - 05 Concession Program is a national model for disadvantaged business participation. The Accounting Bureau will place the City's annual financial report on the Internet for the third conceptive year. In a normal year, the City receives as many as 500 requests for copies of the report. By having report on the Internet, we save the cost of printing and mailing, and our financial data is more readily available. Thank you for the opportunity to provide this testimony. We are happy to answer your questions.

Thank you. Miss Orfanelli, you state in your testimony that your proposed direct appropriation General Fund Budget for FY 2001 is $17,550,000, a decrease of $7.2 million from the current projection for FY 2000. Please explain what these decreases are and why you're proposing the decreases.

The decreases are made up two components. The largest one is a $5 million decrease in contributions, which is a Class 500 item, and that decrease is due to the 292 12/14/00 - WHOLE - Operating Budget - 05 fact that we have a large contribution in Fiscal Year 2000 for the RNC, for the Republican National Convention, and we will not have that in 2001. The other large component of that is $2.5 million, which is a decrease in money going over to the Capital Fund Projects Fund. We had a two-year program of taking in certain revenues into the Operating -- into the General Fund, which was then transferred over to the Capital Fund, and that program has ended.

Thank you.

Excuse me, the money came from the bandwidth sales.

From what?

The bandwidth sales.

I still didn't hear you.

It came from the radio bandwidth sales, excuse me.

Is the City now paying its vendors in a timely manner? And if so, how many days from receipt of the invoices has this resulted in noticeable savings to the City as vendors no longer need to factor the cost of money 293 12/14/00 - WHOLE - Operating Budget - 05 into their bids?

As you -- as I stated in my testimony, we are paying more quickly, and we are paying in 35 days. Whether we're saving money or not, which was one of the objectives of doing this process, I believe, is really a question that we have to address to the Procurement Commissioner and request that an analysis be done. We actually have to have a comparison done between what bidders are bidding for certain items now as opposed to what they bid in the last few years. It is so new that it was not possible to collect that data to make the analysis yet, and I believe, going forward, we will be able to do that.

Thank you. You make a reference in your statement to the City's debt policy. Please explain, what is the City's debt policy? And how does the cost of the Veterans Stadium repairs and the voting machines fall within the City' debt policy?

I'm going to call someone up from the Treasurer's Office so that you 294 12/14/00 - WHOLE - Operating Budget - 05 can get the information that you need.

Thank you.

Excuse me -- from the Sinking Fund. (Witness comes forward.)

Good morning, Madam President.

Good morning.

I'm Vince Jannetti. Secretary of the Sinking Fund Commission. Could you restate the question, please.

Certainly. Miss Orfanelli made reference in her statement to the City's debt policy, and I asked that that be explained. And how does the cost of both the Veterans Stadium repairs and the voting machines fall within the City's debt policy?

The City's debt policy is a document that we did like three years ago that accumulated all of the debt of the City that's funded by the General Fund, so all the secondary debt -- leasing and the revenue general obligation bonds -- is all put together in one 295 12/14/00 - WHOLE - Operating Budget - 05 document so that we can see what we're really paying. The cost of the voting machines and the stadiums would just be another cost. You know, it's not really a related thing. I mean, it's related but not related.

It's related but not related?

Well, the debt policy is all the debt that we have outstanding, okay? It's the --

And what is the debt at the present time?

What is the debt? I don't have that on me, Councilwoman.

Isn't it something like 288 million?

288.

288?

I can get that.

I believe I know the answer, but I would like the record to reflect it.

Sure. I'm reading from 296 12/14/00 - WHOLE - Operating Budget - 05 the City's annual report as of 6/30/99. The general obligation debt of the City is $740 million. And the other long-term obligations of the City principal is 3 billion, 124 million. And that's exclusive of revenue-bonded debt.

Was that the answer to your question?

I don't think so.

No? Okay, the outstanding debt of the City, the general obligation, at 6/30/99, principal is $740.5 million. And that's both tax-supported and self-sustaining.

Point of information, Madam Chair.

The Chair recognizes Councilman Nutter.

Thank you. I thought your question was, what is the City's current debt limit, and either how close are we to it or how far away we, or what's the difference between the debt limit and the current level of debt? And I guess the difference 297 12/14/00 - WHOLE - Operating Budget - 05 between those two numbers is how much we have left to borrow. Wasn't that your question, Madam Chair?

Yes.

