Certainly you realize during the year it fluctuates, and I will just give you a rolling total of 1.5 billion. It sometimes goes up to 17. Con cash goes probably between 3 and 6. So I would say approximately during the year $1 billion to 1.3 is probably always involved in some bond issue relationship.
So it's restricted to those institutions in terms of who can hold it?
Yeah, because they are based on past agreements that 88 3/1/06 - Whole - Bill 06003, etc. were in those bond issues.
That's a question that would be for the bond counsels when they put the deals together.
Last question: Based on conversation we have had so far, do you believe that U.S. Bank needs to be authorized by this Council to hold money out of the City treasury?
That's interesting that you say you would feel more comfortable because my position is that we actually cleaned up some things in December by authorizing Wachovia, which was not a City depository and there was money from the City treasury there, by authorizing the Bank of America, which was not a City depository, didn't have any money, but essentially was using Fleet status. 89 3/1/06 - Whole - Bill 06003, etc. I don't believe that you can just use a status of a predecessor institution to be authorized separately to receive City treasury money. I don't understand how -- I let it go before, but I don't understand how U.S. Bank can have money from the City treasury if this City Council does not authorize them to hold money from the City treasury. That's the Home Rule Charter.
Certainly you would understand if I were to give direction to the custodian to withdraw the funds and place them somewhere else, that they would be under a legal requirement not to take my direction because of those arrangements that are already in place and that they consider a legal document.
I'm asking 90 3/1/06 - Whole - Bill 06003, etc. you to explain that particular arrangement.
Because U.S. Bank bought the business and bought the contracts or agreements that were in place. So legally they became the entity that had control over those legal documents.
What's interesting is that there were some documents. I'm not sure they were legal. You are referring to them as legal documents. Does that mean that they are lawful? If under the City's Home Rule Charter the City Council has the sole authority to decide who can withhold money from the City treasury, then as far as I'm concerned, before any legal agreement can be made, we would have to authorize an institution, and any legal agreement is probably null and void if we have to authorize an institution. I would also counter we are probably not held to that bonding 91 3/1/06 - Whole - Bill 06003, etc. agreement.
Councilman, I would just add that the clarity of that thought was probably not considered when the bond issues were put together.
I'm pretty sure, which in my mind means that we are not restricted by that bond issue because that bond issue -- that bond agreement because that bond agreement is, in fact, not legal, particularly if it changes hands without us authorizing a new entity. Can you get a legal opinion on that and have it forwarded to the Council?
I will say I have to work with the finance director's office because the bonds are currently handled under the finance director, yes.
You're welcome. 92 3/1/06 - Whole - Bill 06003, etc. Are there any other questions of this witness? Thank you. This committee will stand in recess until 1:45. Thank you all very much. (Luncheon Recess.)
The committee is back in session. I would ask Mr. McPherson to announce who will next testify.
Good afternoon. Please identify yourself for the record and proceed.
Good afternoon, President Verna and members of City Council. I'm Nancy Kammerdeiner, Revenue Commissioner. With me this afternoon is Marlene Duley, Deputy Revenue Commissioner for the Water Revenue Bureau, and I have others in the audience who may be available to help 93 3/1/06 - Whole - Bill 06003, etc. answer questions should the need arise. We are pleased to be with you today to discuss the proposed fiscal '07 operating budget for the Department of Revenue. You have my written testimony, so I will try to hit some of the highlights and not go through it word for word.
