COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE PUBLIC HEARING - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, March 24, 2008, 10:15 a.m. - - - Bill 080022 - Alternative BPT computation Bill 080154 - Capital Program - FY '09-'14 Bill 080155 - Adopt FY '09 Capital Budget Bill 080156 - Adopt FY '09 Operating Budget Bill 080157 - Amending tax rates, credits, alternative tax computation for BPT Bill 080160 - Establishing rate of taxation on parking transactions Bill 080161 - Re Wage and Net Profits Tax Bill 080168 - Revising certain types of BPT Bill 080173 - Resolution providing for approval of Revised Five-Year Plan (Full text of all of above attached hereto) Committee Members Present: Anna C. Verna, Chair Curtis Jones, Jr. Jannie L. Blackwell James F. Kenney Darrell L. Clarke Donna Reed Miller Frank DiCicco Frank Rizzo W. Wilson Goode, Jr. Marian B. Tasco Bill Green - - - V A R A L L O Incorporated Litigation Support Specialists 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 I N D E X WITNESS Rob Dubow, Director of Finance......... Steve Agostini, Budget Director........ 27 John Nacchio, Acting City Treasurer.... 37 Keith Richardson, Revenue Commissioner 81 James Haley, Deputy Revenue Commissioner 96 Marlene Duley.......................... 97 Deputy Water Revenue Commissioner. 3 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
Good morning, everyone. The Committee of the Whole is now in session. (Witness comes forward.)
Good morning, Mr. Dubow. Please identify yourself for the record and proceed with your testimony.
Good morning, Council President Verna and members of City Council. I am Rob Dubow, Director of Finance, and I am pleased to provide testimony on the department's proposed Fiscal Year 2009 operating budget. The proposed budget for the Office of the Director of Finance supports a number of departmental divisions; Executive Direction, including debt management and the Administrative Services Center; the Office of Budget and Program Evaluation, Minority Business Enterprise Council, the Accounting Bureau, the Office of Administrative 4 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Review/Bureau of Administrative Adjudication, and Risk Management. Joining me here today are representatives from those divisions who are available to answer your questions. In the Five-Year Financial and Strategic Plan, Mayor Nutter indicated that his administration would focus their efforts on achieving results in six key areas, which are: 1. Public Safety 2. Education 3. Jobs and Economic Development 4. Healthy and Sustainable Communities 5. Customer Service During these FY 2009 budget hearings before City Council, you have heard from various departments already and, will hear from additional departments, regarding their plans to achieve results in these six areas. 5 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 The Office of the Director of Finance is a central agency that provides leadership and support to departments so that they may achieve success in each of these key areas. The FY '09 budget, as proposed, provides the necessary funding for the Office of the Director of Finance to accomplish this objective. 1 billion and includes: 1. $967 million in Class 100 funds. This will provide compensation for 169 employees and fund fringe benefits for all City of Philadelphia General Fund employees. The Class 100 appropriation for salaries remains unchanged from FY '08, and the fringe benefit appropriation represents a decrease of about $13 million from the FY '08 estimated obligation level. The 6 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 requested fringe benefit appropriation decreases because FY '08's estimated obligations included one-time payments made as part of settlements with the City's unions. Also, a portion of the Class 100 funds will allow us to continue a fellowship program that began in FY '08 to host five post-graduate school fellows for a year-long placement in a City department. This is a new and exciting approach to attracting talented and energetic future leaders to the City. 2. million decrease overall from FY '08. million for legal services provided by the Defenders Association, and that's an increase of $781,000 over FY '08. The decrease in requested Class 200 expenditures is caused by the end of the City's agreement to provide 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 funding for CORE Philly Scholarships. 3. The budget has $575,554 in Class 300/400, unchanged from FY '08, for materials, supplies, and equipment. 4. 4 million in Class 500 funds for contributions. 6 million in indemnity costs. 7 million in fees and interest earnings that will be deposited to the Housing Trust Fund and 10 million pay-as-you-go financing to fund street reconstruction projects. The Office of the Director of Finance has an 18 percent participation rate in contracting opportunities for female-owned businesses in Fiscal Year '08. 8 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 I'd also like to note that this represents the percentage for only a portion of the contracts in finance. The Finance Department also contracts with a number of law firms, financial advisors, and underwriters to assist with the issuance of debt and debt management. These contracts are not included in the above calculations 'cause the advisers are paid from bond proceeds and the budget does not include a contract (indiscernible) that can be included in the calculation for budgeted FY '08 contracts.
For contracts related to City bonds issues, the Finance Department achieved a 29 percent participation rate. And I'm sure you may have questions about the City's plan to issue pension-obligation bonds. We have posted an RFP for a financial 9 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 advisor to assist in our efforts to analyze this transaction. When we have an additional details analysis, we will provide that information to Council. At this time, I also wanted to recommend an amendment to the bill 9 that's before Council for consideration in the budget for the Office of the Director of Finance. I'm recommending that the 10 million in Class 800 appropriations for pay-as-you-go financing to fund streets reconstruction projects be removed from the Finance Department's budget and be placed in the budget of the Department of Streets, and that's consistent with the discussion we had in the earlier hearings. And during today's and tomorrow's hearings, you'll be hearing testimony from other departments and commissions under the Office of the Director of Finance, including the 10 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Revenue Department, the City Treasurer, the Board of Pensions and Retirements, and the Sinking Fund Commission. I appreciate this opportunity to provide testimony, and I'll be happy to answer any questions that you may have.
Thank you. Mr. Dubow, on -13, you show an External Services Unit of ten positions at a requested level of $858,000. What does this unit do?
It's actually a group of people who work in other departments, and they're assistants to the Director of Finance. And in a sense, it's because the other departments don't have exempt positions, and we're supplying them with the exempt positions. And you can see there's an expenditure transfer below that. We 11 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 eventually ship all of those costs back out to the other departments.
Well, my next question was: You then show on the same page an expenditure transfer of 850.
Yeah. It's charging those people back to the departments where they work.
Okay. I see that for FY '09, you're eliminating the $4 million that went to the Philadelphia Education Fund in FY '08. What are the consequences of eliminating this program, and why are we doing it?
We entered into a -- originally entered into a four-year agreement to provide funding for the CORE Philly Scholarships, and that agreement has come to an end. And part of the rationale for the four-year agreement was that the CORE Philly Scholarships was also setting up an 12 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 endowment, and that endowment was supposed to help provide funding on an ongoing basis. We've since found out that there's probably not sufficient funding in that endowment, and so we're looking at our options for how to continue, or whether we want to continue funding, the scholarships.
Okay. On -18, you are requesting $74,000 for hearing officers. Can you elaborate on that, please.
Okay. And can you tell us why you're requesting an additional $16,000 in FY '09.
Yeah. I think there were vacancies during the year, and we're anticipating that those positions will be filled during '09. 13 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
It was really one -- one member who wasn't present for most of the hearings.
Mr. Dubow, why is the administration of the Water Revenue in your budget? I assume it's because of the exempt nature of the positions?
Will the Charter change dealing with deputies alter how this is budgeted in the future?
It will -- I think it will help both here and with the line item we were talking about before, External Services; more of those individuals would all be assigned to the departments where they actually work in the budget.
Thank you. 14 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 On -71, you're requesting $36.5 million for the Defenders Association, which represents an increase of $331,000 from their FY '08 anticipated obligations. How will the increased funds be used?
Those increases are to pay for increase in benefit costs for the defender.
On -72, you are requesting $18 million for PGW. When will the City be able to eliminate this payment? You know, we're hearing about how 15 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 well --
PGW also actually gives us million, which you can see 12 on the revenue side, and it helps them 13 with their rate calculation to be able 14 to show this payment. So the net 15 impact on the City is zero of this 16 arrangement. 17 However, PGW's -- 18
Yes. I was going to get to that part next. PGW's calculation show that in 2012, they think that this payment may go away, so that that's their projection. We don't show that in the 16 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 plan, but they project it in 2012.
Would you please go to -79 and explain line 193. Why are the estimated obligations over $50 million more than the budgeted amount?
Yes. There were a number of -- that's the health medical benefits line. And during the first half of FY '08, settlements were reached with all four major unions on outstanding health-benefit-contract issues, and a number of one-time lump-sum payments were made as part of those settlements. So those one-time payments increased the cost of health benefits for the year. And then you'll see that in the next year, the cost goes down 'cause those one-time lump sums don't repeat.
Mr. Dubow, I know that you and Charlie McPherson talked last week about the 17 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 allowance of doubtful accounts of $794 million. That appears on of the City's annual financial report for 2007. Can you explain what this is and what measures the City is taking to collect these funds?
Right. And clearly, that is a huge number that, you know, sets off alarms at the moment.
We looked at it. As we're digging in, it's clear that there are items in there which never really were collectible, there are some items that are really old. And it's kind of raised issues for us on how we classify collections and how we go about collecting money in general. So we have been sitting down with the Revenue Commissioner to talk about ways to improve our process and 18 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 to figure out, you know, the best way to classify all of what we now call "receivables."