I'm sorry. I misunderstood the question.

That's all right.

In the same document -- I'm reading from the City's annual report at 6/30/99. The legal debt margin, the amount of debt we could still authorize is $288.2 million.

You got it, that's it, that's it. Thank you. And can anybody answer, how does the cost of both the Vets Stadium repairs and the voting machines fall within the City's debt policy?

Well, the cost of the repairs of the Vet that were already in prior capital fund budgets or expended, the costs of those would be from the principal debt, so it would be rolled up into the payments that we make, you know, all during the year for debt service 298 12/14/00 - WHOLE - Operating Budget - 05 payments, for principal and interest payments.

Okay, thank you. Miss Orfanelli, you indicate in your testimony the various financing that the City will undertake in the coming Fiscal Year. Please elaborate how you envision the Blight Program to be financed. (Rob Dubow comes forward.)

I'm Rob Dubow. I think the details of how that's going to be financed are still being worked out. The only concept, I think, that's pretty much settled is, it will be one of the outside agencies, so that it won't be a regular G.O. offering.

When you say "outside agencies" --

So like the RDA, for example, or PAID.

Mm-hmm. I'm going to suggest that each of the Councilmembers be given five minutes for questioning, and then we will have a second go-around and I will include myself on that. 299 12/14/00 - WHOLE - Operating Budget - 05 So at this time, the Chair recognizes Councilman Clarke.

Thank you, Madam Chair. I will not use my five minutes. This will be very brief. You indicated in your testimony that your office was going to oversee the purchase of the voting machines. Given the antiquated nature of our existing voting machines and the process -- having been a committee person, knowing how difficult that can be sometimes to operate those machines and spending those long night counting up those totals, with this new type of voting machine, how is that process going to act as it relates to the training of the individuals who will be responsible for tallying those votes in the evening? Are we going to increase the budget to accommodate that additional training?

Councilman Clarke, I think you should save this question for Lou Applebaum when he comes up. He's been on the committee that has done extensive work in reviewing what will be involved in the purchase and the training, etc. 300 12/14/00 - WHOLE - Operating Budget - 05

Okay.

So it's a great question, but (unintelligible) the Commissioner.

And the ward leaders need to know about those things.

I'm sure they do.

Another quick questions. TIFs (Tax Increment Finance Projects), does your office oversee or monitor them? Who does that?

That's done by PIDC.

Do they monitor the revenue associated with the TIFs to that level or degree? The reason I ask that question is, I think we have done maybe a couple of TIFs that are actually in operation now, and I was trying to get a sense of if we've met our expectations on the additional revenue associated with that program. Is there anybody here who can --

Yes. (Nancy Kammerdeiner comes forward.) COMMISSIONER KAMMERDEINER: Good morning. I'm Nancy Kammerdeiner, Revenue Commissioner. 301 12/14/00 - WHOLE - Operating Budget - 05 The funds that come in from the projects that have been defined as TIFs do come in as regular tax revenue. And although Council has approved over projects at this point, there are 6 only a few them that are completely active but 7 have full agreements, and we are actually paying 8 funds out to the TIF projects. That's because of 9 the status of the project and the development of 10 the final TIF agreement. 11 Basically what happens with those is, 12 the regular taxes are paid, and before the project 13 was really underway, we established a base tax 14 revenue for that site. In most cases, the only 15 tax revenue the City had been getting prior to the 16 TIF designation was real-estate tax. And so the perfect example on this is the PNC Processing Center in the Eastwick area, near the Airport. We set a base tax on the real estate that was established by the Board of Revision of Taxes, and the Board continues to reassess that property based on the construction that's taken place there. When the real-estate taxes are paid, we subtract from that amount the base real-estate tax that was originally paid on 302 12/14/00 - WHOLE - Operating Budget - 05 the site and send back to the TIF project the differential between those two dollar amounts. And so basically, on that situation, the amount we expected to get in is, in fact, what is being paid back to the TIF project. There is at least one active project that has other taxes involved, including sales tax and that's the Reading Headhouse project, and we do get regular reports on the sales tax paid. This is the 1 percent City tax and any other taxes that are covered by the TIF project there, and are making payment into that --

So your testimony is that -- COMMISSIONER KAMMERDEINER: -- based on what actually is happening. That project does not have full occupancy at this point. The only real participant is the Hard Rock Cafe, and there is the expectation of another Realtor in that site. So I would say on that one, we're not yet at the full potential but we are getting everything that is available and paying it back into the project.

