Any other 18 questions of the Managing Director? 19 (No response.) 20
At this time, the Chair recognizes Councilwoman Tasco.
I have 230 03/31/04 - FISCAL STABILITY - RES. 040276 questions for the Commerce Department. Ms. Wilkerson, maybe I didn't hear you correctly, did you tell me that $125 million is for infrastructure and it would be controlled by PIDC, or you didn't know who it would but they would tell me what it was going to be used for?
What I said was the fund was infrastructure and capital costs, that there is no program in place yet that budgets out all those dollars nor is there in place a funding mechanism for committing dollars to specific projects. In terms of eligible activities, I've committed to ask bond counsel to generate a memo for Council that talks about where the funds come from, what the constraints are on the use of funds.
Ms. Naidoff, in terms of the economic summit, will you be the initiator of that?
So when do you 231 03/31/04 - FISCAL STABILITY - RES. 040276 envision that is happening?
The Mayor has asked me to try to do that before the end of June.
To try to develop economic strategies that will guide the City in the growth agenda that he's laid out.
Is that just for the entire City or a limited area of the City?
I think a part of the summit will be that we'll be trying to gather data from people who have been in the economic development arena as to how they believe the best investments can occur as we go forward. The Mayor has laid out the River City strategy, but we have some way to go before we have the whole 500 million in hand, and I think there's time to do some good, creative, 232 03/31/04 - FISCAL STABILITY - RES. 040276 thoughtful planning about that; and that's what we intend to start with, the summit process.
So who do you envision to be a part of the discussion?
Our goal is to have the broadest possible spectrum of perspectives there, and one of things that we're going to do is put together a Planning Commission that will help to identify all of the stakeholders who ought to be represented.
And how large will the Planning Committee be? And who do you envision being on the Planning Committee?
I think it will probably be about a dozen members. And I'm talking to the Mayor and to Ms. Wilkerson right now about how we will constitute that.
Aside from the economic stimulus -- and I guess we'll get into this when you come before us with your department's testimony. We would like to talk to you about neighborhood economic development. Is that going to be -- you said 233 03/31/04 - FISCAL STABILITY - RES. 040276 City-wide, but what is your focus on neighborhood economic development?
For you in terms of new Commerce Director, what do you see in the future for neighborhood economic development?
Neighborhood economic development has obviously been a strong part of what the Department has been doing for a long while, what the whole City has been doing, and we will build on that. But I think one of the things we're trying to do now is to develop some overarching strategies. One of the things that I think we're all concerned about is whether all of the pieces that we've put in place fit together neatly, whether there's a rational array of projects and investments that we're making. And one of the objectives is to bring all of the people together who have been working on this and get their ideas about whether it's been knit together properly and what kinds of 234 03/31/04 - FISCAL STABILITY - RES. 040276 things we need to do to leverage the money that's been invested so that as we go forward, we take maximum advantage of that.
Do you envision including the District Councilmembers in your discussion?
I think what we were talking about is the Planning Committee would be a small group of people who have a good idea of who in the community at-large represents the various constituencies. But as far as the summit itself, we envision probably a series of meetings leading up to the summit meeting that would be organized both on an economic cluster basis and a geographic basis so that we'd be getting input from Councilpeople on both sides, both in terms of specific interests you may have in an economic cluster but, of course, in your geographic areas.
Well, the plan 235 03/31/04 - FISCAL STABILITY - RES. 040276 calls for $500 million for the stimulus. What happens if, as we go through this discussion, you come out with a higher -- the budget would be a higher figure.
I think that, as in any exercise like this, there's always a wish list of things that people would like to do. What we hope will come out of it is --
Could be trillions of dollars, but I think that the goal is to try to develop a list of priorities. And as I said before, the objective is to see what we can leverage about what has been done and make sure that as we go forward we have a set of priorities so that we can measure specific projects against a set of stated objectives that we all have agreed on.
So we pass this budget and the Five-Year Plan, we still won't have an idea of where the $500 million will be coming from and what it will be used for? We won't have a plan by the time the budget is 236 03/31/04 - FISCAL STABILITY - RES. 040276 passed?
At the time the budget is passed, no. We will have the plan, hopefully, by sometime next fall.
Thank you. Do we have any other questions of the Commerce Director?
I have one other question for you, Joyce. In the Philadelphia Forward letter I received, they raised the issue that when they put forth their tax reform plan, some of the recommendations they made were to fund the cuts that they also recommended, but it seems that the Mayor has taken some of the funding pieces from the Tax Reform Commission to use in this year's budget. Does that mean that there is no commitment to the tax reform package, as presented?