When you say many of them are not collectible, would you expand on that, please?
Yeah. I'll give you an example. For EMS, we charge $500 a run. Medicaid allows a reimburse of $300 and then funds 80 percent of that. The difference between 300 and 500 we never intend to collect for Medicaid recipients.
Yet it's shown as a receivable and then it eventually hits this category of something that is uncollectible.
But 19 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 didn't we hear not too long that the City was talking about raising the rates?
So if we can't collect them now, if we raise the rates -- (Indiscernible; parties talking over each other.)
This is just for the portion of people on run to our Medicaid. So there's a portion of people who get ambulance service who aren't on Medicaid, and that's where the revenue increase would come in.
-- we're charging $500. 20 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
That's something that we're looking into. I mean, this issue obviously just came up last week, and we're trying to track all of this down.
Well, if in fact we're not collecting, as we should, I don't know what the sense is of raising rates.
So we're going to have that much more of a debt, which doesn't make too much sense to me. 21 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
That's correct. We have the same exact issue; we're looking into that.
Councilman Rizzo, you have a point of information?
Madam President, I think you answered my question, but I want to ask it again. You're specifically referring to Medicaid. What's the difference between a person that's on Medicare that may not have the money to pay the difference than a person on Medicaid?
I think, actually, you're right, it's Medicare. There's no -- I don't think there's actually -- we have to get back to you on that.
Please, because, you know, you're cutting out an entirely, you know, a different -- a whole different group of people. Medicare, I think, are normally people that are very, very poor, which I can 22 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 understand, but there's a lot of people on Medicare that are also -- I don't want to use the word "poor" but might not be able to pay that difference, especially if they're insurance companies. And, you know, one of the basic things in life, when you pay taxes for 50, 60 years and you need an ambulance, you know, you kind of expect your government, if you've paid those taxes for a lot of years, to be helpful to you. So you're always going to get a little fight from me when you try to raise rates or you try to charge or go aggressively after people that can't afford to pay that difference.
Mr. Dubow, what is the current status of the administration's proposal for a 23 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 pension-obligation bond?
We issued an RFP for financial advisors to help us put the deal together, select bond counsel, select underwriting. The responses to that RFP are due today.
When do you anticipate that you will be able to present this proposal to City Council?
Thank you. The Chair recognizes Councilman Green.
I just have a question about the health, medical, and fringe benefits and why, for the entire city, they continue to be in 24 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 the -- finance your budget rather than assigning to each department so that we can see the true cost of, you know, each department's service delivery.
Actually, I think it's the way that our accounting system works, but, I mean, you raise a good point. In theory, it would make more sense to be able to see it in each department.
Is that something you think we can accomplish by next year?
I don't think we would have a new accounting system in place by next year. I mean, it's kind of a longer-term goal.
Do you have any sense of what the breakdown is, or is it just, you know, courts versus --
For example, courts versus, you know, other City 25 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 agencies.
I mean the largest payroll is in the Police Department, so they would have the largest benefit costs. I think courts is a fairly high personnel; they're in the top five or six departments, I think, in terms of personnel, so their benefit costs would be relatively high compared to other departments.
Can you try to give me a breakdown by department of what that is?
Thank you. I have a -- I'll take advantage of your presence here today to ask you a question about the feds' declining growth projections for the country as a whole. I know that the 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 overall budget was based on initially fed projections for the national economy they've been lowered significant -- FY '08's down to 3 percent -- and I'm just wondering whether or not you're revising your assumptions regarding overall revenue in the City of Philadelphia.
Well, we continue to monitor what's happening locally and what's happening with our collections. So, for example, the wage-tax collections have been very strong so far. If they start to weaken, you know, then obviously, we'll take another look. There are a couple of taxes in general that seem to be bellwethers of what will happen at least locally. One is the sales tax which was weak earlier in the year and now has actually gotten stronger, which is a good sign for our revenues. The other one, though, is the 27 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 transfer, tax which has been really weak, and I think one of the things we're likely to do before this process is over is take that projection down because that has come in more slowly than we thought.
But most of the out-year's assumptions are based on what the fed predicted for the national economy and I'm just -- as they lower your estimates, I'm wondering if you plan to lower your estimates. (Witness comes forward.)
Madam Chair, Steve Agostini, Budget Director. Actually, the projections we were using were from the Congressional Budget Office. The Federal Reserve doesn't typically doesn't do long-term projections because of the impact it has on interest rates. We used the first year and the near term for both Fiscal Year '08 and '09 and then calendar years '08 and 28 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 '09, and those projections were in the two-and-a-half percent and that was at nominal growth. They're anticipating real growth to slow down. I have not seen recent CVO projections that have reduced out-year growths in Years through of our plan yet; they haven't done that yet.
Yeah, that's correct. I haven't either, and I did misspeak. The only new projections I could find were from the fed, and they lower growth from to 1.3 to 2 percent next year. I just have a question now about the likelihood of -- and I think I know your answer to this, but what is the likelihood of a successful $4.5 billion bond issuance by the City given that our Dutch auction bonds continue to fail?
I don't think those two things are really related. The auction rate -- the auction rate market 29 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 has been failing. The fixed-rate market, which is what we're anticipating doing with our pension- obligation bonds has not been failing, so I don't think that it has any -- that that makes it any more likely that we'd have problems marketing our bonds. And we continue, when we talk to, you know, people in the industry about it, they still think that we'll be able to sell them.
I've had a few conversations with people in the industry, some well known FA's from around the country, and it is suggested that we ought to look at different alternatives; for example, look at cash outflows versus projected savings based on interest rates, doing a series of bonds that cover the difference every single year going out to 2019 versus borrowing 4.5 billion up front. And I just -- I know we talked about this the last time you were 30 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 here, but when you have an FA on board, that's the analysis I would like to see.
Right. And one of the reasons, obviously, that we're using an FA and going through the RFP process is to get, you know, a whole series of ideas and to look at how they all play out and what we think are the most attractive options.
Would you say that there are a lot of eggs in the pension-obligation bond basket with respect to --
A lot of eggs in the pension-obligation bond basket with respect to this budget? And, if for some reason, that we cannot issue these bonds or we can't issue them at a rate that is interesting to us, that we're 117 million short Year 1, and it continues to be 31 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 increasing up to 173 million in Year 5, not to mention the 50 million that we're spending as part of the savings until the budget. I mean, do we -- should we be looking at an alternative budget that has an assumption -- you know, one with pension-obligation bonds, one without?
Yeah. I'm not sure where your -- I think your numbers are a little overstated, but I think your conclusion is right. And one of the things that we are doing is looking at what kind of other scenarios we would have if the pension-obligation bonds didn't come through.
-- when it's done? Thank you. Thank you, Madam President. 32 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
You're welcome. The Chair recognizes Councilman Jones.
Over the Easter break, a couple of financially disturbing things have happened countrywide: experienced a stock selloff that has shook the financial markets, and the rippling effects of it have impacted here in the Commonwealth of Pennsylvania with FIA. FIA has announced that they will not originate loans for college students this year they will leave that task to private banking institutions. Young people in June are going to be faced with the possibility that they are going to have to go to a bank, take out a loan for their education at a higher 33 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 interest rate; and for some of them with not so perfect credit, are going to have to go to even more oppressive lending sources. Most of this has been a track back to the sub prime interest rates, the high number of financial failures on these mortgages. And I want to just take this opportunity to commend Councilman Goode for sending a letter to the sheriff asking for a moratorium on sheriff sales while this crisis continues. But specifically germane to the young people that are going to not have FIA this year to depend on, we note that you are considering not funding CORE Philadelphia, which is a no-interest grant to young people coming -- or seeking higher education higher education, that over 9,900 Philadelphian young people have gone on to college with a grant as opposed to a loan with and that we've expended 34 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 about $20 million in the fours years of its existence, and I think it's a good investment. I'm very concerned that with the cuts in this that a lot of young people are going to have to make a serious choice as they fill out their financial applications right now. And can I count on this last dollars in grant opportunity? So you said that you were considering what we do, and I just want to ask the pointed question: When will we come to a conclusion so that we can tell Philadelphian young people that they can count on this money or whether they have to look elsewhere?
I think we have to come to a decision relatively quickly because they'll be making their decisions about college relatively quickly, so I'm hoping that that's something we can deal with in the next 35 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 couple weeks.
Most of these CORE Philly grants go to Commonwealth schools -- state and I 6 think an additional 7 colleges and 7 universities that are not necessarily 8 state schools, a total of 21 schools 9 that participate in this. 10 I just want to emphasize that 11 as we make tough budget cuts, as we 12 reprioritize where our dollars go, 13 that to accomplish some of the goals 14 that this administration wants to accomplish by increasing the number of college graduates, this is where the rubber meets the road, and I wanted to make that point on the record.
You're welcome. The Chair again recognizes Councilman Green. 36 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
I'm sorry, Madam President. My light was inadvertently on.
Thank you. Are there any other questions of the Finance Director? (No further questions.)