But I would like to put on the record a few things about the amounts that we are requesting for fiscal '07. Our General Fund request for the department totals $17,702,237. This is an increase of $220,660 from the FY '06 estimated obligations. Most of this is for Class 100 where we are requesting $12,962,937. This will support 274 full-time and four part-time positions and provides for the 3 percent salary increase that has already been 94 3/1/06 - Whole - Bill 06003, etc. negotiated, increments in longevity payments that are due to our employees, and the estimated cost of lump sum payments for employees who will be retiring through DROP. We are requesting $3,943,014 in Class 200. This is an increase of 117,240 against estimated obligations for '06 and provides for the postal rate increase that took effect in January of this year. We are requesting $689,971 for Classes 300 and 400. This is a reduction of 150,000 from the estimated obligations in '06. S. Postal Service. That expenditure will take place in '06 in the General Fund and therefore is being eliminated as an 95 3/1/06 - Whole - Bill 06003, etc. expense for the General Fund in '07. I'll come back to that in a moment in reference to the waterfront because there is some additional cost there. The departments received three productivity bank loans and we have an allocation of $106,315 in Class 800 to repay the bank for those three loans, and information on the loans is included in the written testimony. Once again this year we are requesting $2 million in Class 200 for collection agency payments. As you know, our collection agency contracts are paid on a contingent fee basis and the funds will be expended only if collections have actually been made. In the waterfront we are requesting an appropriation totaling $20,707,875. This is a decrease of $2,405,296 from the estimated obligations for '06. Most of that again is in Class 100 where $11,400,870 will provide funding for 278 full-time and 10 96 3/1/06 - Whole - Bill 06003, etc. part-time positions, and it also covers the additional costs needed for employee increments, longevity, and DROP payments. We are requesting $7,458,055 in Class 200 and $1,845,950 in Classes 3 and 400. There is an increase in Classes 3 and 400 that would complete the upgrade of the mailing equipment to meet postal standards by the end of December of 2006. That's the shared cost that I referred to a moment ago in terms of General Fund. The waterfront piece of that will be funded in fiscal '07. We have had a number of things happening in the department in this past year. We have spent time working with other departments on the implementation of the electronic bill presentment and payment system in expanding its availability. This started in the fall of 2004 and through January we've grown to a point where we have had a high of 5,999 -- just short of 6,000 -- transactions in a given month in terms of 97 3/1/06 - Whole - Bill 06003, etc. credit card payments. We expect to see this service expand more and the numbers to increase as more people become familiar with its availability. You can pay real estate taxes on-line with a credit card now that is made possible by a service that we initiated a year ago that will let taxpayers view their real estate tax information on-line using either the account number or the property address, and that can be accessed from the City's Web site. I hasten to add that this is now the real estate tax due date time period. Yesterday was an extremely busy day in the department as the discount due date brought a lot of people in to pay in person. We encourage people to pay by mail and to take advantage of the credit card payment on-line, but we do have a lot of people who come and do stand in line in order to pay. The actual due date for the tax is at the end of this 98 3/1/06 - Whole - Bill 06003, etc. month now on March 30, and so we expect some continuing busy times during this month.
I mention in the formal testimony that we are getting a lot of payments through the automated clearinghouse. That continues to expand as more and more businesses pay on mostly wage tax through the ACH process. Let me skip down through here. We implemented two new taxes during this year, as you will well recall. This Council and the Mayor approved legislation at the end of last fiscal year for valet parking to expand the parking tax to include valet parking operators and also approved an outdoor advertising tax. We have been in the process of implementing both of those and working to enhance collections on them. Approximately $239,000 had been collected in the valet parking through January and about $700,000 collected for outdoor 99 3/1/06 - Whole - Bill 06003, etc. advertising by January.
Not at all. Through January the valet parking had brought in $239,000 and outdoor advertising approximately $700,000. We see with these, as we generally do with taxes that hadn't been collected before, that they are slow to start in terms of payments coming in as people become more familiar with their obligations. We have been in touch with every one of those who we know should have this kind of liability and we are starting the process now of going back to those who haven't been filing and verifying that they are in this business or not in this business so we know who actually has a liability going forward.
I was just curious to know how much the revenues have increased since Council adopted those two bills. 100 3/1/06 - Whole - Bill 06003, etc.
That's the amount we collected in essentially the first six months. Because the revenue, as you probably know, is collected by the operators of the valet parking operations or, in the case of the outdoor advertising, by those who own the signs and they pay that money over to us the following month, the collections from July came in August, and so the collections through January would only be for the first six months.
How do these figures compare to, say, last year at this time?
There were no collections at all last year at this time because these taxes didn't go into effect until July 1. So this is the first six-month period.
But because of a piece in the law, the parking 101 3/1/06 - Whole - Bill 06003, etc. operators' definition did not include valet parking. It only included those with a surface lot or a garage. That was the change that was made by Council in that ordinance so that we could expand and include the valet parking operators.
Part of the law supervising or overseeing valet parking operations is that the valet parkers had to show the City I believe a 7.5 or 7-year lease with a structured parking garage or a surface parking lot. I don't know why, if that's the case, it would not include them in the same category as the structured lot operators and owners and the surface lot operators because by virtue of the lease, which I don't know if any of them even have because most of the time you see them valet the car across the street to an illegal spot on Broad Street or somewhere else and not put them in a lot, 102 3/1/06 - Whole - Bill 06003, etc. I don't know why they wouldn't be part of that whole parking tax anyway?
