Not for the revenue. There's a problem here. And I think it has to be corrected. I don't know when you can meet, Mr. Donatucci, your staff. And if need be Mr. McPherson will be there, but I think there's a problem here. I don't think we ought to belabor it right now. But are you going to be available --
-- this afternoon? Ms. Reed, before the end of the week, I would like you to meet with Mr. Donatucci, his staff and Mr. McPherson so that we can rectify whatever problem there is here.
I know you will. Okay. Thank you. Thank you very 2312 Operating Budget - 4/5/05 much.
Thank you, Council President. I'd just like to point out, this will be a real revenue enhancement for the City, this computerization. I mean, we're excited about it. And not to dwell, you know... And I know it was before she -- Diane came here. But that money, when I met with the Governor last December, before he turned it over, he agreed to make a settlement of our office and the City because it was specifically earmarked for our computerization. So, what I'm basically saying, we will never have -- we wouldn't have to pay back to the Productivity Bank these monies if -- if certain... you know, amnesia didn't set in, you know. But I just wanted to point that out.
And with the computerization, do you feel that you would be generating more revenues? 2313 Operating Budget - 4/5/05
Unequivocally, yeah. Give you an example. The Bar Association. There's so many times they contact our office. And as you know, we worked to compromise that many years ago with the public, that we allow access for any given day, who walk in and check three records free. The Bar Association and the lawyers, everybody, they will pay an annual fee for access. Instead of sending a paralegal over to our office, they will be able to go on line to see if an inheritance tax is paid, if an estate's been raised. I mean, this is monies that if they walked in, a paralegal could walk in and not pay because they're entitled to look. But on line we'll be charging an access fee. You know, if it's -- if they use their lawyer I.D., whatever, their licensing fee. There's so many different things that we could charge for additional revenue to the City. 2314 Operating Budget - 4/5/05
Like I said, not to sound like a broken record. I just hope... It's only... Computers are only as good as the data you put into them.
Precisely. And it doesn't mean that you're going to need less employees.
Well, I'm not looking for any more because we've learned to adapt.
-- just because you're computerized doesn't mean you're going to be able to function your office with a lot less employees.
Well, example, we have an office in North Philly where we man, you know, not every day but certain days of the week, the northeast. We're open Wednesday nights, and. I 2315 Operating Budget - 4/5/05 believe we're probably the only department that we don't give overtime in our office, you know. We give comp time. So, we try every possible way to keep our budget in line in the sense of working for our employees.
Well, my feeling is if we can generate more revenue --
-- then -- I think we're sitting on money. I really do. And I know that everybody has been asked to take some pain with this budget. And I think everybody's been willing to take their share of pain. But at the same time, I don't think that we should be being so penny wise and dollar foolish that we're going to lose revenue as a result of taking the pain and cutting the budget.
Well, there's an old expression in business. And I come from...
You have to spend money to make money. 2316 Operating Budget - 4/5/05
Thank you very much. And please get in touch with Ms. Reed, make an appointment. And I would ask Mr. McPherson to also attend that meeting.
Okay. Thank you. Sheriff is next. Hello, Sheriff. How are you? Welcome.
Kindly identify yourself for the record. Proceed with your testimony. 2317 Operating Budget - 4/5/05 May I say that we do have a copy of your testimony. It will be given to the stenographer. It will be transcribed in full. And if you would, I would request that you just summarize your testimony. SHERIFF GREEN: Very well.
Thank you. SHERIFF GREEN: My name is John Green. I'm Sheriff of the City and County of Philadelphia. In summary, similar to the situation that is occurring in the Register of Wills Office, the Sheriff's Office is in the midst of computerization. We are at Phase II of our computerization program. We need an additional $115,000 in order to complete the computerization. And so, the Sheriff's Office request is simply that we maintain the budget level that we had last fiscal year for the next fiscal year, meaning that we're requesting that our appropriation be $14,078,631.
That's $14 million. 2318 Operating Budget - 4/5/05 SHERIFF GREEN: $14 million. I did read it.
Okay. $14 million... SHERIFF GREEN: $14,078,631.
Thank you. SHERIFF GREEN: That completes my testimony.
All right. Sheriff, you're requesting an additional $1.2 million. SHERIFF GREEN: That's correct.
In FY'06 to be restored. So, it would be the same level as you received in FY'05. SHERIFF GREEN: That's correct.
Do you mind giving us a breakdown for that $1.2 million? SHERIFF GREEN: Well, we would use $115,000 to complete our computerization program. As you know, the City of 2319 Operating Budget - 4/5/05 Philadelphia across the board has been requested to reduce our personnel level. And we have complied with that request. The additional money would be used for overtime that would be needed to compensate --
How much in overtime? SHERIFF GREEN: Actually, remainder of the $1.2 million will be used for overtime.
$1 million for overtime? SHERIFF GREEN: Madam Chair, if you look at -- if you look at our overtime schedule for the last six years, you'll see that we use close to that, if not more, in overtime because our overtime is driven by everything that occurs prior to getting to the Sheriff's Office. For example, when a police officer makes an arrest, then that person is prosecuted by the District Attorney's office, and the trial is heard by the courts. 2320 Operating Budget - 4/5/05 All of that falls on the Sheriff's Office at the end. And we do not have control over the level of overtime costs that are incurred through the actions of the Police Department and the court system.