I believe we were to break at 12:30. My suggestion is that we just go through because we only have two other departments today. We did make a call to the Revenue Commissioner, and it's my understanding that he's on his way. But I do see the City Treasurer here. So if the City Treasurer would please approach the witness table. (Witness comes forward.) 37 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
Nice seeing you. Please identify yourself for the record and proceed with your testimony.
Sure. I have prepared written testimony today. And good day, Madam President and members of City Council. I am John Nacchio, acting City Treasurer for the City of Philadelphia. I appreciate this opportunity to testify before you about the FY '09 operating budget appropriation request for the Office of the City Treasurer. The total requested FY '09 budget appropriation is $770,304. This amount represents no change in funding or service levels from the current year of FY '08. The highlights of the FY 2009 38 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 budget request by proposed expenditure are as follows: Class 100 personnel projected expenditure of $672,992 represents 87 percent of the Treasurer's Office proposed budget and funds 8 positions. 9 The Class 200 amount is 73,088 10 and includes funding for the calendar 11 year 2007 study for -- to examine 12 authorized depositories' lending 13 practice. The combined Class 3 and 400 amount is $24,224 for supplies and equipment. As an overview, the mission of the office is to maximize the value for the taxpayers' cash and the City of Philadelphia government by promoting secure and responsible cash investment and check disbursement practices that are provided through friendly service. The core responsibilities of 39 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 the office is to be the disbursing agent for payments from the City's treasury by the distribution of tax and electronic payments in the modern, secure, and effective and efficient method. In addition, the office has adopted financial practices to identify the maximum amount of cash available after meeting daily cash requirements and investing the cash in various fixed-income securities, thereby providing a source of income revenue to support the City's financial commitments in both the Operating and Capital Budget. A treasury operations overview is provided as follows: Operationally each year, the Treasurer's Office provides internal services to 31,000 paid employees in over 48 departments in addition to external services to 36,000 pensioners, 19,000 vendors, 9,800 election workers, and 4,500 40 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 foster parents. The Treasurer's Office's manually initiates electronic payments of approximately 6,000 wire transfers and manages the coordination of over 900,000 automated clearinghouse (ACH) payments. In addition, the office provides administration for over 100 bank accounts associated with the multi-layer and tiers of banking transactions related to the disbursement of the City's $4 billion budget. 5 billion of investments that involve daily market trading and approximately 10,000 trades annually. In FY '08, the City Treasurer's Office has remained focused on providing departmental service and efficiencies. Safety and 41 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 security have been increased by implementing fraud and theft prevention measures. One example is the redesign of the different types of checks printed and issued by the City. This project was done in conjunction with MOIS. The green checks -- there were various sizes and required perforating and sometimes suggest -- have been replaced with a new standard single-page white stub, with a checked, blue-pattern background at the bottom. To make the check unique, an oval image of City Hall at the center is included. At the bottom, there is now a white background for a more readable micro code for more effective processing by the bank. The reverse side was blank, and now a signature line has been added, consistent with industry standards. There are also other, both visible and invisible, fraud 42 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 prevention features included. In addition to the check paper, another example of increasing security is the implementation of positive pay and positive payee matched on City bank accounts.
This is an electronic verification process engaged to protect both the City and the payees from potential fraud on a paper check by verifying the check number, check amount, and payee. In an effort to increase efficiencies, we have implemented automated e-mail notifications from the bank for reimbursement to the petty cash and imprest accounts, all of who have enrolled for an ACH payment. This has been a task that has eliminated what was done manually by approximately 150 Citywide petty cash, imprest, and account custodians. To further increase efficiencies in FY 2009, we will research the possibility of automated 43 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 online reconciliations for the petty cash and imprest account custodians as well as solutions to increase direct-deposit enrollment. I highlight that the City's voluntary enrollment of direct- deposit-of-pay program is in both the active employee payroll and pension payroll system and continues to grow. By way of a breakdown, 75 percent of active employees participate in the City's direct-deposit program, as do over 85 percent of our pensioners. For the City, the Office of the Finance Department's payroll division and the Pension Board administer the enrollment for the direct deposit. It seems that the message is being heard that is the most simple, safe, and secure form of payment. Another example is the volatile and uncertainty in the financial markets. We have performed 44 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 a risk assess of our investments, and the outcome indicates no significant risk. This has resulted by the guidelines and the guidance of our prudent investment policy adopted by the City. As with the six results areas of the administration, the Treasure's Office contributes to the goals of the shared vision and commitment to a responsive, effective, and collaborative city government by focusing on the values of respect, service, and integrity. In reference to public safety: Public safety has increased by implementing processes that reduce fraud and theft on City accounts and disbursements. These processes include increasing direct-deposit enrollment, redesigning checks to improved safety features, and the timely reconciliation of bank accounts. Increased direct deposit 45 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 will eliminate employee trips to the bank to cash a check, reduce the risk of lost and stolen checks, and reduce processing costs for the City in stop-payments and reissuance of checks. The goal is to achieve one hundred percent direct deposit. This can be achieved through an internal marketing campaign and the enrollment of employees with the continued cooperation of the Finance Department's payroll division. As it pertains to education: Education is implemented through the Treasurer's Office MBUCS, which is a group called Municipal Banking Users Group of Custodial Services. Seminars are held for the over 100 City employees who have banking-related functions in departments across the City government on topics about best banking practices as well as discussions on fraud and identity 46 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 theft. The focus for 2009 will be automated reconciliations. To support jobs and economic development and healthy and sustainable communities, we are called upon by the City Council to commission an annual study that analyzes data on community reinvestment, access to banking services, and loan commitments to the citizens of Philadelphia from our authorized depositories. The most recent study for the calendar year 2006 has been delivered to the members -- to all members of City Council in early March. In addition, the Treasurer's Office issues an annual request for information, an RFI, to be completed each year by the authorized depositories to maintain a focus on compliance and topics of current concern.
As it pertains to ethics: 47 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Ethics training and classes have been provided and attended by all of the employees of the City Treasurer's Office. Ethics and best practices are reinforced within our daily operations. As it pertains to customer service: Our customer focus includes ensuring that outgoing payments are received in a timely and safe manner. All checks and payments are distributed the same day as the issue date. Replacement checks are to be issued within one to five days and ACH payments within 48 hours. In addition, we focus on improving the banking processes of the City custodians. Measuring progress will be achieved by developing an analytical staff to prepare operational studies and develop periodic and annual reports. This will both track and provide a basis to measure progress 48 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 for internal and external customer service. In terms of participation, the City Treasurer's Office has contracted with one nongovernmental entity in FY '08. The contract was with Econsult and MFR Associates in the amount of 75,000 for the lending study. The participation rate for contracts is 50 percent for African-American and women. So, in conclusion, the propped budget of the City Treasurer's Office will support the mission of promoting secure and responsible cash management, cash investment, and check disbursement practices that are provided through friendly service. This concludes my written testimony, and if there's any questions... Thanks.
Thank you. 49 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 The Chair recognizes Councilman Goode.
Let me start with a question I've asked you in previous hearings; I think we now have an answer to it. How many financial institutions are minimally qualified to hold payroll deposits?
For payroll documents, all of the 11 banks that are on the authorized depository list are enabled to participate in the payroll services.
But you put out an RFP last year for payroll depositories?
That's correct. And it concluded the RFP posting in 50 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 August of last year.
And how many financial institutions submitted proposals?
In the final proposal, there were six bank of the eleven authorized depositories. None of the banks were non-depository banks.
And were all six deemed to be qualified to receive payroll deposits?
In the process of the RFP of the committee, they took the top four and asked them to do further presentations, so it was narrowed down to two of the six that they felt were most qualified. 51 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 (Witness consults with Mr. Dubow off the record.)
Well, without getting to the two names of the banks that were eliminated from the final process, can you tell me why those six banks were reduced to a number of four banks?
I believe the committee looked at the submissions and didn't feel as though they met the minimum requirements for the RFP in terms their response. So they didn't -- they were either incoherent or they did not submit all of the material that they needed to submit.
So of the four banks, are all four qualified to hold payroll deposits?
Okay. So are we to anticipate legislation will be introduced at some point that will 52 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 include one bank that's been selected to hold payroll deposits and/or all of the banks that are qualified to hold payroll deposits? (Witness confers with Mr. Dubow off the record.)
There would be a possibility that in the legislation that all four banks could be mentioned, but most likely, the City would tend to select either one or two just for the requirement of security of the process so that it's uniform and consistent.
But it's anticipated that the City would want as many banks as possible that are actually qualified in terms of security and safety to be authorized rather than putting all of our eggs in one basket; is that the position of the administration?
Thank you. Thank you, Madam President. 53 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
You're welcome. The Chair recognizes Councilman Green.