The Administration, as you can tell from our Five-Year Plan, did not adopt the entire Tax Reform Commission 237 03/31/04 - FISCAL STABILITY - RES. 040276 proposal. We were confronted with a proposal that I think would have cost about $330 million over the course of the Five-Year Plan. That would have been superimposed on a $600 million challenge in the Five-Year Plan. We're unable to do both at the same time. And so we have used revenue-generating initiatives, some identified in the Tax Reform Commission, to help close the gap on this budget. We have tried to use things like the increase in the parking tax and the benefit that you get from the change in the date for the wage tax to really reach in order to accomplish the single factor apportionment. So you're right, we did pick some aspects of the Reform Commission report and adopt them. Others, we rejected. And we have used some of the revenue-generating initiatives simply to keep the City afloat.
Thank you. Are there any other questions of the witnesses at the table? 238 03/31/04 - FISCAL STABILITY - RES. 040276
From time to time there have been questions about the naval yard. I keep bringing Mr. Longstreth over.
In the meantime, I know Ms. Kahn had her coat and she was ready to leave and I think we stopped her. Debra Kahn, do you mind coming to the witness table. I know you were ready to leave. I believe you were supposed to -- you had agreed to provide us with some information before the end of the day regarding the scholarships.
Yes. I contacted the School District, and of their $6 million commitment, they are budgeting $3 million of that as federal funds.
So 3 million will be from the federal government and the other 3 million will be from the School District?
They are looking at a variety of fund-raising initiatives. And again, if we needed to get more information on that, I'm sure that they would provide it to make up the balance, as needed. 239 03/31/04 - FISCAL STABILITY - RES. 040276
They're in the midst of doing their budget right now, so I think that certainly we could either get that information before that or when they come in for their own budget hearing. They have made the commitment, and I anticipate that they expect to honor the commitment.
Thank you, Madam President, just a follow-up. So is it safe to say of the million that is left of the million the School District has pledged that the School District may not necessarily be coming out of their budget but they're committed to 3 million in some way, shape, or form.
That's right. And I 240 03/31/04 - FISCAL STABILITY - RES. 040276 think that their first preference might be for certain -- they raise funds, for example, for a variety of purposes. And so I think that they would be looking to generate some contributions for this purpose or, again, if necessary, they could look at their regular operating budget.
I guess playing devil's advocate, let's assume they fall short of the 3 million, they meaning the District. Is it in their budget, are they prepared to make up the balance? I mean, that's kind of like, you know, you're flying with the idea and somebody's going to have to have that and --
Our assumption is, and they have never given me any reason to indicate otherwise, that if the need is there that they will honor their commitment.
And the 4 million from the City is from the General Fund?
Thank you. 241 03/31/04 - FISCAL STABILITY - RES. 040276
I think it was made eminently clear this morning how Councilmembers feel about this issue. And I would strongly, strongly urge that you hear the concerns that have been expressed. And I think before the next public hearings I think we need to know exactly where we are in this issue.
I appreciate that, President Verna. In the first instance, let me say we really appreciate all the support that the Councilmembers have given right out of the box to the program to begin with, as evidenced by, I think, the letter that Councilwoman Reynolds Brown had referenced.
We were led to believe at that time that all schools would be included.
Secondly, I will say that Councilman Ramos, as he indicated earlier, and Congressman Fattah and Archdiocese and I continue to discuss various options.
The Chair recognizes Councilman Rizzo. 242 03/31/04 - FISCAL STABILITY - RES. 040276
Thank you, Madam President. The Police Department will be here on --
Just a minute, Councilman. Do you have any questions of Ms. Kahn?
Councilman Kenney, do you? I think Ms. Kahn had her coat on. I had her come back. Do you have a question of Ms. Kahn?
I have a comment I'd like to make because I was not here this morning. I apologize for that. As one the people who raised this issue initially with Core, I want to make it clear what my individual Councilman position is. The money that's being used for this very worthwhile program, extremely worthwhile important program that should happen is money that comes from the taxpayers, and all the parents of all the children in this City, both public and 243 03/31/04 - FISCAL STABILITY - RES. 040276 non-public schools, have paid taxes, to go to Washington or go to Harrisburg or go to School District, whatever the money's coming from, and that's the bulk of the money, that's the base of the money that's being used; to ask the Archdiocese to kick into a program that their own constituents, their own parishioners, their own families have already kicked into is wrong. The Archdiocese is in the process of merging and closing schools and doing their best to hold on with fund-raising, with really hard decisions to make. You can't -- and if you look at it from this perspective, you can't punish people for staying in the City. You can't say to those non-public school families, "You stayed here, you didn't run up to Jersey" -- I won't use Washington Township like Councilman DiCicco always uses.