There was actually a court case involving the parking operation at the Four Seasons Hotel that went all the way to the Pennsylvania Supreme Court that basically said that the only portion of the payment that you would make for parking your car with a valet operation at the hotel or any other similar establishment would be the amount of tax that was paid for the use of that parking garage or other parking facility under the lease. The additional amount that you would pay would not be subject to the parking tax. Basically what it meant was if they had an arrangement with the garage to pay $5 for your car to be there and you paid them $15, we would get tax on 5, not on the other 10. What this does, the amendment that you passed in the spring does, is let us tax the entire operation for the 103 3/1/06 - Whole - Bill 06003, etc. valet parking operator. And we have -- because we wanted to track how much came in from that and members of Council asked us to do that as well, we've established the valet parking revenue as separate from the parking tax collected by the garage and lot operators so that we can track it separately.
So it is not technically a parking tax, the initial tax?
We are just tracking them separately. It is all parking tax, but we're tracking that which we receive from valet parking operators separately to ensure that we account for it.
Okay. Thank you. Thank you, Madam President. 104 3/1/06 - Whole - Bill 06003, etc.
I think you can see the rest of my testimony in the formal written piece and it's probably more productive to turn to questions.
Fine. And we will give a copy of your testimony to the stenographer and it will be transcribed in full.
I just have a couple questions. On of your testimony you mention various initiatives that you have been undertaking to generate additional revenue collections. Could you give us a brief overview of these initiatives and the additional revenues you have collected and where they appear in the administration's revenue estimates?
The copy I'm 105 3/1/06 - Whole - Bill 06003, etc. looking at is paged differently, so I'm just trying to see where you are picking up. One of the things that we do on a regular and ongoing basis and have been putting particular emphasis on in the last couple years is match to IRS data. We are in an agreement with the Internal Revenue Service to receive federal information about all of those who file 12 returns from the Philadelphia zip codes, any zip code that begins with 191, so that would be both commercial and individual returns that are filed with the IRS. We match that information to the information we have on file for our taxes to try and see if there are people who are paying federal taxes but not paying us or who are underreporting to us in terms of what they are paying to the Federal Government. Our tax discovery unit generated about $5 million in assessments 106 3/1/06 - Whole - Bill 06003, etc. for fiscal '05. That's up from just 1.6 million in '04. So you can see that that concentration on that activity did yield a substantial increase in assessments. I reference assessments because we identify what might be out there. We give an assessment to the taxpayer. We get them to file additional returns to verify how much they might have as a liability to us, and because we are coming from fairly solid ground in terms of what they actually might have as a liability, we have a very high compliance rate and a very high payment rate, in the 90 percent to a hundred percent range, on many of these assessments. So that generally is something that brings in a fair amount of additional revenue. And we also then add these people to our tax rolls going forward and have the opportunity to collect from taxpayers who might not have been paying in some prior years. So I think that's the one that 107 3/1/06 - Whole - Bill 06003, etc. is probably the easiest to explain and most straightforward. The dollar amounts on the revenue forecast really are rolled into the various taxes. They don't show up as separate or special line items because what we are doing is collecting additional wage tax, business privilege tax, school income tax, and so we're factoring that in in terms of the revenue estimates for those particular taxes. We also have continued to work with the Law Department on implementing several technology initiatives. We're making things available within our tax system, tips that would let the Law Department enter payment agreements in our system and have them tracked electronically instead of manually, which is what they do today. The benefit of that is just starting to happen and really I would have difficulty in identifying the exact dollar amounts because the initial 108 3/1/06 - Whole - Bill 06003, etc. collections are with the Law Department. We have also automated the transfer of information between the City, both Law and Revenue, and the Bankruptcy Court in order to more accurately and clearly identify which receivables we can collect on and which ones we cannot under a bankruptcy situation. That won't necessarily bring in more money, at least in the first instance, but it will ensure we are in compliance with federal law and bankruptcy and not dunning for collection people who have bankruptcy protection. But it will also later on yield better revenue because we will understand who is coming off bankruptcy and might be available and eligible for collection again. So those are a couple of things that we have been working on that, as much as anything, improve our efficiency and effectiveness but also then result in additional revenue.
I 109 3/1/06 - Whole - Bill 06003, etc. just have a couple of questions. If you have already answered them, I was distracted and I don't know whether you have addressed it, but on of your testimony you state that the primary objective of the Revenue Department is to increase revenue collections, to streamline the tax return and payment processes, et cetera. Can you tell us how you propose to increase collections, the amount of the additional revenues you are projecting to collect, and where are these additional collections reflected in the revenue estimates?