On your testimony, you mentioned that measuring progress will be achieved in terms of customer service by developing analytical staff to prepare studies, et cetera. Doesn't this capacity exist elsewhere in the administration; for example, the MBO's Office or the Budget and Program Evaluation Offices within the Director of Finance? I don't -- you're not implying that you're going to create your own staff to do this, are you? Or --
Yes, yes. Those abilities or those -- those services are provided in those agencies but not 54 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 particularly to the City Treasurer's Office. Currently, the office is composed of operational-type folks, and we don't have anyone who spends a full one hundred percent of their time analyzing our financial position and our banking statements, et cetera. We have relied on the program and evaluation units in the Finance Department, particularly for the RFP that Councilman Goode mentioned, because without them, we wouldn't have been able to go through the process, which was a year-long process. So we hope to develop some of those capabilities within the Office of the City Treasurer.
Currently, there's two positions that have been vacant; that's the executive assistant and an administrative analyst- 55 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 specialist.
And it would -- those people would now perform this function?
Yes. One of the things I would hope for is to do more periodic and annual reporting that would be the tools by which we could make better financial decisions.
Is there an audit trail within the City's financial computer system? By that, I mean: If someone makes adjustments or transfers, is it clearly logged to a particular user or to a particular computer, et cetera?
I don't know if I'm the best one to answer that question, but the person, or persons, in our office who enter into the accounting system do log on with their I.D., and they do enter information that is attributable to them.
And if 56 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 someone makes a change to someone else's information, is there a trail to that, of what the old information was and what the new information is and who did what?
I'm not sure where you're going with that question, but within the City's system, the City Treasurer's Office is only -- is dependent on the Office of the Finance Director and the accounting system, so we follow the guidelines or rules that they have for logging on and logging in an audit. The City -- one of the things the City Treasurer does not have, we don't have an independent system of our own, which would be a treasury work station, so we don't have that.
Okay. If -- since Rob's no longer testifying, could you please provide the Chair with the answer to that question, what the audit trail processes are within the City's 57 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 finance system?
Are there any other questions from members of the committee? (No further questions.)
Do we have -- I understand that the Revenue Commissioner is entering the building as I speak. Councilman Clarke, I think you may have had a question or two for Mr. Dubow? We can get him back. Mr. Dubow, Mr. Dubow? (Rob Dubow returns to witness table.)
I thought I was done. 58 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
I believe Councilman Clarke would like to ask you a question or two, please. So we won't have to have a callback.
I just wanted to ask you a couple of philosophical/policy questions. What year did the City administration -- I'm -- I'm thinking it was during the -- maybe during the Rendell administration that we started a policy of tax reduction.
Fiscal '96, I think, was the first year where there was a reduction.
Do you know the amount of taxes that we cut from that time period? 59 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
I don't -- I would just be completely guessing. You mean the first year of the cuts? I mean, I think it was probably in the, like, 10 to 20 million range.
No, I'm saying the total amount from that point to this point.
Have you -- have we seen -- 'cause we're all in this -- any evidence of job creation as a result of that tax reduction?
I think probably the best way to look at that is to look 60 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 at how the City does compared to the rest of -- to the national economy, you know, and how we track that. And I think we actually do a little better in the international economy than we used to, but it's something we should -- that we'll get back to you with, you know, the detail on that.
Yeah, in terms, you know, the changes in the number of jobs locally versus the changes in the number of jobs nationally.
So we're creating more jobs locally on a percentage basis, then?
I think, but we'd have to get back to you. I think we 61 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 can do that analysis and get you the information.
So that's inconsistent with pretty much every newspaper report I've ever read.
Well, actually, I mean, if you look at the last year, for example, I mean, we've actually gained some jobs. And the question really isn't just, you know, that -- isn't just how does Philadelphia do? It's how does Philadelphia do versus the nation, and how does that compare to --
I didn't ask you that. (Indiscernible; parties talking over each other.)
That's your analysis. I'm asking a fundamental question.
Right. Well, it gets to the question of whether it helped create or retain jobs, because 62 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 if -- let's say in '90, when you looked at it, if we did worse than the nation as a whole, but now we do better comparatively. And part of the reason, you know, could be because of the tax reductions, and that would lead you to the conclusion that they've had some impact on improving our economy and helping --
Is that written anywhere? I mean, I've never heard that.
The Chair recognizes Councilman Goode for a point of information. 63 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
To word it a bit differently, I think what Mr. Dubow is saying is that the job loss has slowed since the business privilege tax cuts and that while Philadelphia is still -- persistently has an unemployment rate that is higher, that comparatively not so much that we're better than the region or the nation, but in a strange way, it's not as worse, or less worse.
Correct. 64 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
Let's stick to the region, 'cause most of the reports, when I read -- when there's ever an instance -- not, frankly speaking, not as frequent as we would like, when there's a report of job growth in the State of Pennsylvania and then they talk about the region and traditionally, the growth in the region is better than the City, and we're pretty stagnant or parallel.
Right. Let me try it a different way. I'm not saying that we're doing better than the country or better than the region, but the amount by which we're doing worse than the country and worse than the region is less than it used to be.
Less worse, yeah. 65 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
So, for example, if the national economy used to, let's say, go up 2 percent and we would go zero, we'd have no change. Now if it goes up 2 percent, we might go up 0.1 percent. So when you compare us to the rest of the country, the amount by we're doing worse than them is not as much as it used to be.
All right. In terms of the, using your term, less worse job creation --
It was actually the Councilman's, but it was a good way to phrase it.
From a category's perspective, are there any particular jobs, any particular job category where the increase, albeit minimal, is more so than any other, or is there something that stands out in 66 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 the service-related, retail-related office-related, I mean, you know, the various categories.
Right. I'd have to get back to you on that and give you detail on that.
All right. And, you know, I'm going to ask the question but I can't really ask it and expect an answer until you get back to me on the previous question. As it relates to job categories that traditionally or more often than not will have City of Philadelphia residents employed, I need to know, of those job opportunities that are created, what of those job opportunities have the highest percentage of City of Philadelphia employees?
Okay. I understand the question and we'll include that in the analysis.
And to 67 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 break it down even further, can we have demographics as it relates to race, ethnicity -- and I know I'm asking you -- they're very detailed information, but there's a reason for this, and maybe you can't even have that information.
I don't know. We'll look. If we can get that, we will, but I'm not sure that we can, but we'll see whether we can.
All right. And the reason I'm asking this question is that we've had more than a billion, and you've acknowledged --
And my concern is that on the ground, particularly in the substantial part of the district that I represent, I see no 25 evidence of any job creation. I 68 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 actually see just the opposite. And I'm -- when I'm asked to cast votes for this continued job re -- or tax-reduction programs and I see no relationship to job creation in the North Philadelphia part of my district that I represent -- in particular, that's the most hardest hit, and if anything, it's going just the opposite. The job opportunities in some neighborhoods are, you know, 40, 50, percent unemployment. I wonder, what's the point as it relates to those individuals that I represent in cutting those taxes?
You know, at some point, I mean, it either has to be a strategy that -- and I actually -- I can tell you, I actually tried to find out if there's a way that I can amend the current tax-reduction bills proposed before us to require some 69 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 local hiring, but I was told that constitutionally, I couldn't do it, but I had to figure out -- I had to try. I started to introduce it anyway just to stimulate the discussion, but what's the point? At some point, I think there needs to be in our tax-reduction program, given the fact that we've been cutting taxes for quite some time and, at the end of the day, there's been no relationship to job creation in those areas that are of most need, so I really need to --
-- from a personal perspective, before I can continue to support tax reduction, at some point it has to, you know (inaudible).
I understand the question. We'll do the analysis and get that back to the Chair. 70 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
You're welcome. The Chair recognizes Councilman DiCicco.
Thank you, Madam President, and good morning, Mr. Dubow.
I apologize. Think it was on February 27th or something when there was a hearing and a specific discussion took place concerning the parking tax. I was not here for that hearing, so I may have some questions I'm going to ask you that may already have been asked so please bear with me.
Have you received any communication from the Chamber of Commerce in relationship to this proposed tax? 71 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
Their -- they oppose the increase in the tax, and they suggested that we look at other ways of increasing revenues from parking, and I don't have that letter with me.
There are a couple of proposals that have come up that we've been looking at, one of which was -- you know, one that you discussed, which was looking at lots that take cash and whether they're actually paying their taxes, so we're examining those now.
Well, if you find that there's revenue out there that we haven't been collecting, would that change any of the formula here, or 72 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 is the administration still pretty much looking to do the percent increase? 4
I think it depends 5 on what we find, so it's -- I mean, 6 it's too early for us to tell that. 7
Yeah, depending on 10 what we find. You know, we're always 11 open to talking about things. 12
Well -- 13 and I guess we're being asked to pass 14 the package here and it's at 20 percent 15 and how do we -- if we go back, would 16 we have to do some amendment or -- 17
That's right. And 18 we know we need to get all of that 19 information together before you vote on 20 it.
And in the administration's request, the $16 million that's anticipated in additional revenues for FY '09 for street repairs and planting of trees 73 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 and the Fairmount Park Commission, which gets $1 million, what happens in the out-years of that money -- I mean, that's going to be for the same dedicated purposes?
Yes, yes, for each year. We have it dedicated that way each year in the plan.
All right. I guess my other concern is that the parking tax is levied against the gross-receipts tax; is that correct?