They've gone to Jersey, they've gone to counties, they've gone out of state. The people who are 244 03/31/04 - FISCAL STABILITY - RES. 040276 representative of the parochial schools and the non-public, non-parochial schools are loyal to the City. To turn around and tell them now that their kids are not eligible for this publicly funded program because they stayed in the City is a smack in the face, a hard one. And people are really very upset about it because there seems to be this myth that somehow parochial school parents are wealthy. And I can take you to North Catholic and to Bishop Newman and to Cardinal Dougherty and to Ryan and to other places, these people are struggling, hard-working people whose one thing in common besides the love of their kids is they were loyal to the City, they did not leave. And to have a program that is, I'll tell you again, extremely worthwhile, worth doing, important program, and to tell their thousand kids, 9-something I believe the number is, that you're not eligible because you didn't go to a public school, we just can't abide it. We just can't do it. It's not fair. So I compliment Councilman Ramos for 245 03/31/04 - FISCAL STABILITY - RES. 040276 his work with the Administration and the Archdiocese. As you know from the morning, a number of people in here who are extremely concerned and interested in this. And I, for one, cannot stand by and allow this kind of insult to these families to occur. I don't think you're meaning to be insulting. I know that Congressman Fattah is not meaning to be insulting or Paul Vallas or the Mayor or anybody else. But see it from their perspective, it's one of those things that just makes you angry. And I think that we need to resolve it. I wish Councilman Ramos well with his discussion with you and the Archdiocese, but I want to reiterate, I don't think it's fair to ask the Archdiocese to contribute anything because their people thought their taxes have contributed already. Thank you.
Thank you 246 03/31/04 - FISCAL STABILITY - RES. 040276 very much. The Chair recognizes Councilman Goode.
Ms. Wilkerson, tell me what the move to the single sales factor apportionment will accomplish economically.
What we hope to accomplish is what was identified in the Tax Reform Commission, the elimination of a disincentive to locate businesses in the City. Before, under the current system, the taxes imposed on personnel and also sales and property so if you're located in Philadelphia you pay an extra penalty.
That recommendation was part of a broader package and part of other business privilege tax cuts, so what do you expect will be accomplished from just doing the single sales factor apportionment without the other business privilege tax cuts?
Well, that's not the only one we're doing. The City already had in 247 03/31/04 - FISCAL STABILITY - RES. 040276 place reduction in the gross receipts portion of the business tax. We also -- those are the two specific business tax changes. And also trying to --
I could ask the question in the context of if we continue the gradual reductions in the wage tax and business privilege tax and move to the single sales factor apportionment what will be accomplished, because clearly it's not going to accomplish the same thing that was envisioned by the Tax Reform Commission. It's going to accomplish something different because that was a more comprehensive package.
You're absolutely correct. They had a more comprehensive package. I think what we're doing makes us more competitive and allows us to do that within the context of balancing this plan.
You're removing a disincentive, which is admirable and there are other disincentives need to be removed, but removing one disincentive if it requires the removal of several others to complement the 248 03/31/04 - FISCAL STABILITY - RES. 040276 removal of that disincentive, do you know that removing just this one disincentive accomplishes anything at all economically?
Yes. We've been consistently told that removing this disincentive helps businesses that want to locate in Philadelphia but may do a portion of their business outside of Philadelphia, that it will reduce costs for businesses. It won't reduce costs for every business, and there are other things that the Tax Reform Commission recommended that would have helped other businesses that we couldn't afford in this plan.
Do you use the same mechanism to pay for it, the parking tax?
So the use of the parking tax wouldn't have bought you a certain amount of other tax relief in terms of business taxes?
Yes. Business, wage -- yes, part of the overall tax reduction that's 249 03/31/04 - FISCAL STABILITY - RES. 040276 included in the plan.
So this is not just a matter of affordability, this is a matter of strategy in terms of what it's actually going to accomplish economically. So what is this move going to accomplish economically aside from removing a disincentive?
That's the point of it, it's to remove that disincentive so that the City is a more attractive place for those businesses.