Most of what we are doing right now is to improve our database and the information that we have about who is liable for tax and is not paying or is underpaying. That comes back to the increased effort and activity with federal matching, but it also involves better addresses. We do a lot of work with return mail. We're working 110 3/1/06 - Whole - Bill 06003, etc. on accessing some information from the Post Office that would improve our ability to quickly find out where people go when they move so that we can get bills to them in a timely way. We know that timely presentation of a bill is going to result in more likelihood of payment than if a long period of time elapses between when the liability was incurred and we reached them. That's often a problem when someone moves, changes address, and we don't know where to reach them. We are doing things like that to assist us in getting to people in a timely way and making sure we bring the money in. In terms of exact dollar values, I don't have specific amounts for you to identify how much this will increase our collections. We're really trying to make sure that every dollar we can get comes in. These are included in our regular estimates for each tax 111 3/1/06 - Whole - Bill 06003, etc. because it's a part of the basic forecast on how we will do on our collections.
Can you give us any idea -- I don't know if you would have this information on the top of your head, but what is the delinquency for real estate taxes for instance?
I don't have that on the top of my head. I can get the exact number for you, but we work with the Law Department on that.
Actually, no, I don't off the top of my head. I know that substantial portion of the delinquent accounts have been referred by the Law Department to an outside collection agent and that is increasing the payment rate that we have on delinquent real estate tax. I don't keep the numbers in my head. I'm sorry. But I will get that for you. 112 3/1/06 - Whole - Bill 06003, etc.
On we see no growth in prior collections, so I don't know what we are doing to try to --
Let me get that out. You are looking specifically at the real estate tax?
I was going to say there is an increase in the prior year's collections from one year to the other, but I see in this document -- this is prepared in the budget here. I'm not sure. I will have to check and see how this came -- how they developed these figures. I know we always are conservative. That is something you hear from us all the time about our estimates, 113 3/1/06 - Whole - Bill 06003, etc. but I would have expected some growth there, and I will have to look into that.
Is somebody from Finance here that could explain? You know, it seems that -- I don't see us moving forward with the collection. If you look at the figures on , I think we are moving backward rather than forward with the collection of prior year taxes.
Diane, I want you to look at priors. And the original budget had 48 million and the estimate was 38.
Yes. I would say we budgeted aggressively for '06. The receipts are not coming in quite at that level, so we felt it was more appropriate to budget the '07 amount more at the level of our experience for '06. 114 3/1/06 - Whole - Bill 06003, etc.
What made you think we could afford to be a little more aggressive?
We had a spike in '05 because of the contract with Lineburner, which was the vendor for the oldest delinquent accounts.
If we had a spike, my dear, it didn't show in the --
But overall it doesn't really show. We could get you some detail on that.
Councilman Clarke, your light was on. Did you want to be recognized?
Excuse me. Before I recognize you, I don't think that's an answer at all. I 115 3/1/06 - Whole - Bill 06003, etc. really don't. Councilman Clarke.
Madam President, do you want me to ask her the same question?
Please. Maybe you can get some clarification that I didn't.
I probably won't get an answer either. Good afternoon. I had a couple questions, one with respect to your earlier testimony on the parking tax and the billboard tax. What were our projected revenues for this fiscal year and for the five-year plan for both of those taxes?
I'm hesitating because I don't want to misstate what the collection estimates were. I think one was million and the other -- 2 million on the parking tax associated with valet parking and 4 million on the billboard or outdoor 116 3/1/06 - Whole - Bill 06003, etc. advertising tax. Those were the original estimates.
We are behind that. I think we are showing some increases in those collections, but at the half year point we are definitely very much behind that. I remember when the vehicle rental tax was first implemented we had estimates on what that would bring in and the first year lagged behind but by the second year we were getting very close to what those estimates were and have continued to be close to those estimates on an ongoing basis. So I think part of that was an optimism about how quickly we could bring this on and have compliance from all of 117 3/1/06 - Whole - Bill 06003, etc. those who were out there. Plus these estimates were based on guesses as to what the activity level would be. Outdoor advertising, for example, we know -- as we work with some of the people in the field, we are learning more about how they do business, and a lot of the ads were already placed and they had year-long contracts. We are now getting to the point in time when some of those contracts are being replaced or renewed, and I would expect if that holds true that we will see an increase in revenue, because the revenue is only collected at the time the transaction takes place -- the tax rather is only collected when the transaction takes place.
Well, I'm a little concerned because, one, these estimates seem to be overly optimistic given what we are taking insofar to date; and, two, at the time of the implementation of both of these taxes we were told that this was needed to allow 118 3/1/06 - Whole - Bill 06003, etc. us to continue to sustain certain levels of services. You know, we were talking about closing fire stations --
-- and redeployment issues and other issues as it relates to other City services, rec centers. We believed at the time we took the vote that this was essentially a budget initiative that will allow us to maintain those services. If our collections continue to come in extremely less than what we had anticipated, how are we going to resolve this? Are we going to utilize the surplus in this fiscal year and hope that we have additional surpluses in out years?