And my understanding is that we've always talked about how to get that number down or eliminating the gross-receipts tax. Would that not have some impact? If we were to do the 9 percent increase but somehow get to a 10 point in the future, where we 11 eliminate the gross receipts, isn't 12 the revenue not going to be there? 13
No. It's not their 14 gross-receipts tax; it's a tax on their 15 receipts, but it's not the gross- 16 receipts tax -- 17
But the 18 receipts that they give you are the 19 full value of whatever the rate is. 20
Right. So they would still be paying that regardless of whether they paid a gross-receipts tax separately.
Are they paying a double tax then? You're today 75 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 paying on the gross receipts --
Have you looked at any of the impacts that this may have on tourism and entertainment, people coming into the City? Has there been any studies about that?
There -- I mean, we've looked at kind of a broad brush what the numbers are because, you know, there have been increases in rates before. We don't think it would have that dramatic an impact because in terms of actual, you know, dollars per time you're parking, it's not -- it's not that big a difference. In other words, if you were paying, you know, $20 now, your rate may go up to 21.
At percent... My math must be off then. 20 percent of 20 would be a $4 increase, no?
Well -- but you now 7 add $3 if you're 15 percent of 20, and 8 you'd go to 20 percent so you'd get 4. 9
Okay. And 10 you say that you don't think there will 11 be that much of an impact on -- 12
-- tourism 14 and people coming to visit the City? 15
Do you 17 have any idea what that number would 18 be? 19
I just -- I don't 20 think -- no, we didn't anything. We didn't do a full-blown study. But, you know, going from $20 to $21 didn't seem like it would really dissuade tourists.
I don't have any other questions at this time, 77 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 madam President. Thank you.
You're welcome. The Chair recognizes Councilman Green.
With respect to the parking, I think, when we looked at the total revenue assumption, there was basically no assumption that there would be a decrease in the numbers that were put forth in the budget. In other words, if you look at FY '08, the FY '09 numbers are the same, plus $16 million, which implies that there's going to be absolutely no 17 reduction in parking because of increased costs, which I think any economist would tell you is probably unrealistic. Some people are going to change their behavior.
Maybe. Although, again, I don't think it has that big an impact on each parking -- you know, each parking bill, so I'm not sure that 78 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 it would have that kind of impact that you're talking about.
The -- there is a study done by Pittsburgh when they increased their parking tax that shows dramatic drop-offs. Now, they went to a higher tax --
That's correct. But I just -- I think -- you know, I do think that there will be a drop-off, and that ought to be taken into account. And it's not the question of the drop-off in terms of revenue from the parking tax that concerns me; it's all of the ancillary taxes that people -- that we get when people come into town and when they stay here for a weekend and they park their car or they come in for dinner and a play, et cetera, et cetera. It's the impact on all of the taxes, not just the parking 79 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 tax that I think has some people on Council concerned.
Yeah. I guess I would share that concern if the increase were larger and had a bigger impact on bills, but it doesn't -- you know, we don't see because of the size of the increase.
Do you know what the cost of the average parking bill is?
I think it's around is around where they come in. 15 That's a full day. And it gets up 16 there pretty quickly. 17
Thank 19 you. 20 Any other questions? (No further questions.)
We 80 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 will now hear from the -- yes, Councilman Clarke?
In reference to testimony about the -- by the Revenue Commissioner.
Are you finished? Councilman Clarke, any other questions?
Not really. (Addressing Mr. Dubow.) I'll talk to you later. It's a couple of other things I wanted to talk to you about, but go ahead, go ahead.
Okay, the Revenue Department, please. (Witnesses come forward.)
81 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Please identify yourself for the record and proceed with your testimony.
Good morning President Verna and members of City Council. I am Keith Richardson, Revenue Commissioner. With me today are James Haley to my left, Deputy Revenue Commissioner; and to my right, Marlene Duley, Deputy Revenue Commissioner for the Water Bureau. We are pleased to be here with you today to discuss the proposed FY '09 operating budget for the Department of Revenue. The mission of the Department of Revenue is to maximize the collection of all revenue due to the City and tax revenue due to the School District of Philadelphia. The 82 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Department attempts to achieve this goal in a prompt and courteous manner, while providing efficient delivery for customer service that inspires public confidence in the City's integrity and fairness. The employees and managers of the Department of Revenue take this mission very seriously and understand the responsibility that we have for providing the financial resources needed by the rest of City government. Our success impacts on the City's ability to fund the services and programs provided by other departments to enhance public safety, provide the best educational opportunities to the students of our school systems, and create maintain healthy and sustainable communities in all of the City's neighborhoods for all citizens. We would also strive to live by the Athenian Creed to demonstrate the highest standards for ethics, with 83 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 accountability. As commissioner, I look forward to the challenge of maximizing revenues while developing quality customer service to all. General Fund highlights: The Fiscal Year '09 General Fund appropriation request for the Department of Revenue is $17,197,437. The decrease of $225,000 from Fiscal Year '08's estimated obligations of 17,422,437 is achieved primarily through the elimination of a one-time amendment to a professional services contract. The Department is requesting $12,826,474 in Class 100 personnel services to fund full-time and two part-time positions, 3,718,014 for Class 200 purchase of services, and 652,949 in Class 300 and 400 for material, supplies, and equipment. The Department is also requesting 2 million in Class 200 for collection agency payments. The 84 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 collection agency contracts are paid on a contingency-fee basis, and these funds are expended only after collections have been received. The Water Fund. The Fiscal 2009 Water Fund appropriation request for the Water Department is $22,202,074. This is an increase of $2,751,444 from Fiscal Year '08 estimated obligations. 1 million for Fiscal 2008 estimated obligations. This funding will enable us to fill as many as 50 current vacancies and reaching staff levels of 260 full-time and 3 part-time positions in Fiscal Year 2009. The Department is also requesting $10,071,700 in Class 200, an increase of $1,866, 750 over Fiscal Year '08 estimated obligations. The increase is due to primarily 85 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 additional costs associated with enhancements to the new water billing system such as design of a more customer-friendly bill, programming costs, implementing interactive voice response applications to the Water Revenue Bureau's automated call distribution system, and a (indiscernible) increase expected to occur in May 2008. We're requesting $1,251,300 in Class 300 and 400 materials, supplies, and equipment. This is a decrease of $276,800 from Fiscal Year '08's estimated obligations due to decreased requirements for computer and office equipment. How do we measure our progress? The Department is in the process of developing customer service standards.
We will review what our counterparts in other major cities in the mid-Atlantic region and surrounding states are using as well 86 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 as communicate with colleagues from the Federation of Tax Administrators and Northeastern State Tax Officials Association to analyze their standards for customer services and best practices. We will establish a focus group comprised of citizens of the City who use our varied services in the concourse level of the Municipal Services Building. In the meantime, the Department has identified customer service performance measurements that will improve to attain our goals. We will see modest improvement in our response rate on incoming calls. In Fiscal Year 2009, on the tax services side, the response rate is expected to improve from 55 percent of calls to 56 percent of calls; and for the Water Revenue Bureau, response rates are expected to improve from 63 to 65 percent of calls. Once we are able to 87 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 achieve and maintain full staffing levels, we expect response rates to see more dramatic improvement. We will reduce the average wait time for walk-in customers at our points of self-service locations. On the taxpayer services side, we project wait times for walk-in customers to be reduced by percent, from 33 minutes 11 average in Fiscal Year '08 to 25 12 minutes on average in Fiscal Year 13 2009. For the Water Revenue Bureau, a 14 reduction of 48 percent, from 12 15 minutes and 15 seconds, to 6 minutes 16 and 26 seconds. 17 What must be done to achieve 18 service improvement? The Department 19 has identified a number of things it 20 will do to improve service for the 21 citizens of Philadelphia and those who 22 do business in the City. Most of 23 these are things that the Department, 24 no matter how dedicated and hardworking, the staff cannot achieve 88 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 in isolation. Therefore, we will be seeking the support of other City departments and professional colleagues to further develop and implement these initiatives. These initiatives include: partnering with the Personnel Department to increase the number of customer-service agents in the Department's contact areas by 12 percent from a total of 125 currently 13 to 145 in Fiscal Year 2009. Funding 14 this initiative is included in the 15 proposed General and Water Fund 16 budgets for Fiscal Year 2009. Implementing interactive voice technology and the call centers of both the Tax and Water Revenue Bureaus and coordination with the Mayor's Office of Information Services. The Water Revenue Bureau will implement application for account balances with a new billing system that went live on January 2, 2008, while taxpayer 89 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 services will implement application for real-estate tax balances during calendar year 2008. These IVR applications will reduce the number of callers who need to talk with customer service agents and, as a result, reduce the wait time for callers. We will explore evaluating additional IVR applications incrementally in later fiscal years. Fully realizing the benefits of the newly implemented water bill 14 system. The system automates several processes that previously were entirely or largely manual. It also provides for the retention of more customer data for longer periods of time. This will increase (indiscernible) the ability to staff to provide service for customers who have concerns about their bills. The new billing system will support increased customer service online and on telephone and will support 90 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 integration with other e-business applications. Many of these enhancements will be implemented during calendar year 2008. Working with the E-government Steering Committee to increase electronic payment options.