In other words, if you have a City that has a poor school system and high crime and you deal with the crime but don't deal with the school system, you deal with one disincentive but you don't deal with the other, a business still might not locate. I'm saying, do you know that this move is actually going to accomplish anything? I know that the Tax Reform Commission has even certain job creation projections based upon the comprehensive package. 250 03/31/04 - FISCAL STABILITY - RES. 040276 Have you, as I asked in terms of other initiatives, whether it's NTI, whether it's Economic Development Investment Fund or just in terms of this tax reform proposal, do you have any projections in terms of the creation of businesses or permanent jobs based upon making this move?
We don't have specific projections on jobs or business creations. We have had conversations with a number of people who said this would help make us more attractive.
Like knocking down blight but not necessarily knowing when a developer is going to come?
Obviously, every decision we make is a trade-off. This is something we were told was a primary impediment to business.
More so than the gross receipts portion of the business privilege tax?
We're also reducing the gross receipt portion of the -- 251 03/31/04 - FISCAL STABILITY - RES. 040276
But you couldn't have brought more reduction in the gross receipts tax with the parking tax?
That's correct. We could have used this money in some other way.
But do you know that moving to the single sales factor apportionment and paying for it through the parking tax is a better move in terms of business and job creation than buying more gross receipts reduction with the parking tax?
We're not sure. One of the conversations that we've had with the Tax Reform Commission as we developed the plan was to say, "This is how much we're investing in tax reform. If you think that there's really a better way that we could have done that, let us know."
I understand the affordability issues and I understand use of the parking tax was the Tax Reform Commission's recommendations. You obviously are not adopting their comprehensive package. The affordability issue is dealt with through 252 03/31/04 - FISCAL STABILITY - RES. 040276 the parking tax. The issue is in not adopting their comprehensive package, have you actually determined what the best move in terms of what to do in terms of business privileges taxes is what you'll be able to buy through the parking tax? And is that measurement a measurement that is based upon business and job creation?
We based this decision on talking to both people who had been on the Tax Reform Commission, people who were working on the Philadelphia Review Forum who all said if there was a single thing you could do with business tax, this is the best thing.
They said a single sales apportionment over a gross receipts reduction?
Can I just say one thing. I think to be more complete in the 253 03/31/04 - FISCAL STABILITY - RES. 040276 answer, I think they said that in the context of knowing that we were already reducing gross receipts portion.
I'm taking your word for it because I know you deal with budget matters and fiscal matters, not necessarily economic matters in a broader sense. And my guess is the context has changed in terms of discussions. So I'm not sure what context you really actually had that discussion in and whether the question was posed to them, "If we're buying a certain amount of business tax relief through the parking tax, where should we direct it?" Because the people you're having conversation with, my guess is they were first focused on comprehensive tax relief in terms of Tax Reform Commission's proposals and then you probably didn't give them a choice, you probably made a choice for them.
Let me say again that the last conversation I had with the Tax Reform Commission was, "this is the decision that we've made, If you think there is a 254 03/31/04 - FISCAL STABILITY - RES. 040276 better way that we use the amount of money that we've allocated for tax reform, is there a better way we could have done it?" They haven't gotten back to us, but we have got posed that question basically for the reasons you're raising.
Thank you. The Chair recognizes Councilman Rizzo
Thank you, Madam Chair. Ms. Wilkerson, I know, the Police Department and the Commissioner will be here on the 19th, I believe, of April. But I want to set the stage for that visit. It's more about policy that the Administration's going to have to make. You know I have also another interest, and it's in the Mayor's Five-Year Plan about the $5 million for the State Police patrols. What I would like to know is, is the Administration prepared in the event that State does not cooperation and reimburse us or provide State Police to patrol those roadways, 255 03/31/04 - FISCAL STABILITY - RES. 040276 are we prepared to pull the police from the expressway and allow the responsibility to become the State's?
I'll leave that for the Police Commissioner to respond to.
This is policy. I'm talking about will the Mayor direct the Police Commissioner to pull the police, the 60 officers, from the roadways. I'm asking about the Administration directing the Commissioner.
That's why I want to ask it now because I don't want the Commissioner to say he'll get back to me on the 19th. Thanks. Thank you, Madam Chair.
Thank you. 256 03/31/04 - FISCAL STABILITY - RES. 040276 Are any other questions of these witnesses? (No response.)
Seeing none, the Committee will stand in recess until Wednesday, April 7th, at 9:30. Thank you very much. (Council adjourned at 3:50 p.m.) - - - - 257 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday, March 31, 2004, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE OF FISCAL STABILITY AND INTERGOVERNMENTAL COOPERATION _________________________ Lisa C. Bradley, RPR