That's a question I can't answer, but we will continue to work to bring those collections up to the level of those estimates and I would say it will take probably two years of collection to get to that point. The estimates for the 119 3/1/06 - Whole - Bill 06003, etc. first year were probably a bit more optimistic than they should have been.
The question was in reference to the services that were to be provided as a result of bridging the gap between those two types of taxes and if they don't reach the same level of activity as the estimates, what will happen in terms of the services. Am I restating that properly, Councilman?
Then we will all have to pay attention. 120 3/1/06 - Whole - Bill 06003, etc.
The question centered around the fact that our estimates -- well, everyone's estimate, your estimates, ours estimates, as related to the revenue associated with the implementation of the two taxes, the parking tax, the valet parking tax, and the billboard tax, one, Miss Kammerdeiner said it would be between 6 and 7 million and we are woefully short of that number. I'm concerned that if we don't reach that estimated level of revenue that we will be here next year possibly talking about an additional budget shortfall based on our belief at the time when we voted for this that this money would ensure that we wouldn't have service levels cut and rec centers and fire departments. So if that money does not come in, where does that leave us as it relates to our ability to fill that budget gap in out years and this year? 121 3/1/06 - Whole - Bill 06003, etc.
I think part of the problem with the receipts this year so far is just the new tax effect and that they should be coming in more strongly. Some difficulty on the outdoor advertising side might result from the fact that there are ongoing discussions and lawsuits from the industry, but we don't anticipate that we will have to cut services as a result of that because some of the other taxes are coming in strongly and we should on a net basis be able to sustain the services.
So we believe that even if we don't reach the 6 or $7 million level, the increase in revenue from other taxes will more than --
Yes, right, because, you know, they are not like earmarked exactly for those services. They just went into the General Fund generally.
I understand. It is just last year we were 122 3/1/06 - Whole - Bill 06003, etc. saying that we didn't do this. That rec center was going to close and we were under the belief at that time -- I think all of us, even the administration, were under the belief that the numbers were going to be really tight.
And we realized a relatively substantial surplus. And we suspect that some of the taxes associated with that surplus will continue in out years so this won't affect the fact that this is coming in --
-- much lower than anticipated. Okay. Another part of that, you had mentioned -- I was actually going to ask that question about litigation surrounding the billboard tax. I understand that there is either discussion of litigation or current litigation. Where are we at with that? 123 3/1/06 - Whole - Bill 06003, etc.
I would have to check with the Law Department for the current status on it, but I know that several of the billboard or outdoor advertising companies filed suit against the City on the collection of that tax. They attempted to have an injunction to prevent us from collecting that. That was denied by the Court. The suit itself is making its way through the court with hearings and the regular discovery and presentment process. I'm not certain of exactly where it is, but it has a way to go before it actually is heard in court and any final decision is made on it. In the meantime we are collecting and we are attempting to collect from all of the companies including those who are a party to the suit.
The ones that are a party to the suit, are they the larger billboard companies?
I know at 124 3/1/06 - Whole - Bill 06003, etc. least one of the larger ones is a part of the suit. I'm not sure if all of the large ones are, but they cover probably the majority of the industry.
Are we collecting taxes from any of the participants in the lawsuit or are these --
Are we collecting taxes from any of the companies that are a party to the lawsuit?
Yes, we are. And for any that we might not be at this point, they are among the ones we would be pursuing. We are not making any distinction between those who are a party to the suit and those who are not, and my staff is in the process of following up with the ones that we identified at the outset and registered, and to the extent that they are not already filing, we are 125 3/1/06 - Whole - Bill 06003, etc. working with them to find out whether it is they don't have any business to file 4 on or if they need to play some catchup in terms of some months that they have been nonfilers. So we are pursuing that. There aren't that many of them. It's a small universe in terms of the number of payers.
Has there been discussion already with regard to the on-line payment service you have implemented in your department as part of these proceedings, this hearing, today?
We won't 126 3/1/06 - Whole - Bill 06003, etc. repeat that. Let's move to my favorite topic, New Start BPT Bill. First of all, tell me, how long have you been in revenue?
That period of time. I came to the department as the commissioner. I was with the City before but not in revenue. In fact, it is almost 11 years.
With that said, please give me an update on where that bill is. We know that that moved in 2001 or 2, whenever. The bottom line is last year you shared with us that there was a need to get the internal process in your office up and running. We are 22 months later. So I'm curious to know 23 where are you with the implementation and 24 execution of this new legislation.