This includes continuing the increase in credit card payments, implementing e-check payments, increasing the use of automated clearinghouse payments by businesses and exploring the provision of payment kiosks in areas outside of Center City. These online options, in addition to credit card payment options, would allow customers to increase uses of the Department's website and divert more customer traffic from in line to online. Increase of the use of the Department's website by taxpayers and Water customers. The Department's website provides information on all taxes that the City and School 91 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 District levy as well as tax forms that be downloaded and Water and real estate tax balances. There were -- over 5 million visits to the Revenue websites were made in 2007, reducing the number of in-person and telephone contacts handled by Revenue's customer service agents. Educating our customers and our taxpayers about information and electronic payments methods that are available via the Internet about pay-by-phone opportunities and about payment kiosks that are available in the concourse of the Municipal Services Building. Building upon relationships with tax practitioners in our market to assist us in championing our technology and services. In summary, I am pleased and honored to present my first budget request at City Council. This request, if approved, will help the 92 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Department of Revenue achieve its mission of maximizing the collection of all revenue due to the City while also maximizing customer service. This concludes my testimony.
Thank you, Commissioner, and, again, welcome. You are requesting 271 full-time General Fund positions for FY '09, which is exactly the same as you budgeted for FY '08; is that correct?
Can you tell us how many of these employees actually are directly involved in the collection of revenues?
All of those pretty much employees are within the stream of collecting revenue. The majority of the positions are customer= service positions, which would be working down in the taxpayer services area. 93 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
So how many actually do -- are involved in the collection department?
Total number, I guess, right now is -- I mean, technically, everybody who works for the department is going to collect revenues. Clerical positions aren't doing that but they are assisting us with -- you know, seeking our mission of collecting the revenues for the City and the School District.
If you were given additional positions, would you be able to generate additional revenues?
Can you tell us what additional personnel you would need and the additional revenues that you might generate?
Again, with the positions that we're seeking to fill for next fiscal year, they would 94 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 be on the taxpayer services side, hopefully within the audit side as well. Again, my goal is to try to collect above and beyond what we've collected thus far this year. Again, I need to sit down and continue with the relationships with the Law Department to move forward. I don't want to quote a direct amount we would collect without sitting down with our Law Department to come up with a good number.
Yeah. I think you're talking about vacant positions that you presently have.
I don't know how many they are. For the record, if you would tell us how many vacant positions you have, and my question is actually: How many more positions would you need above the 271?
I can't 95 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 quantify that for you right now, Council President; we're in the middle of putting the plan together to figure out what we will need down the road. I think, right off the top of my head, I could tell you we probably need some more audit staff because right now, our audit staff has been depleted with the Drop Program with retirements. That would help us out with -- to have the ability to go out and make more assessments on businesses within the City limits and businesses outside of the City that we could possibly do audits on.
So, again, Commissioner, I'm asking: How many vacancies do you have?
The vacancies right now that we have are twenty vacancies.
That's a lot. Would you please explain the 96 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 process that occurs once a taxpayer's account becomes delinquent?
For taxes, on business taxes, when a person first goes delinquent --
I'm sorry. You're going to have to identify yourself for the record.
Oh. James Haley, Deputy Revenue Commissioner. For a delinquent business taxpayer, the Department of Revenue does an initial billing. If that goes unpaid, roughly 90 days. If it's a smaller amount, right now below -- $500 and below, it will go to a collection agency. For $500 and above, that stages to the Law Department for their enforcement.
We apparently haven't been too successful. The City Controller just released his report on the review of delinquent water and sewer accounts, 97 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 which amounted to $161 million. Out of that amount, 117 million, which represents 62,000 customers, have been delinquent for more than three monthly billing cycles. Can you explain what measures you are taking to collect these funds?
I'm Marlene Duley, Deputy Water Revenue Commissioner. Basically what happens now is, the enforcement tools that are available in the Water Revenue Bureau is the enforcement tool of shutoff, and the enforcement tools that are used through the use of the Law Department in litigation. Presently now, if an account is -- becomes delinquent, past due, beyond 30 days, we serve them due process. And from that due process, residential accounts receive two notices, commercial accounts receive 98 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 one notice, and then they are subject to termination of service. As you are aware of, we terminate service between April the 1st and November 29th. There is a moratorium during the months of -- of December through the end of March. All accounts that are eligible, that are past due, are subject to the notification, and they are terminated. What you're seeing in the report -- in addition to the termination of service, we are required to remove -- to leave on the books for financial presentation all accounts that are delinquent up to 15 years. Those -- yes, yes, they remain on the books for 15 years. They remain on the on the books. Unlike the gas and electric companies that can write off their receivables, we do not write off those receivables. But those accounts -- so we have accounts 99 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 that service has been terminated. In addition to that, the Revenue Department refers accounts to the Law Department for judgments to be placed against the persons and also for the accounts to be pursued by the Law Department for additional collection activity. All accounts that are over 90 days' old have been sent through the process and are sent to either the Law Department for judgments to be placed against them. Additionally, the counts are liened, and then we also have shut off.
I'm just wondering, you say you keep them alive for 15 years, so to speak?
Well, we just carry them on our records for 15 years; is that what you're saying?
We're required to, 100 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 yes.
There is a -- under Chapter 19, Section whatever, there's something that states that the receivable is to be carried for 9 years. And, I think, under the 10 previous commissioner -- we can get you 11 a copy of that. 12
That's for the 15 water utility that is governed by the City of Philadelphia, yes. I don't know about other utilities. And I would say that most utilities don't carry them for 15 years. But we, as a city government, have made that decision that these accounts are to be carried for 15 years.
Point of information. 101 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
Good morning. Do you know how many -- how much of the amount due you is 90 days, 180 days, one year, two year in terms of the 161 million versus, you know, years? And could you tell that? 11 'cause that's probably collectible and 12 the rest is not. 13
We can get -- we 14 can get information for you on the 15 amount of accounts that are paid normally within the 30, 60, 90 days. I would not be prepared to quote them to you right now.
I'm not asking for that; I'm asking for an aging accounts receivable.
The 102 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Controller's report commented on possible fraud within the Water Revenue Bureau. Can you tell us what steps you have taken to investigate this allegation, and can you share with us what have been your findings?
Well, let's see. One of my duties -- I'm also the integrity offer for the department. I work with the Inspector General's Office. Any complaints, allegations, incidents of that nature we refer to the Inspector General's Office and work with them.
Well, are there many investigations ongoing, if any?
There are investigations that are ongoing. The one cited by the -- in the Controller's report, the person was forced to retire.
I'm 103 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 not going to get into that because if their investigation is still going on, I certainly don't want to interfere with that, but I'm glad to hear that you have referred them to the appropriate authority. On .55, you're requesting $2.4 million for collection agencies. What is their compensation?
When you're saying "compensation," are you talking percentages or the what they're getting throughout the course of a year?
The percentage rates that the collection agencies are getting from the department right now are anywhere from 14 to about 19 percent. Dollar-wise, I couldn't tell what you we have spent year-to-date on agencies. We can get you that dollar amount what you're looking for on what we spent year-to-date. 104 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
How many collection agencies does the Water Department have?
Can you get us that information, please? I'd be very curious to see what it is we're getting.
What is the status of your new billing system, the Project Ocean, and what will be its final cost to the Water Department?
Currently, the Project Ocean -- as you know, the 105 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 system went live on January 2nd of 2008. We are getting bills out on a timely manner to our citizens in the City of Philadelphia. We currently expect to spend in the next fiscal year $1.6 million on that project. The project was underbudgeted by $900,000. It was budgeted for 6.8 million and we only spent 5.8 million on that project when it was completed.
Can you explain why it costs the Revenue Department more to collect the City's water bills, 22.2 million, than it costs to collect all of the General Fund revenues of $17.2 million?
Currently, the staff in the Water Revenue Bureau, it's for 260 full-time people. The staff is at the time period a little bit larger than what the revenue side of it is, and the costs are shared with the Water Department also as well. 106 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 And some of the funds are shared costs with us because of payment processing that is downstairs in the concourse that is funded with Revenue and Water Revenue side of things also because, again, a lot of billing is coming from the Water Revenue side more during the course of the year than on the Revenue side.
Okay. The Water Fund is more money. Again, we have 260-plus positions there currently compared to the Revenue side. We also share the costs from the Water Fund that goes through the payment processing side of things downstairs in the concourse for the equipment usage for the positions downstairs as well.
Thank you, Madam President. 107 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 I wanted some clarification on in our operating summary, where we -- where prisons are listed. I don't understand -- I want clarification on all of those charges, what telephone reimbursements are, what work-release board increase is and inmate account fee and other. Can you explain those charges?
On , where it says "Prisons," can you explain all of those charges for prisons?
Telephone reimbursement is one, and that's 46. Number 47 is work-release board increase. The third is inmate account fee, and the fourth is other. (Witness comes forward.)