According to Schedule 100, Section 33, -- correct me if I'm wrong -- in FY'05 it was over $2 million for overtime. Now you're asking for an additional $1 million? SHERIFF GREEN: Madam Chair, as I said, we anticipate -- Let me just back up on where we are. I didn't want to get into the testimony, but if you look at the testimony, we describe what has happened on our civil side, and that is, the need for compensating for a tremendous increase in the amount of sheriff sales. We have gone from 300 -- a little more than 300 sheriff sales a month to over 1,000 sheriff sales. We have gone from two sheriff sales per month to four sheriff sales per month. 2321 Operating Budget - 4/5/05 In addition to that, we are being required to trace or to track, if you will, individual properties that are sold in order to expedite the distribution of the funds to the City, and of course the unclaimed money going to the state. That's on the civil side. In order to do that, we realize that we're not going to have as many people as possible. And at this point in time, we are using temporary employees. And with temporary employees, you have additional overtime costs that you do not have with Civil Service exempt employees. We also have on the criminal side, we anticipate that there will be even more arrests made during the next fiscal year. We have had meetings with the Police Department, and of course with the court system. And the one thing that everyone agrees on is that there is a need for an increase in enforcement which will result in arrests in various areas. I mean, if you pick up the paper, 2322 Operating Budget - 4/5/05 you'll see what's going on in our various communities. And that requires the adjudication of court cases, and of course the deputy sheriffs will be handling that. Now, there are solutions. And quite frankly, Madam Chair, we continuously try to develop solutions for the problem. If you'll notice that at the end of the last fiscal year, you saw a tremendous drop. If you looked at the individual months, as far as overtime, you will see a tremendous drop in the amount of overtime. Now, just because we're appropriated the money doesn't mean that we will use the money. But quite frankly, we have had experiences in the past where we got to March, April, May, and we were close to running out of money, and because of not -- because of the overtime usage. And during the next fiscal year I would like to avoid that.
I see that... What is it, $40,000 being appropriated for part-timers. 2323 Operating Budget - 4/5/05 SHERIFF GREEN: That's correct.
What type of positions are they? SHERIFF GREEN: They are working in our accounting unit and at the receiving desk where we receive all of the judicial papers, the writs, the warrants. And they're also working in our real estate department.
So, are they college students or just who are they? How do they get a part-time job such as you're describing? SHERIFF GREEN: Well, these are people who are currently unemployed and they need employment. They realize that they will not have benefits, but just having an hourly wage suffices at this point in their lives. And it has ranged... We have had college students, we have had older employees. And quite frankly, they work out very well. The problem associated with having the temporary employees is a human one, where they want to make as much money as possible. 2324 Operating Budget - 4/5/05 They're willing to work as hard as they possibly can, and they're willing to work on Saturdays and Sundays. We have the work. And of course, we try to control the overtime, but when you look at the cost factor --
Part-time employees get overtime, too? SHERIFF GREEN: Yes. Temporary employees. They receive overtime.
And how many temporary employees do you have? SHERIFF GREEN: Three at the present time. We have had as many as six during any given time.
Mm-hmm. Okay. The Chair recognizes Councilwoman Brown.
Thank you, Madam President. First of all, let me thank you for your testimony. And I have no questions. But I do want to commend the leadership of 2325 Operating Budget - 4/5/05 your office, you and your team, for the enormous escalation of outreach that I've witnessed and observed over the past many, many months. With regards to... I mean, you gave some stats with regards to the number of sheriff sales you're doing and the housing workshops that you're offering, so that citizens understand what's required once they move -- want to move into that whole sheriff sale system. So, the level of outreach is commendable, and I think that needs to be on the record. SHERIFF GREEN: Thank you.
You're welcome. Councilwoman Blackwell, did you have any questions or comments?
I echo the sentiments of my colleague, Councilwoman 2326 Operating Budget - 4/5/05 Brown, and also with yourself, in terms of the Clerk of Quarter Sessions and Mr. Donatucci, in trying to clarify what the -- what the prices are and where we should go from here.
Sheriff Green, what type of discussions did you have with Finance? Did you explain to them precisely what you have testified to today? And what was their reaction? SHERIFF GREEN: We've had continuous discussions with M.O.I.S. and finance. M.O.I.S. has done a tremendous job in getting us to this point. And I've sent a letter -- And I sent a letter last week to the Finance Director. Because of budget hearings and everything else that's going on, I'm sure she hasn't had time to get back to me. Tyrone Bynum from my office has had continuous discussions with our budget officer about our needs. At this point I would categorize our discussions, if you will, as being midpoint, and that we haven't 2327 Operating Budget - 4/5/05 had an opportunity to talk completely because of budget hearings and because of scheduling.
Ms. Reed, time is running short. May I suggest that you meet with the Sheriff and his staff so that we could see how we can help him.
Okay. As I said, I think everybody was asked to bear some pain, but we can't hemorrhage to the point that we can't operate either.
Okay. Thank you very much. SHERIFF GREEN: Thank you, Madam Chair.