But my question is, 303 12/14/00 - WHOLE - Operating Budget - 05 as it relates to the projections, 'cause I know when PIDC puts together projections on the TIF legislation, it sounds like in one instance in PNC, we might be meeting those goals but -- COMMISSIONER KAMMERDEINER: PNC is right on target and doing exactly what it's expected to do.

How does that affect the repayment schedule if we don't meet those expectations? COMMISSIONER KAMMERDEINER: The developer has the ultimate responsibility for the full payments, and so there is no -- as I understand it, there is no obligation that comes back to the City if the projections under the TIF District don't meet what was originally anticipated. The developer has the residual balance to pay.

So, okay. And in years out -- three, four, five years from now -- as we calculate the importance of doing TIFs, will we take that into account? COMMISSIONER KAMMERDEINER: We certainly will be able to, but it really depends 304 12/14/00 - WHOLE - Operating Budget - 05 on a project-by-project basis on the viability of that project and whether or not it meets the expectations. Just, for example, using the Reading Headhouse, there was an expectation that the second large Realtor would be -- not Realtor, but the retailer would be in place, and there would be tax revenue coming in from that. That has not yet happened and so we're behind schedule. That doesn't mean there won't be a catchup or that it won't, over the life of the TIF, bring in the full value that was anticipated, but it's a slower start-up.

Okay, thank you. Thank you, Madam President.

Thank you. The Chair recognizes Councilman Kenney.

Thank you, Madam Chair. Following on the lines of the questioning from the Council President in talking about our debt limit of $280 million at this point, and also based on the testimony from 305 12/14/00 - WHOLE - Operating Budget - 05 Mr. Dubow that the Blight Program and the money that would be borrowed to do the Blight Program would definitely be borrowed by an outside agency, why then would we not have given similar consideration to placing the $80 million and the $21 million for -- the $80 million for the Vet and the $21 million for the voting machines in a similar outside agency, considering the sensitivity that we have towards approaching our debt limit? It would seem to me, for example, that the Vets Stadium repairs, whether it's $80 million or less, would fit tightly and securely into PICA, based on the fact that PICA allows for emergency borrowing for health and safety issues. And as I said before, in the Capital Budget, when we have cadets falling through the railing at the Army-Navy game, it would seem to me to be a PICA-eligible number to do repairs to the Vet. Why would we, considering our sensitivity to the debt limit, place a $40 million number into 2001 and a $21 million number in for voting machines and for the Vet, if we've already decided the Blight Program's going to be done 306 12/14/00 - WHOLE - Operating Budget - 05 through an outside agency?

I think that's a good suggestion, and we should look into other funding options.

Was there a discussion, when the Capital Fund budget was drafted and sent over, that maybe, considering our debt limit concerns, that that $40 million number is a pretty big number and maybe we ought to look to put it in PAID or PICA or somewhere else?

There were some very preliminary discussions about that, but we never looked into them in the detail that we should, and will.

Okay. The Mayor recently announced -- and we were very thankful that he did a -- $3 million allotment for our firefighters and their health and welfare fund as it relates to the dealings with Hepatitis C. That number may be a minimum number, it may even be more money -- hopefully it won't be, but even more money by the time it's over. I don't see -- where would that money come from, why is it not mentioned in the Finance 307 12/14/00 - WHOLE - Operating Budget - 05 testimony, and where would the money actually be going to?

The money that you're speaking of, the $3 million, is coming from the employee benefits.

Okay.

And you're right. I mean, that number, we don't know yet how that number's going to work out. That's an educated guesstimate, shall with say. In terms of how it's going to be handled, the City will be meeting with the firefighters probably later this week and details will be worked out at that time.

Okay. But the employee -- where it's coming from, from employee benefits, it would be within your bailiwick?

Yes.

Okay.

Excuse me.

Sure.

May I just ask, would the Firefighters Union receive the funding? 308 12/14/00 - WHOLE - Operating Budget - 05

That's all to be worked out.

So right now, there's been no actual transfer of any dollars to anyone?

That's correct.

This is a conceptual kind of thing?

We will be sitting down with them and working out all those details.

Okay. And we would be -- and I know myself and I know other Members of Council will be very interested in knowing the specific details of the amount, the process, and exactly where the money's going.