Madam Chair, 108 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Steve Agostini, Budget Director. Those revenues are specific to the Prisons Department. For example, the reimbursement on the telephones were implemented by -- or proposed by the Prisons Department as a way to recover additional revenue. I believe that Prisons is before you sometime later this week, either Tuesday or Wednesday, so you may wish to ask the Commissioner then.
All right. I'll wait till -- so shall we ask Prisons all of the questions?
Thank you. We're happy to wait till then. Thank you.
You're welcome. The Chair recognizes Councilman Green. 109 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
Can you tell me how many employees are assigned at water collection, Water Revenue collection?
Currently for the Water Revenue collections, there are funding for 260 positions.
So the 20 vacant positions you mentioned earlier, 110 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 that's on the Revenue side?
We intend to fill these positions. We're trying to work with Central Personnel to get all of these positions filled.
Well, based on your testimony, Project Ocean created efficiencies, you said, that many of the tasks that were performed manually can now be performed automatically. How are you within your own agency changing work-flow processes to take account of these efficiencies?
A lot of efficiencies were made in the area of automating our collection process. So we're in the process now of working with the staff, of redesigning our work flows. But that's where the great 111 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 efficiency was obtained, in a case- management system for the Water Revenue Bureau, which we didn't have before.
Okay. So do you need all of the positions, with the efficiencies that have been created by the automation of many of the former manual processes?
Yes, because a lot of the attrition that's taken place previously, we've gotten rid of most of the fat. So what we have now is, we have a new type of worker. And the numbers that we have been carrying reflect previous drops in staff, so I will say yes, we still need that.
I would be very interested in seeing what the work flow processes change is that you come up with as a result of doing this study.
Do you take -- I know that you take online payments. Do you still continue to charge people for the use of a credit card?
Yes. We are still currently charging. Again, we're looking, as a committee, to look at that fee and other fees to do away with them, which we, again, probably would increase usage.
And would that not lower costs of collection, otherwise getting checks and having people deposit them and et cetera? 113 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
Having people pay online eliminates a lot of the back-office costs of having people pay by check, by mail, otherwise 'cause letters don't have to be answered, deposits don't have to be made. Have you done a comparison of that, you know, 1 percent fee versus the savings that the department will undertake in back-office operations?
We have not done that currently with the committee, but that's something we're looking to move forward with to get a comparison on it.
When you complete that comparison, would you please provide it to the Chair?
Do you allow automated debit, like when I -- people get loans, people, you know, for a car 114 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 or other things, you can sign up with that provider or that dealer or whatever to allow you to automatically debit your bank account so that you don't have to worry about it every month. Do you permit automated debit at the moment?
We do currently have taxpayers and citizens paying taxes and water with ACH payments currently and even credit cards, yes. And that will hopefully continue to increase --
The automated clearinghouse, when someone's going to do it automatically through their account on a monthly basis.
Okay. What efforts -- can you describe any efforts 115 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 by the administration to increase revenues from the State and federal government?
You're just talking about in general? Life, for example, the money we may --
Okay. You mentioned that Project Ocean came in under budget.
And I was confused by that because I think I've read in numerous newspaper reports and other things that you were way over budget. Are you talking about the last process that was conducted by MOIS, or are you talking about the overall project?
For me, I'm talking about the current project. 116 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Working with MOIS, I know over the previous years, it has gone over budget, but I'm specifically looking at this Project Ocean with basis two.
So I have a specific question now about, and this is probably for the Deputy Water Commissioner. My understanding of the previous accounting system for the Water Department or for revenues owed to the Water Department is that there were no audit controls in it. In other words, an employee could go in, zero out someone's account or, you know, add $10,000 to what they owe, and there would be no 18 way of checking that because there are no sort of other records, and there was no log-ons required. Is that correct with respect to what was true in the past?
That was -- that was true in the past. In the new system, there is an audit trail that's 117 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 left by anyone who interacts with the system. And there is a -- there is a security profile put in place so that anyone who has to access the system must use a non-generic sign-on.
So it's not the computer itself; it's that per person's log-on.
Any change they make is recorded, and the old information --
Thank you very much. 118 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam President. Commissioner, good morning.
I don't know if you can answer all of this question at this time, but if not, I'd appreciate you providing a report to the Chair. Here's the question: During this budget process in years past, we learned that the Revenue Department, along with the Police Department, was not collecting monies due to the City in a program where police officers work overtime. The police officers were paid and there were millions of dollars uncollected by the Revenue Department and the Police Department. Could you tell me the 119 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 condition of that program presently, and that your satisfaction or lack of satisfaction on how collecting the money that is due to the City of Philadelphia that the Police Department had paid officers to perform work off-duty and security applications?
Councilman Rizzo, currently, we have a meeting set for two weeks from -- actually two weeks from now to discuss that program. From looking at the numbers currently -- and I can't tell you off the top of my head of them -- I'm not really satisfied with that program, so we're going to sit down to put our hands around what we need to do between the Department of Revenue and with MOIS to work on trying to increase those collections.
So you're telling me that right now, you're not satisfied with the way that is working? 120 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
I'm not satisfied on the collection numbers. There's a lot of cases out there that are probably 60 days' delinquent with us. Again, I can't tell you the numbers, but for me, I'm not satisfied with it.
Commissioner and Madam President, I would like on this issue to have the Revenue Department come back -- as you know, we were quite involved in this issue -- to report after that meeting, 'cause I've been assured for years now by the Police Department, by the Deputy Commissioner, that this program is working and working well. And for the Revenue Department to have some concern, whether it's founded or unfounded, I'd still like to have them back eventually to report on that particular issue.
Very well. 121 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Are there any other questions from members of the committee of the Revenue Commissioner? The Chair recognizes Councilman Green.
While we have Mr. Agostini here -- and thank you, Madam President -- I thought maybe he could answer the question I just asked. What are we doing to get additional resources from the State and federal government, or what's the administration trying to do to increase funding from those two sources, for the record?
Madam President, Steve Agostini, Budget Director. I knew I shouldn't have said anything. For the record, we have had conversations. We had one meeting, briefing with the Secretary of the Budget from the Governor's Office. And we have raised concerns -- 122 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 I believe these are longstanding concerns -- with issues like court funding and funding for similar kind of State-mandated programs. I guess the best we can say is that they understand our concerns, and it isn't -- it isn't clear or likely that we would get additional revenues for that, but they certainly understand where we are with that and what our concerns are with that lack or absence of additional funding.
Was there any specific discussion about the Supreme Court opinion that requires the State to fund every court system in the -- county court system?
Councilmember Green, not in any of the meetings I attended. That may have occurred in other meetings.
Is there any objection by the administration to zeroing out the court system budget 123 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 since that is -- clearly, we've all taken an oath to uphold the state laws and the constitution, and the Supreme Court has ruled that it's a state legislature obligation, and I'd just like to know, why don't we just zero it out of the budget?
Yeah. We actually used that approach. I guess, ten or fifteen years ago, we used it every year. And in the end, it meant that we had to come back and do a transfer ordinance because -- I mean, in the end, the courts will mandamus us and we'll lose.
Well, I think that was before the 1998 special master order, but the court cannot --
I don't see how the courts can mandamus the City of Philadelphia when there's a Supreme Court order that the state legislature 124 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 is responsible. Have we --
I understand what you're saying, but that's the way it's played out in the past, and I can give you more information off line about that.
Thank you. Are there any other questions from members of the committee? The Chair recognizes Councilwoman Miller.
I just want to have a couple of, I guess, for me clarifying issues under "Customer Service Standards Improvements." In the second paragraph, when you say that the taxpayer services 125 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 side, that the response rate is expected to improve from 55 percent to 56 percent, on the Water Revenue, 63 to 65, what exactly does that mean? Does that mean, like, 44 calls go unanswered? What do you -- can you clarify that?
We're primarily saying that we will get to more calls and be more responsive to them than what we have been currently into the next fiscal year.
So -- but if you say that you have -- right now, you have a 55 percent response rate, and you want to move it up to 56 percent. That's 55 percent of what, telephone calls being answered, moving up to 56 percent of unanswered calls? I mean --
So there's like, 40-some percent of people that just can't get through because you 126 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 don't have enough staff?
Forty percent of those calls would be dropped calls; some people may drop off. Some of them due to, right now, the limited staffing, per se, are not getting in to be serviced efficiently and effectively.
You know, it is frustrating when you call departments. As a customer, you know, when I call places and I get that voicemail that tells to you push this and push that and push this, then you just get disgusted and you just hang up, or you just hang in there and it takes forever, you know, for calls to be answered. So I just wanted -- so you're moving towards the voicemail and increased staff? 127 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
Yes. We're looking to increase our RVR systems and the staffing to be able to get to the phone lines and take care of the taxpayers as they should be satisfactorily serviced.
Okay, all right. Thank you. Thank you, Madam President.
Any other questions from members of the committee? (No further questions.)
Seeing none, thank you, Commissioner. Thank you.
Thank you. All right. The committee will stand in recess until tomorrow, 128 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Tuesday -- oh, Councilman Clarke?