The committee will be in recess until 1:45, at which time the City Controller will be testifying. Thank you very much. (Public Hearing recessed from 12:18 p.m. to 2:05 p.m.)
Good afternoon, everyone. 2328 Operating Budget - 4/5/05 This is the continued public hearing of the Committee of the Whole. We will now hear from the City Controller. Good afternoon. Please identify yourself for the record and proceed with your testimony.
Thank you. Jonathan Saidel, S-a-i-d-e-l, at the present time the City Controller of Philadelphia. Good afternoon, Madam President, members of City Council. I am City Controller Jonathan Saidel, and I'm here today to present testimony on the Office of City Controller's fiscal year 2006 operating budget. I am joined by Deputy City Controller, Tony Radwanski and Albert Scaperotto, as well as our Director of Financial Policy and Analysis, Mercel Waxman and our Administrative Services Director Gene Laumer. This is the 16th year that I have presented a budget to Council. And I'm 2329 Operating Budget - 4/5/05 deeply appreciative, on behalf of myself and my office, for the courtesies you have always shown me and for your willingness to work together for a better Philadelphia. It has not always been easy, and this year in my last year as City Controller, we are challenged once again. I will not be the only beneficiary or victim of what we do now, but I cannot emphasize this more strongly: Adequate funding to complete the professional responsibilities of the City Controller's Office is essential to the City's system of checks and balances and for properly safeguarding the City taxpayers' funds. The person we elect to assume the Office of City Controller next January must be provided with the resources necessary to do the job. Failure to provide the number of professionals needed will result in the office's not being able to fulfill its ever increasing mandates, and not being able to produce the family opinion audits that are 2330 Operating Budget - 4/5/05 essential when Wall Street and others view Philadelphia and determine its financial future. I have spent the last years of my 6 life being an independent voice on City 7 finances, and I intend to continue to fight 8 to preserve the independence of the 9 Controller's Office. 10 My fiscal year 2006 operating budget 11 proposal includes a General Fund 12 appropriation of $7,624,594. This is the 13 funded total of 132 budgeted positions. 14 In the last few fiscal years I have 15 attempted to fill the responsibilities of my 16 office while accepting across-the-board budget cuts proposed by the administration. These cuts represent three percent in FY 2003, another three percent in FY 2004 and a very significant five percent in FY 2005. An additional five percent was proposed to be cut from this year's operating budget. It is incumbent upon me this year to accept the strong advice of my staff of certified public accountants that it is just 2331 Operating Budget - 4/5/05 impossible to release even my mandated opinion audits in the time frame required by law with the resources offered. Fortunately, the framers of the Philadelphia Home Rule Charter and Philadelphia voters realize and appreciated this dilemma when they enacted Section 8-102 estimates of current expenditures by departments, boards and commissions. This section gives the Mayor the power to approve the budgets of all City agencies within his purview but recognizes the Controller's unique responsibility within the government to function as an independent watchdog, just as it recognized the City Council's independence by prescribing the Mayor shall not reduce the estimates of City Council or the auditing department without their consent. In order to preserve and protect the Office of City Controller for those who come after me, I find it necessary to accept and act on the guidance of my professional staff, make my best and most conservative estimate 2332 Operating Budget - 4/5/05 of what we are requiring to accomplish our mandated responsibilities and draw this line in the sand. To put the current situation in perspective, the last year before I took office, FY 1989, found the Controller's Office with 147 budgeted positions, 98 of which were professional post audit positions.
After three consecutive years of budget deductions we now find ourselves with only 132 budgeted positions, of which 75 are professional post audit positions, a 14 percent decline. 15 For FY 2006 the administration is 16 seeking to even further reduce the 17 Controller's Office to a maximum of 116 18 budgeted positions, and has yet to approve 19 our request for four auditor trainee 20 positions which we are requesting, using 21 existing funds appropriated to us by City 22 Council last year. During my years in office we have continued to be inundated with increasingly complex and high risk audits. 2333 Operating Budget - 4/5/05 Our audits have increased in size and scope, due to the additional work required by professional accounting pronouncements, principally Government Accounting Standards Board Statement Number 34, and ordering standards there were put in place in response to financial statements fraud and alleged auditor negligence by WorldCom, Arthur Anderson and other companies. Our work is further complicated by budget cuts in other departments which make the City's financial statements much more difficult and time-consuming to put in order. While my office has cut 11 percent over three years, other auditing costs have skyrocketed. In the private sector, for example, we were advised by two major accounting firms that nationnwide auditing costs have risen by 20 percent last year alone. A full 93 percent of our staff resources are expended conducting mandatory auditing activities, leaving very few 2334 Operating Budget - 4/5/05 resources to exercise any of the discretionary but usually profitable performance and palpable audits I hope to discuss with you and would like to do more of. S. funds received under the Pennsylvania Emergency Medical Services 2335 Operating Budget - 4/5/05 of 1985, consent letters and bond offerings, certifications of City's capital budget under the First Class Cities Act, brief calculation of the City's debt limit, review of the City's annual five-year plan required by the Pennsylvania Intergovernmental Cooperation Authority Legislation, the annual lending report required by Council ordinance, tax increment finance and analysis required by City Council ordinance. As you can see from this sampling, there are many duties and responsibilities that are either much more complex or that didn't even exist when the funding for the Controller's Office was at a much higher level. Accomplishing these obligations leaves precious little resources to pursue many of the discretionary aspects inherent in the mission of the Controller, not to mention the 2003 chart amendments giving the office the right to audit quasi-governmental and City board appointed entities. This amendment was passed by Council 2336 Operating Budget - 4/5/05 and approved by a three to one margin by Philadelphia voters. Despite these obstacles this year, we still managed to perform two important reviews which will soon be released. One is the study of the City's recycling program, and the second is the examination of the problem-ridden police and fire emergency communications systems. On the pre-audit side the number of payment vouchers processed by my office has increased from approximately 150,000 per year to well over 190,000. Through operating efficiencies and the cooperation of our employee unions and fine staff, we have managed to handle this increase with no corresponding increase in staffing. Through negotiations with the administration, we have also been successful in obtaining some limited funds to help us conduct an independent inspection of properties being demolished as part of the Mayor's Neighborhood Transformation 2337 Operating Budget - 4/5/05 Initiative. I would like to thank the Mayor and Managing Director's Office for their cooperation in this area, but I must strongly emphasize that a project of this magnitude, involving the expenditure of over $290 million, requires an independent post-audit.