And we'll be glad to provide that for you.

Thank you very much.

Any other questions, Mr. Kenney?

No, thank you, ma'am.

Thank you. 309 12/14/00 - WHOLE - Operating Budget - 05 The Chair recognizes Councilman Nutter.

Thank you, Madam Chair. Let's go back to the question that Councilman Kenney asked and an issue raised by the Chair. Mr. Dubow, on the concept, I guess, of the outside agency borrowing, whether for the Blight Program or for potential or conceptual renovations to Veterans Stadium or even for the voting machines, can you walk us through -- how do you do that? How do you put forward that kind of transaction? What needs to happen, and what are the details on that?

I'm going to ask someone from the Treasurer's Office to come up and answer that.

Okay. (Witness comes forward.)

Good morning.

Good morning. If you could just give us a very brief overview on that, and you can supplement your answer in writing with a longer version of how you do this kind of transaction, but could you briefly explain 310 12/14/00 - WHOLE - Operating Budget - 05 how you do it?

Good morning. I'm Karen Yancy, Deputy City Treasurer. I will give you a brief overview. As for the Blight Program, I'm not sure of the details of how that will work, but the Treasurer's Office's responsibility is to work in coordination with the City's agencies to coordinate their financings. We provide support, along with our financial advisor -- currently that would be PFM. And we would just support and provide, you know, whatever they needed -- documentation, legal review, and so forth.

I understand that. But let's say that we all agreed that we wanted to have set aside $40 million for potential renovations to Veterans Stadium. My question is, who would do what and how do you get that done?

I can't answer that at this moment.

Well, how do you do any outside borrowing by any of the various agencies?

Well, generally, we don't 311 12/14/00 - WHOLE - Operating Budget - 05 work with PAID. So if the Veterans Stadium was going to be through PAID through some type of TIF arrangement, that is not our role. If we were going to go through the General Fund for PMA for Veterans Stadium, once again, we would work with that authority, the Treasurer's Office, the F.A., we would create bond documents, take it to market, and we oversee it beginning to end. That I can outline what the steps would be in a general financing, but we would not make the financial -- the economic decision that that would be done; we would look for direction from the Director of Finance's Office.

No, I understand that. I just was more concerned with the mechanics of it. I mean, basically, you have to set up the bond authorization, you have to make sure the City is going to make the debt service payments on it.

That's correct.

And I guess that gets done probably through the -- either through the Sinking Fund or directly to the outside agency 312 12/14/00 - WHOLE - Operating Budget - 05 or authority, but you create the appropriation in the General Fund for whatever those debt service payments are going to be, and then you just go and float the bond and you can demonstrate that you have the money available to make the debt service payments.

That's correct.

Is that right?

That's correct.

Okay, all right thank you. Let me go back to this Sinking Fund. In the budget book, on -8, there is an item, Code No. 285. It says: "Rents-Other for Fiscal '99", and that number was $787,000 for Fiscal 2000. It was anticipated to be $5 million, and for FY '01, it's $4.8 million. First, can you tell me why there was such a significant increase from FY '99 to 2000? What is this line item and what is it going forward?

Councilman, this line item is for payments, the lease payments on the justice projects -- the Court House, the current 313 12/14/00 - WHOLE - Operating Budget - 05 Fromhold Correctional Facility, the 650-bed PIC facility, and the One Parkway Building.

Okay. And on 10-16, Item 701, "Interest on City Debt Long-Term," it's $4.5 million.

That, I believe, is the estimate on the revenue from the car rental tax fund.

What's that estimate based on?

I'm not sure.

Is this a car rental tax that's estimated to be the support for either the stadium transaction --

That's correct.

-- or the possible repayment if we end up buying the practice facility?

Yes.

Where did that number come from?

It came from estimates of the revenue generated by that tax from our Revenue Department. 314 12/14/00 - WHOLE - Operating Budget - 05

And that's based on previous rental history?

Yes.

Okay. What happens if the car rental companies decide to have the cars picked up at a place other than inside the City of Philadelphia?

If the -- if the car rental companies are located outside Philadelphia --

No, not the companies, the pickup point.

I'm not sure. I know -- well, any of the pickup points outside of Philadelphia, we don't get the tax, right.

'Cause the tax is calculated based on where the car is picked up, correct?

Right.