Madam President, I had a couple of questions for Mr. Dubow, a couple of follow-up questions.
Mr. Dubow, please come forward. (Mr. Dubow returns to witness table.)
Hello. Mr. Dubow, on the wage-tax issue with respects to the different rate for resident versus a nonresident, what's the history of that? Why do we have a --
I believe it's in the state legislation. I think there was -- it dates back to a rate increase, I think, in the '80s. There was a reaction among the nonresidents to the increase, and then I think there 129 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 was state legislation that required that the nonresident rate be lower than the resident rate.
Is there -- do they require to the level of specificity that there has to be a difference in the percentage between the two? Do they set -- should there be -- I mean, let me ask you the straight-to-the-chase question.
Yeah, right, basically. So, basically, are we allowed to reduce the resident wage rate without reducing the nonresident wage rate?
I want to -- I think the answer is yes, but I want to make sure and check with people in the Law Department.
So why -- 130 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 is there a reason why we wouldn't do that? Given the fact that a resident in -- I think my understanding is, if a person lives in the City, the likelihood of that money generated by that individual will probably go through the local market several times as opposed to a person who lives outside the City that gets their check and the likelihood is they're going to spend their money outside of the City of Philadelphia.
Yeah. I think the reason is concern that what happened before when there was legislation mandating that a nonresident tax not be increased would happen again.
Well, we're not talking about increasing the nonresident wage tax; I'm saying, why would we opt to focus most of our wage tax reduction on the residents?
I think we actually -- 131 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
If you -- if you're looking at the gap between resident and nonresident, I'm... I think I'll have to -- I think over the life of this plan, it actually shrinks a little. And I understand your question and I think the reason is our concern about what the recreation from the State would be in terms of imposing requirements on reductions on the nonresident side, so I think we have to be really careful with how we proceed.
Thank you, 132 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Madam President. Are there specific rates set in terms of wage-tax reduction reductions from gaming revenue?
No. There are -- there is a distribution of how that money has to go between resident and nonresident, so that money has to be allocated in a specific way.
-- in terms of how wage-tax reductions have to be set in terms of resident and nonresident.
How those dollars have to be distributed, but if we're putting some of our own money in, then we can change rates.
Okay. Thank you. 133 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Thank you, Madam President.
I didn't hear that question. I mean, I heard the question; I didn't hear the response. I'm sorry.
And that's the way that money has to flow. If we -- it doesn't say, though, that the City, in allocating its own money, has to have a specific split between resident and nonresident.
So we don't have to apply any of our tax-reduction 134 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 program money generated from the City's General Fund. We can apply that if we wanted to, we can apply that only to the resident.
We could. My concern is, then, the restrictions on the State money would probably change, 'cause they would probably try to compensate for that, if we only did resident with our money.
Well, 'cause I think they would say that we were taking money from around the State that was going for tax reduction and using that so that we could change our program to put less of our money into the nonresident rate, so that we're getting money from around the State, and the result of it was that we were pulling money away from tax reduction for people who don't live in the City. I mean, it's something we can 135 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 explore with people at the State, but that's my concern.
The Chair recognizes Councilman Green for a point of information.
I apologize. I stepped out for a second. Can you just repeat what you think the law is with respect to what we can do with the money that comes from the State in terms of --
The gaming revenue comes to us and it is divided between resident and nonresident reduction. There's a specific amount that is allocated for resident and a specific amount that's allocated for nonresident.
In terms of 136 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 percent, and then they actually just tell us what the dollars are.
And that formula doesn't change if, say, we had far more people all of a sudden working outside of the City or inside of the City; it's a fixed formula?
So then what was the discussion you were just having about the resident portion?
The Councilman asked, could we then decide that we're going to take our money, the City's General Fund money, that we, you know, dedicate to reducing rates and say we're only going to do it for resident, we're not going to use any of that reduction for nonresident. And I said I had a concern 137 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 that if did that, that there would be reaction from the State, and they would switch the formula for the -- for the gaming money. And I said, you know, we could talk to them and see how they'd react, but that that's my concern.
Okay. Real quick, getting back to the earlier discussion about job creations.
As a result of tax reduction. When you're doing an analysis on what taxes to cut, 'cause now we're looking at net-profits tax, and I know in prior years, we were looking at specific taxes to -- based on the lobby of the day, to cut taxes that would benefit different categories of employees or employers. Do we look at -- or can we look at the people who are of most 138 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 need? And I know we've done that to some degree with Councilman Goode's tax credit program. Looking at the job opportunities that most likely will employ these people based on the statistics related to the unemployment rolls or the underemployed rolls, to focus tax reductions on those businesses that will more than likely hire people from the City of Philadelphia who are either unemployed or underemployed. And that's a complicated question.
Yeah. I think what we can do is look at, you know, for example, for the gross receipts portion of the business privilege tax, we can look at, you know, who the largest payers are and what kind of businesses they are and, you know, what kind of jobs they typically would have. I think that's a way of getting at your question. 139 3/24/08 Whole 08022,154,55,56,57,60,61,68,73
Yeah. I'm -- yeah, my issue is, as I said earlier, you know, cutting taxes is fine, but at the end of the day, it should at some point equate to creating job opportunities for the citizens in the City of Philadelphia. I mean I don't represent the suburbs and, you know, I'm sure that their elected officials look out for the people that they represent. But I would like to see us focus on a program that's going to, you know, aggressively attempt to employ the people in the City of Philadelphia.
I'm just looking as you do your analysis on what taxes. Now, some people say, Well, a particular tax that we propose, well, the lawyers, you know, get reductions as a result of that. Or some people 140 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 say another category.
And at what point do we look at those folks who are of most need? When do they get the, quote/unquote, tax cut, particularly given the fact that in this discussion, we're being asked to eliminate the tax- reduction program for lower-income individuals.
I mean I know -- I've been sitting in this room, you know, for a lot of years. And people say, Yeah, we're going to look into it. You know, there's looking 141 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 into it and then there's really looking into it.
Well, we'll do the analysis and we'll get it to the Chair, and then we'll sit down with you and make sure that it gives you what you want.
The Chair recognizes Councilwoman Miller for a point of information.
I asked a similar-type question about a week or so ago in the budget hearings. And my question was: Is there some strategy to reduce business taxes but is there some strategy that also ties in, you know, recruiting those types of businesses that will then hire Philadelphians to help us begin to decrease the poverty rolls and the 142 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 unemployment rolls? I mean, you just say, Oh, we're going to reduce taxes. Okay, fine. Then people say, Oh, we're going to get more businesses in the City, but I don't think that -- I've never heard since I've been here that there's some type of strategy, you know, to go and outreach to businesses that will then be able to either move in the City or open in the City to begin to employ City residents that need jobs.
We'll make sure, when Commerce comes here, that they can answer that question and describe that strategy for you.
Yeah. I was at the -- on Thursday, I was passing by the Philadelphia Convention Center -- or Pennsylvania Convention Center, and I saw all these men coming out. So I went in, and it was 143 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 actually the Urban League and Sunoco were doing a recruitment, and so I took the recruitment for something they call "refinery operators," and I took the information home and I read it this weekend, and it looks like they may hire ten people per refinery. There's three -- you know, Marcus Hook, Philadelphia, and I believe the other one's in New Jersey. But there were hundreds of men coming out, you know, for potential maybe 30 of them getting employed. So we do have people out here with skills, with knowledge, that can work and want to work. And that was a pure indication, if people think there's a chance of getting a job, they're there. So we need to tie in our tax reductions to recruitment to help decrease the poverty rates and the unemployment and increase the unemployment rates here in 144 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Philadelphia. People need jobs.
But I don't think -- you know, none of the administrations since I've been here have actually, to me, ever said, This is our goal as it relates to increasing employment around here. Thank you, Madam President.
You're welcome. The Chair recognizes Councilman Green.
Thank you, Madam President. As a corollary to the issue about unemployment, just to discuss the working poor and an issue was raised by Councilman Clarke, would there be any objection from the administration to applying the local General Fund money to keep the Cohen tax cut in the out-years? And if you could address two things there: 145 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Number one, money in those hands is most likely spent in Philadelphia, so it has a positive economic impact that is extremely local. And number two, just -- I'm not sure I would understand the objection to that, given the large wage tax decrease we're going to get through gaming anyway.
Let me -- I will take that question back, and we'll get back to you.
You're welcome. Are there any further questions or comments from members of the committee? (No response.)
Seeing none, this committee will stand in recess until tomorrow, Tuesday, March 25th, at 10 a.m. 146 3/24/08 Whole 08022,154,55,56,57,60,61,68,73 Thank you very much. (Proceedings end at 12:19 p.m.) * * * 147 C E R T I F I C A T E I HEREBY CERTIFY that the proceedings of the City of Philadelphia Council Committee of the Whole are contained fully and accurately in the stenographic notes taken by me on Monday, March 24, 2008, and that this is a true and correct statement of same. __________________________________ JOSEPHINE CARDILLO Registered Professional Reporter (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)