The $75,000 we have received, while helpful in the pre-audit side, does not come close to accomplishing the full post audit need to insure proper internal controls and to guard against wasteful expenditures. I will continue to fight for funding to accomplish this essential component of this project. Additionally, our Financial and Policy Analysis Unit which we had to cut back in staff, continues working with you and your staffs in producing its award-winning reports and approving 21st Century Philadelphia. Believe me when I tell you that we have to cut the office to the bone. Yet my office has won six national awards in the last nine years and achieved the respect of 2338 Operating Budget - 4/5/05 our peers. It simply doesn't make sense to allow across-the-board budget cuts to eliminate auditors in the time of financial stress. Auditors save taxpayers money in many ways. For example, between January 1, 2002, and March 30, 2005, my auditors made 986 recommendations, identifying approximately $660 million in financial benefits for the citizens of Philadelphia. Please give them the tools they need to do the job, by approving my conservative budget submission of $7,624,594 which is supported by the Charter, instead of the administration blanket across-the-board cuts. The best way to stifle an independent watchdog is to cut off his funding. The taxpayers of Philadelphia need and deserve this vital check and balance. In closing, I want to thank my great staff for the dedication and professionalism they bring to government service. Once again, I would also like to 2339 Operating Budget - 4/5/05 express my sincere gratitude to this Council for the cooperation and courtesy they have extended to me and to my staff. And I'm happy to answer any questions that you may have and anyone else.
Do you have a tear in your eye that this is the last budget hearing that you're going to be attending?
Yes. This is my 400th year as Controller of Philadelphia. (Laughter.)
Let me just state for the record how proud I am of every member of Council and my workings with you, Madam President.
All 17 members, even those that are not here today, and thank them for their courtesy and their support all these years.
Thank you very much. It's my understanding that you are 2340 Operating Budget - 4/5/05 requesting an increase of $523,261 from the administration's recommended budget; is that correct?
Have you, in fact, spoken to the administration about this? And if so, what is their position?
I have spoken countless times to a variety of members of the administration; and to give you an update on that, Tony Radwanski, who is the Deputy Controller for Administration. Tony.
My name is Tony Radwanski. I'm Deputy city controller. We met as recently as two weeks ago with the members of the Budget Bureau, and they have indicated a willingness to work with us on this matter.
How much of a willingness? Is it $523,261? 2341 Operating Budget - 4/5/05
A little willingness. A little push in the right direction would do us a great deal of good.
Well, it depends on what happens as a result of this budget hearing, what Council has to say, and we'll go back to them. I figured it would be better if we found out what happened at these hearings first, and then go back to them to negotiate.
Thank you. I would ask the Controller: During the M.D.O. budget hearings, we raised the issue as to why the M.D.O. has salaries budgeted in his office that get transferred to the Fairmount Park, L & I and MOCKS. He said it was the recommendation of both Finance and the Controller. Can you explain why you prefer it budgeted in this way?
I don't. And I never -- I never opined on the consolidation 2342 Operating Budget - 4/5/05 of that funding. I think it's for vacant property and vacant lots that you're talking about, Madam President. I never opined on it, nor was I asked for a recommendation one way or another. Historically the Managing Director's Office has not been in control of operating departments. That's why we have operating departments. It's always been my recommendation to Mr. Goldsmith and whenever I'm asked, that salaries be paid out of the departments that are doing the service, and that the responsibilities for each one of the departments be run by the commissioner. So, it's -- it's -- I don't know where he gets that from.
Well, the M.D.O. budgeted $75,000 in both FY'05 and FY'06 for your office for N.T.I. inspection work to be done by the Controller's Office. Why would the M.D.O. budget for this work? And who actually controls the contract?