Okay. So even if they keep their physical buildings in the City and tell you that you have to go across the street or down the road or around the corner to get the car at that lot --

Right, if their lot's in 315 12/14/00 - WHOLE - Operating Budget - 05 Delaware County.

-- that becomes the site and you don't get the tax, correct?

That's correct.

Okay. Now, I have read a number of newspaper stories about different about different aspects of the Blight Program and that there was -- as characterized at least by the news stories, that there was a downpayment on the Blight Program somewhere here in the budget.

That's inaccurate. There's an assumption of debt service payments in the budget, but there's no actual downpayment on the Blight Program.

Is it in the Sinking Fund Commission section of the budget?

It is.

Where is it?

It's shown in 700, and it probably shouldn't be; it probably should be in the 200s since an outside agency's going to be doing it.

You want to say that again? 316 12/14/00 - WHOLE - Operating Budget - 05

Yeah. It's shown -- it's in 701, the interest on G.O. debt.

Is that on 10-12?

Hold on one second, I'm actually not looking in the detail. Let me get there.

I'm sorry, that's in the Water section. Is this in the General Fund section?

Yeah, it's in the General Fund section.

So it's -9?

Let me turn there. Yes, that's right.

On which line?

It's included in 703 and 202? I'm sorry, 701 and 702.

Why is it in both?

Interest and principal.

Gotcha.

701 is interest and 702 is principal.

Gotcha. 317 12/14/00 - WHOLE - Operating Budget - 05 And is the total amount of the increase in column number 7, which would be a total of $12 million, between those two items, is the total increase attributable to estimated debt service payments on the Blight Removal Program?

Well, there are some payments that go away.

I'm sorry?

Some payments go away, so it's not -- it's not -- the increase in the Blight Removal Program is actually more than just that increase 'cause there are other debt service payments like principal payments that we've made this year where the debt would no longer be outstanding, so we don't have to make those payments again in 2001.

Let me ask the question differently. What's the total amount between those two lines that is directly attributable to anticipated debt service on the Blight Removal Program?

$16.9 million.

But you're only showing an increase of 12 million. 318 12/14/00 - WHOLE - Operating Budget - 05

Right, because there are other changes. What you see there, in 701 and 702, is the net change between two years.

Right. So you're saying some payments -- okay.

Yes.

Your earlier testimony was that some payments went away, so that would eat into what the larger numbers was, therefore, you can. . . okay.

Right.

All right. So the real answer is $16 million in anticipated debt service.

16.9.

Do you have a --

There are also some increases in commitment fees in the Sinking Fund reserve payments. I think you get up to about 18.8 when you add in everything. I think it's getting to your --

Councilman, excuse me.

Yeah. 319 12/14/00 - WHOLE - Operating Budget - 05

Your five minutes was up a long time ago.

Five minutes ago, at least.

Can we resume with your second go-around, please.

Yes, sure. No 9 problem. Thank you.

Thank you. The Chair recognizes Councilwoman Tasco.

Thank you very much. This question may have been answered already. In terms of the debt service that you talk about for the Blight Program -- good morning, first -- how much will that add to our overall debt and for what period of time? Can you calculate it?

The debt service -- we're assuming the debt service on the Blight Removal Program will equal about roughly $19 million a year for about 30 years, but we're also assuming that it will be issued by the RDA or PAID, but not 320 12/14/00 - WHOLE - Operating Budget - 05 through General Fund, so that it won't eat into our debt capacity.

But the debt service comes out of the Operating Budget, right?

Yes.

It wouldn't come out of --

That's right.

What affect does that have on our debt limit?

It won't have any impact on our debt limit if we structure it so that the debt is issued by an outside agency. So, for example, if it's issued by the Redevelopment Authority, the debt doesn't count against our debt limit.

Oh, okay.

We still have to pay the debt service on it, but it doesn't count against our debt limit.

Okay, all right. And debt limit is not -- the debt service amount that we pay is not looked at by our bond rating companies when they look at our debt?

It's not looked -- well, 321 12/14/00 - WHOLE - Operating Budget - 05 there are two answers. One, yes, the bond rating agencies look at all our outstanding debt in analyzing our financial picture, but it's not looked at in terms of our debt service capacity 'cause that's determined under a formula in the State Constitution.

Oh, okay. Where in the budget, on -18 I, do not see any appropriation for the Student Philadelphia Activities Fund. Has that been taken out of the budget?

Yes. It's been eliminated, has it not?