That went 127 3/1/06 - Whole - Bill 06003, etc. into effect almost immediately after the legislation was approved. We no longer have a separate new start provision. All businesses pay on the retrospective basis instead of paying on a going-forward basis. The tax returns that are due on April of this year are for 2005. So 9 they are filing on a retrospective basis. 10 Under the old legislation the returns due 11 on April 15, 2006 would have been for tax 12 year 2006. They are filing on a 13 retrospective basis and have been since 14 2002. 15
I would respectfully correct the record. Last year we had extended discussion and letters were exchanged between your office and my office and the former City Controller Jonathan Seidel's office on why the delay in making this new issue real.
I think the piece that you are referring to is the availability of an installment payment 128 3/1/06 - Whole - Bill 06003, etc. arrangement for either all BPT payers or for new start payers. We had originally set this up in order to avoid having a problem of revenue neutrality in the fiscal year with an estimated payment for the next fiscal year being paid by all taxpayers. The thing that we have wanted to explore, but have not yet been able to implement, is an ability to pay on a quarterly basis instead of paying in one payment.
We have not changed the way it has been established. The one thing I would like to do, but with so many things that are going on we have not been able to do, is to provide for estimated payments in quarterly installments only for those who are new starts, that are starting a new business, to let them pay that first year tax amount on April 15 and then in installments afterwards pay the estimated 129 3/1/06 - Whole - Bill 06003, etc. payment for the new year, but it's something that with so many other things that were happening with other taxes we haven't been able too spend the time on.
Would the investment of the time, which does get scarce, be beneficial when you look at the yield on the back end with the revenues generated from the institution of that practice as you just defined it?
We already have the effect of that because now someone goes out of business in a given year, they still have to file in their last year in business. That has been in effect since the 2002 tax year.
So that everything regarding this bill has been fully executed?
Okay. There was some discussion on dealing with considerable problems handling incoming calls. Knowing that a 130 3/1/06 - Whole - Bill 06003, etc. number of the departments had to work smarter, what kind of efficiencies have you put in place that deal with that problem?
We already had an efficient phone system that identifies the calls, provides for queuing of calls. Our problem is that you still need people at the end of the line to pick it up and talk to the customer, the taxpayer, and get the information, look up their account and resolve the issues. So in this case we have the efficient system. We need the bodies in order to make use of that system. We have a much reduced work force, but we have had approval to add additional staff. We are in the process of doing that. We have done that to some extent. There is a long training period. On the Water revenue side that training period is at least two months and on the tax side, because of multiple taxes, it can 131 3/1/06 - Whole - Bill 06003, etc. be as much as two years before someone is really knowledgeable enough to be truly proficient. And so bringing on new staff helps, but it doesn't solve the problem in the first instance because until you are really proficient you are slower at answering a call, you are slower at answering the questions that are raised. So we are heading in that direction, but it is still a situation where you need to have people answering the calls or you can't effectively bring down your call answer rate and can't have a short talk time, which is another thing that makes it more efficient in terms of answering phones. The more proficient someone is --
How many bodies do we need to efficiently operate this system? Has there been approval to hire? Have people been 132 3/1/06 - Whole - Bill 06003, etc. trained? Give us some idea, please.
We have had approvals to fill a number of positions. Our problem is that we have as many people leaving as a result of DROP or promotions to other departments. Most of these positions are maybe not entry level, but they are fairly low-level positions, and so our staff will take promotional exams, and if there is an opportunity somewhere else, they often will move there. So it's a twofold problem. We get approval, but we lose people before we get the new people trained and on board. So it's a never-ending process. In terms of numbers, I really would need to defer to Marlene Duley in terms of Water revenue and my deputy, Jim Hailey, in terms of tax revenue. We could provide that now or provide something in writing to you in terms of the numbers.
If 133 3/1/06 - Whole - Bill 06003, etc. you are setting up all of the necessary equipment and we need bodies to operate it, what are we doing?
We had sufficient staff. It is just we have lost so many people.
I don't think it was a secret, if you knew they were under DROP, that we would not have replaced them and trained them.
We did have constraints for a period of time. Because of budget constraints, we were not permitted to fill positions for several years in a time period that I would have liked to. We now have that authority, but it is very difficult to move quickly enough because we were so far behind that it takes a while to get it up to strength. We are working at it 134 3/1/06 - Whole - Bill 06003, etc. diligently. I think you can see differences, particularly in Water revenue, on those numbers. We are not where we need to be, but we are doing a lot better than we were even six months ago in terms of answering calls.
We are not quite there because people leave before we get to the full complement. But we are working at it. I don't know how else to say it. Because each time we think we are there, someone else announces that they are going to be leaving.
They are going to be leaving, but you have four years, if it's the DROP program.