I had originally asked 2343 Operating Budget - 4/5/05 for $250,000. The Mayor had... When I met with the Mayor, he said he would give me $100,000. In the end, the only way that I could get the utilization of $75,000 for, you know, a $390 million project, was that the money was left in the Managing Director's Office. We set up the contracts. And it's my understanding that there hasn't been any interference, as of today, in relationship to examinations that we are attempting to do through statistical sampling. We do a sampling, and then we send out investigators and engineers to look at the progress that's being done. Would I rather have that money to a transfer ordinance within this office so that there is no hint of any kind of pressure? Absolutely. But, you know, when you ask for $250,000 and then you're told you're going to get a hundred, and then you get 75, I'd rather get the 75 somehow than nothing. So, 2344 Operating Budget - 4/5/05 that's the system that was set up.
I know that your office issued a report concerning the City's debt obligations. The administration is now considering a ten year lease/purchase of vehicles worth over $100,000 each. Do you think this is a prudent choice in our current financial condition?
The problem... I'm not in favor of leasing vehicles. You usually, through the Capital Program, match the life expectancy of a vehicle with the bond, so that we own them. Leasing ends up being an opportunity to evade the responsibility that you have for owning your own property. And I'd much rather us own our own property. So, I'm not in favor of leasing. I think we have to accept our responsibility, match the life expectancy of any asset with bond proceeds, and move forward as we always have moved forward. But I understand he's trying to -- 2345 Operating Budget - 4/5/05 the Mayor is trying to use leasing in the administration, leasing to avoid having to go through a bond and not -- and avoid having to put any up-front money. But the reality is that that's the way it should be done and that's the way I would -- I would approve it. And so, I'm not in favor of the current administration's proposal to lease vehicles that are over $100,000 apiece that are effectively real assets that the City should own and operate.
Thank you. The Chair recognizes Councilman Nutter.
Afternoon, Controller Saidel. Should I take it that the fact that the full budget for your office was not included in the book is in some way connected 2346 Operating Budget - 4/5/05 to the... I guess the dispute between your office and either the Mayor's Office or the Budget Office with regard to what the budget should be?
Well, I think you can certainly take it that way. I have always, as you know, attempted to negotiate... I'm sorry.
As you know, for the last number of years that I've known you, I've always attempted to negotiate what I thought was a fair and responsible budget with the administration before I came before Council. In this particular case, you know, I lived within the means of a multitude of cuts. But this final cut, I think, would leave this office to the next City Controller with not having the available resources to do what I think is a responsible thing to do. So, the fact that we are presenting what our view of what the office should have 2347 Operating Budget - 4/5/05 which is a little over $7.6 million and have 132 appropriated positions, I think is a responsible statement for me in my last presentation before you as the Controller of Philadelphia.
Right. No, I understand that and I appreciate that. I was just trying to understand. It wasn't in the budget book. So, we didn't get -- We apparently didn't get it until either yesterday or today or possibly the tail end of last week.
It was not included in the book. I'm just trying to understand that.
Yeah. I would assume that is the reason, because of the ongoing statements.
And the difference between the proposed budget and what you're, I guess, in essence kind of re-submitting is the 132 versus 116?
Okay. All right. No problem. Let's go back to... You had a response to the Council President with regard to the N.T.I. dollars and the inspections. How many inspections were conducted under that contract for the N.T.I. program?
165? These are of demolished properties? Is that the issue?
Yeah. One of the biggest concerns I've had, as you know, is that the... I think it's been -- I think the cost of demolition has doubled. So...
One of the things -- The priorities that we've been looking at is the demolition costs, where the property is, where the dumping is being done, and a variety of other things. And we are -- And we'll issue a report effectively when I run out of money. And I don't know necessarily when I'm going 2349 Operating Budget - 4/5/05 to get any more money to continue the process as it moves forward.
Okay. What conclusion have you reached with regard to why the costs of demolition has doubled, based on your inspections?
Councilman, I could probably respond a little bit, although I just took control over that particular area of our office recently. I've been trying to get a handle on that same issue. And it seems like the fact that there were union restrictions, prevailing wage that didn't exist before, a number of other issues, including the fact that N.T.I. was originally designed to tear down a block of homes at the same time. Now that they're doing it on a gap tooth basis, it raised the cost of demolition. The original estimate was, I believe, $11,000 a house. It's now up to $22,000 a house. 2350 Operating Budget - 4/5/05
You made reference to the prevailing wage issue. Why would that be any different now than it was before? We've had prevailing wage requirements for a long time.
I will tell you, I don't think that, though I think N.T.I. in theory, if done properly and as utilized, the outstanding funds from the bond proceeds and sell off the vacant land that you demolish and then move forward and replenish is a wonderful concept. The problem is in running it on a day-to-day basis. And I think that some of the estimates of what the administration thought were going to be the costs were undervalued, in relationship to the reality they find themselves in. I would rather not comment in public until I have all the facts and figures so we can make an accurate presentation, but prices shouldn't double for anything.