I'm sorry, what was the -- the Student Activities Fund?

The Philadelphia Activities Fund, -18.

It's definitely not showing in the budget so I would say it's been eliminated at this point.

Who would have made the determination to eliminate it?

Well, this is a -- actually, it's a Finance supplement into the 322 12/14/00 - WHOLE - Operating Budget - 05 Recreation Department on this, so I'm not sure that it's not showing in the Recreation -- it is showing in the Recreation Department's budget.

There's an increase in the Recreation Department's budget equal to what was taken out of the Finance Department budget, so now it's all now in one place, but the funding hasn't changed.

Okay, so part was in the Managing Director's Office and --

Part was in Recreation, part was in Finance, and now it's all in Recreation.

Oh, okay. All right. Thank you very much.

Thank you. The Chair recognizes Councilwoman Brown.

Thank you, Madam President. Good morning offers of the Administration. Good morning.

Good morning. 323 12/14/00 - WHOLE - Operating Budget - 05

When I reviewed testimony, I looked to see where impact had happened with regards to education of children and youth, so my requests are framed around those areas. There is a dramatic decrease with Legal Services for child advocacy representation, a 75 percent decrease from -- gee whiz --

Where are you? I'm sorry.

FY 2000, budget binder 8-71.

Oh.

Are you with me?

Yeah. What happened -- yeah. If you look at the totals, though, look at the Defender Association number.

Yes.

That's goes up by 1.4 million.

And so. . .

So it gives us less -- the Legal Services line is kind of an unallocated line, and what we've done is allocated more money up to the Defender Association and taken some 324 12/14/00 - WHOLE - Operating Budget - 05 money out of what we have in the unallocated line.

Very well, okay.

But if you're looking in total, the totals Class 253 on that page has gone up, it's going up by about $800,000.

And what prompted that move? What sparked that decision?

Part of it was just the cost to the Defender contract. In a lot of years, we don't allocate the increase in the Defender Association contract until later in the year. This year, we decided just to do it up front.

Very well. The Community College subsidy, there was an increase of 1.5 million from FY 2000 -- that's the upside. The downside, however, is that the formula says one-third state, one-third City, and one-third student contributions of student tuition costs. So is there any reason why as of yet, the City has not honored it's one-third contribution?

I think we'll have to get back to you on that one, but I believe that if you look historically, you'll see that we really 325 12/14/00 - WHOLE - Operating Budget - 05 have never been able probably to afford to honor that commitment, more than anything else.

Very well. And the record should reflect that the increase is dramatic, and that's applauded, but the reality still exists that there is not that complement of 33.3 percent.

You're right.

And we should also note that the increase is for the total amount that Community College requested this year.

Very well. Okay, then. Thank you. Should we wait to hear the testimony of Mr. Cermele, Madam President?

You could ask questions now.

Very well. Good morning.

Good morning.

This question is related to the Code Violations Unit and the enforcement of the law surrounding youth access to tobacco. 326 12/14/00 - WHOLE - Operating Budget - 05

Yes.

How is that happening? Just brief me on it. And is there any tie-in with any of the schools -- public, parochial, or private?

The City contracted with an organization known as "TEACH," and that is the company that -- or the agency that provides both education and also provides undercover work.

Okay.

By the means of which then code violations are issued against store owners who violate the ordinance.

And the bright side to that is there is a 75 percent payment rate in the first year?

The payment rate's about 55 percent. The 75 percent number represents our information back from TEACH as to the number of instances where they were unable to detect a violation, where they went in with a teenager who asked for tobacco and was properly carded. So there was that type of increase in merchants paying attention to the law. 327 12/14/00 - WHOLE - Operating Budget - 05

Is there any role potentially for the School District to assist, complement, underscore that effort?

Yes. There would be a role in education in the school, and that is the general role in schools of encouraging the nonuse of tobacco products.

Could you please forward my office any information about TEACH, the actual program.

Yes.

So I could read more about it.

I will do that.

Thank you very much. Thank you, Madam Chair.

Thank you. The Chair recognizes Councilwoman Blackwell.

Thank you, Madam President. While we're speaking to Mr. Cermele, I read in your testimony where you talked about 328 12/14/00 - WHOLE - Operating Budget - 05 fielding complaints from people when they call about the lien program.

I'm sorry, if you could -- I'm getting old, so --

Let me talk a little louder.

Thank you.