We have a number of people leave after two. We think we have four years and they will come in and say, "I want to leave in two weeks, not two years." So it's a combination. And some of the people are 135 3/1/06 - Whole - Bill 06003, etc. taking promotions to other departments. It is not all DROP, but the effect combined is a dramatic one.
I think it's false economy. If we don't employ people to answer the phones, give the necessary information --
I couldn't agree with you more and was making that argument over a period of time, and because of overall budget constraints, we weren't given the opportunity, and more recently we have been given that opportunity and we are trying to follow through on it.
I would appreciate something in writing from you, please.
Thank you. Councilwoman, I'm sorry. Thank you for your time.
It is 136 3/1/06 - Whole - Bill 06003, etc. quite all right. It helps me as well, Madam President. That's it.
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam President. Commissioner Kammerdeiner, we had a brief conversation about an issue that I have done a little more research on, the ability for taxpayers and other people, visitors, whatever, to be able to pay their tax bill and other fees and fines with the use of a credit card.
I have done some research, and many of the major companies, for example, Allstate Insurance and others, find it very beneficial because they get their money, and when that transaction occurs, it goes right into their bank account. And I 137 3/1/06 - Whole - Bill 06003, etc. know that we charge the fee to offset the fees that the credit card companies charge. I hope we can get to the point -- because I did check. Other governments do not charge because they find it is a benefit. They get their money. And if there is a problem with payment, the person has to deal with the credit card company, but the government or the utility or the insurance company has received their money. And I know that we charge I think it was 3 percent and I had a constituent call just this week and complain the fact that PGW charged $4 I think for a credit card transaction. I think it was just a flat fee. I wasn't sure whether there was a percentage there. I think we ought to really seriously look at that because if we are having problems with collections in certain areas, that we get our money.
I agree that there are lots of instances where having 138 3/1/06 - Whole - Bill 06003, etc. the City absorb those fees could be productive. I think if you look at a number of governments you will find the IRS does charge a convenience fee that is passed onto the taxpayer. Most of the states charge a convenience fee that they pass onto the taxpayer instead of absorbing it internally, but there are some services not just -- and with that I'm referring to taxes. And, incidentally, taxes you can have a percentage, but with other services the credit card company regulations require that you establish a fee based on the dollar value of that transaction and the frequency volume of that transaction, and so there are different kinds of fees for different types of services depending upon what the actual cost will be. So you will find variation over different services with that. I think you find that most of the state governments will be charging fees for taxes and things that they feel 139 3/1/06 - Whole - Bill 06003, etc. that the taxpayer will have other opportunities or have other obligations to pay. When they are dealing with something that they really find it's cost efficient to have everything coming in with the electronic file that they get from the credit card company, they absorb the cost. I have read about the State of Arizona doing that with motor vehicle licenses. They offered the credit card option with a fee and had very little activity with it. When they did away with the fee, something like 50 percent of their residents started to use renewal on-line for their motor vehicle licenses. We're looking at it in a couple of places. One thing that we are looking at right now in terms of not charging the fee is with water shutoff crews. They go to someone's home and check to see if they can get a payment instead of shutting off the water. We want those people to pay and we want them to pay 140 3/1/06 - Whole - Bill 06003, etc. with a credit card where it is more likely that we will actually get our money than a check that might be a bank return item and have additional costs that will occur. So we have a pilot program that the Water Department is going to be starting soon where they are accepting credit cards at the door. They have handheld devices to be able to do that. And we're considering not having the credit card fee paid by the consumer on that, that we would absorb it, because we will reduce our internal operating costs for doing that. So that will be the first foray we will have into that area, and we will start to look at it more and more in terms of cost effectiveness.
Commissioner, just a curiosity question. When you deduct your taxes, do you have to back the fee out, or can the fee for the credit care be included in the cost, 141 3/1/06 - Whole - Bill 06003, etc. in the total amount of the tax paid?
You mean in terms of a federal deduction? I think you can only deal with the tax itself. I am not an expert on federal taxes, so I'm not certain.
As far as I know, it is only the tax itself that you have the opportunity deduct.
It is somewhere between there and 2-1/2. We have had to change it based on what the credit card companies have been charging us. It's not our fee. It's the credit card servicing company's fee, and so it is established based on their -- 142 3/1/06 - Whole - Bill 06003, etc.
So what I'm hearing is you are looking at it and the first step, the little step, will be --
We would rather collect money. And like you said, I think in most cases a credit card is a pretty safe bet to avoid a --
-- dig-up, to avoid a shutoff, and I think that's a good application and maybe we can move on from there because I had a lot of folks tell me, especially with these airline point junkies, that they want to use the credit card for everything humanly possible.