Well, yeah. I mean, that's what we've been trying to 2351 Operating Budget - 4/5/05 understand to some extent. I mean, whatever rules were in place at the time N.T.I. started, I don't know that we've made any changes since the beginning of the program. So, the costs have been what the costs have been. But it does slightly defy at least one of the things that I recall from a fairly early economics course which is we've demolished more houses than ever before in any one year. So, it's been a tremendous amount of supply of these properties. I don't understand why the costs under that circumstance would go up and literally double. So, we've made no changes in law to affect what we do or how we do it or who has to pay what for what. We've had, as I mentioned, the prevailing wage law has been in place for some time. So, and we've done string demolitions and we've done individual properties, as they become imminently dangerous. 2352 Operating Budget - 4/5/05 I mean, is there anything that's come out of this inspection process, 165 properties that have been inspected, that would give you any indication as to why the price would double?
Nothing that I would like to say in the public forum at the present time. But I can tell you that if you look at the original estimates, that the reality that the administration found themselves in is different than the original estimates. And Mr. Radwanski mentioned, which I can opine on, is that in many cases when the estimates were created, they thought that they would be able to effectively demolish an entire block, when it is much more costly to pick and choose. So, in some cases of the 165 that we examined, there was better initial planning, so that you waited until five out of ten homes that were only separated by party walls, could be demolished at one time. It would have kept the cost down. 2353 Operating Budget - 4/5/05 I don't like -- As you know, I don't like commenting before an investigation is completed. But I think sometimes in theory, when something looks good in theory, unless you have a hands-on daily basis to make sure that money is not being used improperly, it does happen. But we'll be -- we'll be issuing a report soon that will go through a variety of...
I'm not going to go down that path for the moment. 165 demolition inspections. How many properties have been demolished so far?
Do we have any idea? I don't have that information available for this hearing.
Okay. Madam President, are we operating under the normal rules or the clock or... I have a few more questions, but I think the Councilman might have. Is your light on?
Actually, I was 2354 Operating Budget - 4/5/05 actually going to piggy-back as a part of a follow-up on Councilman Nutter's questions, as it relates to the N.T.I. demolition. So, I probably should wait until he finishes up that line of questioning.
With respects to the cost of demolition -- And I agree with you, Mr. Controller, that the estimates were probably better than the best case scenario early on in the process, understanding somewhat about dealing with that process.
When I saw the original estimates, I thought they were extremely, extremely optimistic. But I understand that there were a number of things that added to the costs, certainly not a hundred percent increase. 2355 Operating Budget - 4/5/05 But there were a number of things, as it related to the type of demolitions and the subsequent aftermath of the demolitions that I think is related to cost, such as the party wall treatment was different than we traditionally do.
In addition to which the actual land where the property was demolished, there's a different type of treatment for that land, where traditionally we'll essentially either knock that house down or remove the bricks. But more often than not, we knock the house down, and put the bricks in the hole and walk away from them. I understand now that there's a different type of fill put in the hole, clean fill, and subsequently there's a treatment to those vacant lots. More often than not, I believe it's soil.
So, there is a difference. But I don't think it should cost 2356 Operating Budget - 4/5/05 a 100 percent increase. But I know that there was some factors associated with that.
I think you could also add the fencing and the removal of asbestos.
Yeah. There was -- Which was required by law prior to the N.T.I. program being implemented. So, there are a number of things, as it relates to the pure demolition. The question is, should it increase it by 100 percent. Now, you know, your investigation will determine that. But there are some substantive issues, as at relates to why demolition costs more than it did prior to that. I just want to ask you a couple questions about your testimony, one, as it related to the City's recycling program in the police and fire emergency communication system. Let me ask you about the latter. Is this comparable to the Councilman Rizzo investigation on the communication systems, 2357 Operating Budget - 4/5/05 for lack of a better term?
I can't tell you, Councilman, what Councilman Rizzo is doing, with all due respect to Councilman Rizzo. I mean, we were asked to by the unions. And I felt that it was important to see what our process was, to require Motorola, which was actually acquired under Mayor Rendell, and move forward and look at comparable cities in relationship to their 9-1-1 communication system. And we are in the process of finalizing that audit, and then we'll publish that audit. And I think that the recycling audit which was --
Let me respond to that. The reason I asked that question about the communication systems, we yesterday, hopefully had our last public hearing on a series of public hearings about this issue. And there was actually substantial information provided to us at the public hearing, as it related to the cause and effects of those issues with Motorola, 2358 Operating Budget - 4/5/05 Verizon, and the Deputy Commissioner of Public Property, Mr. James. And I'm wondering if that information could either be helpful to you. And I know that you have to do your own investigation. But it was quite a bit of information that came out of those hearings. And you know, not to suggest that you shouldn't do your own investigation, but...
If there's information out there that assists you, I think we need to take advantage of.
Absolutely. I had present people at all those hearings. And we interview, obviously, members of MOCKS, as well as Deputy Commissioners that were involved in the procurement process, as well as the insulation process. And then for outside help we look at comparable cities that have had communication systems: Baltimore, Kansas City, and a variety of others, not only for police but 2359 Operating Budget - 4/5/05 for the Fire Department in somewhat comparable size. Each city has its own topography and its own population mixes. And that creates a little bit of a problem when you try to see what their system is, but just to look for a process as to see what kind of problems they've had and how they rectify those problems. But we have been in communication with all the members of the administration that are forthcoming, as well as the Firefighters Union and the F.O.P. of this City as well as others. And that report should be out in a few weeks. But I've always had people here at your hearings so that -- because that's valuable information in a public way.
Okay. Can you kind of give me a little more detail about the recycling program? First, the reason why you're investigating that; and second, what we're looking to determine.
My name is Albert Scaperotto. We had a request to look into the recycling program, and it was decided that we would look into it.
Where did the request come from? One of the advocacy groups. I'm not sure.
A number of advocacy groups came forward and wanted to know the process upon which the City was doing recycling. And I thought it's something I've never looked at for a number of years. So, we decided to do a performance audit on the recycling program.
The draft report has been sent to the Streets Department, and the exit conference on that report is scheduled for tomorrow. Usually within two weeks after the exit, we ask for the written response from 2361 Operating Budget - 4/5/05 the agency, and the report should be published shortly thereafter. But it looked at the current rate of recycling in the City and offered suggestions to improve that diversion rate.
Is there a criteria associated with the triggering of an investigation by your department? And you said an advocacy group requested that you investigate. Is there a certain --
I mean, I'm assuming that -- Everybody's asking for me to investigate everything. And that's not my job.
In the last couple years, if everything else fails, people ask me to send 10,000 employees in to look at something, which I don't have. But I've always tried to segregate some of the funds and some of the key auditors that when something topical comes up, that we would look at it. 2362 Operating Budget - 4/5/05 And if you would have asked me last year would I be looking at the communications system of the police and Fire Department, I wouldn't know. But it's a topical thing, and we were asked to involve. Advocacy groups from all over the City came, asked me look at the recycling program, which I've never looked at with any kind of depth. So, I just -- We thought it was something topical and something that was important to the City, and I assigned a few people to it. And the Streets Department's been very responsive because no one's really looked at it. So, we'll be issuing a joint release with them in a couple weeks.
No. It's based upon impact. It's based -- The financial impact, an impact on the City of Philadelphia, as well as, you know, the reality of how much funds we have available at any given point in 2363 Operating Budget - 4/5/05 time to see what we should be looking at. I usually do that in communication with a variety of people and in the government itself, so that, you know, it's not a blind side, and then move forward, depending upon what's topical, in any particular month or any particular week.
You're welcome. Councilman Nutter, do you have any further questions?
Yes, Madam Chair, just a couple. Mr. Controller, just kind of quickly back to the N.T.I. situation. Do you have any sense of -- Since, as you've articulated, maybe there were less of what are often referred to as string demolitions which are usually rather massive. And you can kind of bring in the largest equipment, wrecking balls and the like, which I assume must be a lot cheaper 2364 Operating Budget - 4/5/05 than the individual, what's often referred to as hand demolitions. Do you have a sense that so far because of this -- I don't know whether it's a change in strategy or a change from what was anticipated. Are there more people working on these demolitions? And is the cost of the actual demolition activity, the renting of equipment and the like, is that what's driving the cost or are there more people working and therefore higher payrolls --
Higher payrolls than may have been anticipated by the string demolitions, which I assume require more people because you have more hand-to-hand activity.
Just in general, and I haven't -- I don't -- I'm not prepared to 2365 Operating Budget - 4/5/05 answer your specific questions on N.T.I. today at a budget hearing. But I can only tell you in general that when N.T.I. was laid out, it was looked at in broad scope; that the government I think, and in a proper way, wanted to attack the problem on a regional area. So that when they wanted to demolish, they would demolish, say, ten homes at one particular time or five homes and a corner property, and then try to set up property that was contiguous to each other when, you know, development could occur because those properties were contiguous. I think what happened during the process is that you ended up demolishing homes that were not located next to each other, so that it was a party wall situation as well as an asbestos cleanup, which I don't think was anticipated, as far as the dollar amounts are concerned. There is more people involved because they're not using -- there's no 25 wrecking ball system because a lot of this is 2366 Operating Budget - 4/5/05 done in isolated circumstances throughout the City in a variety of the Councilmanic districts. But I don't have -- If you're asking me for specific numbers and indications, I didn't bring that here for the budget hearing.
I understand. Now, how many investigators do you have?
We have ten investigators that are paid for by the School District.
The relationship with the School District and the City Controller's Office was that -- I believe it was 30 years ago -- the School District would pay the City of Philadelphia for the Controller's Office coming in and doing a variety of audits. The money went to the General Fund, and then never --
Related to the 2367 Operating Budget - 4/5/05 School District.
Right. Money went to be recompensed for outlaid expenditures would go into the General Fund. The money never went back to the Controller's Office. So the School District, through agreement with the City of Philadelphia, said they would fund a certain amount of positions and paid for out of the School District. And those are where the investigators come from.
No. We have three investigators in the pre-audit. And the $75,000 that was given to me that's being held by the Managing Director's is for an outside company that we use, to be involved with the investigators that we do have.
Okay. But now, I mean, you also have investigators, for instance, in the past who look into issues 2368 Operating Budget - 4/5/05 involving residency and those kinds of issues.
Yeah. The ten that I mentioned, the School District, do residency. They do residency for the City so that there's no... The way... Historically it was set up that they would do residency investigations. And they're School District employees, so there would be no conflict that they be investigating City employees. And that was the theory 30 years ago.