That person is using it as a convenience and it benefits them, and that's a case where it is not perhaps as much benefit to us. In the case of someone who simply does not 143 3/1/06 - Whole - Bill 06003, etc. have the cash and is using the credit card in order to avoid having a problem like a water shutoff, then it is something that we really want them to do in order to save us money.
Commissioner, do you have a feel for how many people take advantage of the discount February 28 date?
If you were over at our offices yesterday, you would see it is a large number of people who come into our offices in order to pay, and in the next week we will get the volume of mail. It is a very, very high percentage. I could actually get numbers on that from prior years. But it is a very high percentage. Plus all of the mortgage companies that have escrow accounts take advantage of the discount for their customers, and so probably as much as two-thirds of the money that comes in comes in by the 28th because you get your 144 3/1/06 - Whole - Bill 06003, etc. high volume dollars with your mortgage escrow payments, and yesterday we had never-ending lines, actually the last week, but particularly yesterday with high volumes of people coming in to pay in the offices because they were close to the deadline and I guess they didn't trust the postmark. But we do accept the postmark and for the next week we will probably be -- I can't give you the exact day, but once we see we are no longer getting mail with a February 28 postmark date on it, then we will switch over, but we will accept it and honor it as of February 28.
Thank you and thank you for always being available to help.
Are there any other questions from members of the committee? Seeing none, thank you very much, both of you. 145 3/1/06 - Whole - Bill 06003, etc.
I was going to ask you if you would abbreviate it. We will give a copy of it to the stenographer and it will be transcribed in full. So may I ask that you identify yourself for the record and proceed.
I'm Carl Coin, executive director of the Sinking Fund Commission, and I'm here to testify on behalf of the Sinking Fund Commission on fiscal 2007 operating budget requests. Shall I just read the whole thing? 146 3/1/06 - Whole - Bill 06003, etc.
No; I'm asking if you would be kind enough to abbreviate your testimony. We will give a copy of it to the stenographer and she will transcribe it in full.
Okay. Well, the total amount all funds for fiscal '07 comes to 482.6 million. The General Fund portion of this totals 109.3 million, which includes 94.1 million for capital lease payments and 105.2 million for debt service and other debt-related expenditures. The request in Classes 701 and 702 totals 83.8 million and provides for the General Fund's portion of the interest and principal payments on the City's general obligation bonds. These two classes combined reflect an increase of 18.3 million from Fiscal Year '06 estimated obligations mostly due to provisions for a new general obligation bond debt issue and overall increase in the interest rates. 147 3/1/06 - Whole - Bill 06003, etc. In order to meet the City's annual temporary imbalance between the payments of obligations at the beginning of the fiscal year and receipts of taxes and other revenues early in the calendar year, it is expected that the City will issue tax revenue anticipation notes early in July 2006. These notes will mature prior to June 30, 2007. The request in Class 703 of 17.6 million provides for payment of interest at a rate of approximately 5-1/2 percent on these short-term loans, estimated to be in the amount of 310 million. The Water fund. The Sinking Fund Commission's request from the Water Fund for Fiscal 2007 totals 178 million, all in Class 700. This represents 7.2 million increase in the Water Fund request from the fiscal '06 budget. This increase is due to new revenue bond issues made in 2005. The total amount of this borrowing was 336 million. Aviation fund. The commission 148 3/1/06 - Whole - Bill 06003, etc. request from the Aviation Fund for Fiscal 2007, 99.5 million, all Class 700, is to provide for payments of regularly scheduled airport revenue bonds. The increase of 9.5 million over Fiscal 2006 estimate is due to provisions for a year's debt service on a new airport borrowing in 2005 to fund improvements at the airport. The total amount of this borrowing is 355.5 million. This concludes the written portion of my testimony. I will be glad to answer any questions the Council may have.
For your first time testifying you did very well. I just have a question or two. Can you detail for us the proposed borrowings that have been included in your proposed 2007 budget and the estimated payments associated with these borrowings?
You're talking about 149 3/1/06 - Whole - Bill 06003, etc. the new issues now?
I'm talking about the borrowings that are the new issues. I think that is a new issue. Are there several new borrowings?
There is a new issue that was going to be worked on in March, I believe, for 217 million. I only have in my budget for 200 million because back in November, December --
And there is also a provision for the 150 million for the commercial corridor, I believe that's what they are calling it.
And how about Trans? 150 3/1/06 - Whole - Bill 06003, etc.
So we have the three that you have spoken about or have mentioned. Can you tell us the estimated payments associated with these borrowings?
On the commercial corridor there is an $8 million interest payment for the first year, and for the new issue there is a $3 million principal payment and an $11 million interest payment.