Yes. Yes. It's a way of being recompensed for the amount of auditing activity that we do almost on a continuous basis in the basement of the School District headquarters.
Okay. All right. So, do they not even show up on -- They're not even on your budget.
Gotcha. How many investigations did they conduct in the 2369 Operating Budget - 4/5/05 last fiscal year?
Well, I don't just use them -- That's difficult to say. I don't have those numbers. But I don't -- I don't just use them for residency. I use them because they effectively act as plainclothes investigators. I use them for a variety of things. I use them when we investigate things in pre-audit. I use them in conjunction with post audit review, to go out and take photographs because they have photography equipment. So, I don't know exactly how many residency investigations they do. My priority has been to use them for pre-audit and post audit investigations in which they can acquire information. If you remember, we did an audit of the Rec Department and had visual aids of all the swimming pools that were dilapidated. They were the ones that took the films and did the investigations of, and took the pictures, and interviewed the witnesses. 2370 Operating Budget - 4/5/05
Well, even if it was just pre-audit and post audit, I mean, is there a general -- do you have a general number of how many investigations they would have conducted in the last fiscal year.
Last year they did approximately a little over 30 residency cases.
If I may respond, we 16 have resigned or terminated, and another 3. 19 have resigned or terminated. I'm sorry. 16 have resigned or 2371 Operating Budget - 4/5/05 terminated, are pending, pending 3 adjudication. And another 7 are inconclusive, and they're scheduled to be reinvestigated at some point.
There's probably at least ten that are in the -- what they call in the bank, which means that they're investigating them right now.
Well, there's different terminologies. I mean, it's about... you can say is 26. 20
I'm sorry, 21 Councilman. Three that are pending. In 22 those cases the investigation has been 23 completed, and they're in some state of 24 adjudication, in that they're waiting for an 25 administrative hearing within the department, 2372 Operating Budget - 4/5/05 an arbitration or a Civil Service Commission determination.
Okay. If you want to forward something later to the Chair... You gave me 30. You've accounted for have resigned and done whatever 8 they've done, 3 pending and 7 inconclusive. 9 It just adds up to 26. I'm just trying to 10 understand where the other 4 are. 11
Mr. 13 Controller, you can say whatever you want. 14 If it's 30, then I just want to know what 15 happened to the 30. I mean, it can be 16 whatever number you want it to be.
Okay. All right. There's been some discussion in the past about increasing the number of investigators for the Inspector General. Could you share with us in the course of this budget process your perspective on that? 2373 Operating Budget - 4/5/05
I've always been concerned that an Inspector General that is -- can be terminated at will, what they call an at-will employee, by the Mayor of Philadelphia, has the proper independence to investigate his own boss. And one of the important things about having an independently elected Controller, as well as the District Attorney that is not elected in the same municipal election as the members of Council and some of the row offices, as well as the Mayor, is that there is a level of independence that I think creates a bully pulpit and to the general public creates an opportunity for them to believe and should believe that whatever decisions are made by an independent Controller can be believed in relationship to an I.G. that works at will within the administration's central office. So, I am -- I have been concerned, as you know, for a number of months of the growing budgetary appropriations to the I.G.'s office as well as what the I.G. plans 2374 Operating Budget - 4/5/05 on doing, in relationship to investigations. I also believe, Councilman, that --
Well, is money better spent either giving it to the Inspector General or is it better spent over at the Controller's Office.
Well, I think just -- I think that it certainly is better spent in the Controller's Office because it's an independent branch of government that is separately elected. I also think that there is a cloud over the level of independence. If the I.G. attempts to do any kind of audit or any kind of statement, the fact that there was a lack of independence under accounting guidelines destroys the whole idea of third parties believing in the statements that are being made. And I'm not casting aspersions on the I.G. But the reality of -- You know, the reality of independence is that third parties have to believe what is being said, and it is very difficult for third parties to believe 2375 Operating Budget - 4/5/05 something that is being done by an at-will employee of the Mayor in an investigation of an administration that the Mayor and the I.G. are part of.
Okay. We received here in the Council monthly economic forecast reports by your office. We're again in the middle of the budget process. Toward its conclusion, I'm sure we will have a quite exciting discussion about continued either tax reform or tax reduction. Based on your analysis over the past few years and year to date, what is your position with regard to continuation of specifically Business Privilege Tax reductions?
I think they're absolutely essential. You know, as you well know, because you and I have been involved and so has Councilman Goode, who's not here, have been involved for a number of years as proponents of reducing the onerous tax burden, not only for residents that exist here, businesses that exist here, but an 2376 Operating Budget - 4/5/05 attempt to bring businesses to Philadelphia, that we have to have a long-term view that those are extremely important decision-making tools, when it comes to whether a company comes here or Scottsdale, Arizona or Phoenix or anywhere else. So, I think that we have to confine the explosion of tax liability in the City to attract new businesses here, and I think that that's a responsibility that we all have to face.
Okay. From a cost effectiveness standpoint, do you have any particular views on the issue of competitive bidding, with regard to the contracting process here in the City?