Could you please put them on some kind of chart so people can see them?
Thank you. The Chair recognizes Councilman Greenlee.
Thank you, Madam President. My question is sort along the same line as Councilman Kenney, the beginning of it, as a follow-up to 46 4/14/09 - WHOLE - BILLS 090212, etc. Councilwoman Brown, and I know you said you were going to provide us information, so maybe this question is slightly premature, but I just want to be clear. The seniors that you're saying you're going to be able to help, they're the ones that are eligible for the program as we speak?
So there wouldn't be any extension. Because, see, I think that's the concern with a lot of people, that those programs are great, but they kind of only hit the low, low income almost.
And there's a lot of people who are above that limit but still would have a problem obviously with a 19 percent, or something like that, tax increase.
So I 47 4/14/09 - WHOLE - BILLS 090212, etc. guess we're still -- and obviously that's one of the dilemmas we have, because the more people you include, the less money you get, I understand that, but I think that is what maybe all of us are hearing from, are those people that are not eligible for that but still would be under a real hardship to get a pretty sizable real estate tax increase.
Right. And that is part of what we're looking at. It's a legitimate question.
No. I understand. And the other part of that is, you're saying there's going to be other people included in trying to get in the information you're sending in response to Councilwoman Brown's question or have sent? Are there other people that are going to be included, low-income people?
That's what we're looking at. We haven't fully developed those plans yet, so -- 48 4/14/09 - WHOLE - BILLS 090212, etc.
So you don't have it yet. All right. I got you. All right. Thank you. Thank you, Madam President.
You're welcome. Mr. Dubow, the Administration has been saying that 58 percent of the General Fund budget is non-discretionary; is that correct?
Can you tell us the total amount that you have reduced and/or cut from the non-discretionary items?
Yeah. I mean, I'd have to go back and look, but, yes, we can do that.
How have you been able to achieve these savings if they are truly non-discretionary? 49 4/14/09 - WHOLE - BILLS 090212, etc.
Well, for each of them, we need cooperation or approval from someone outside the City's control. So, for example, we show reductions in our pension costs, but that would require approval from the state Legislature. We show reductions in our labor costs. That would require cooperation from unions or arbitrators. So there are a number of things that we show, but each of them are things we can't do by ourselves.
On of your testimony, you mention the potential consequences of Plan B reductions. If in fact these reductions could result in declining revenue collections, wouldn't you be increasing the deficit rather than reducing it?
We would be trying to manage so that that did not happen, but it is one of the threats of what could happen. So we will try to make sure it didn't. It's just a risk of some 50 4/14/09 - WHOLE - BILLS 090212, etc. of the cuts that we'd be making.
Can you tell us how were Plan B reductions determined?
Yeah. I mean, at that point, we were looking at each division and trying to just maintain core services, to the greatest extent possible, and the cuts were all things that we wouldn't want to do, but that we thought left most of the core intact.
Well, as we look at these reductions, we see that some of them could have revenue implications. Was that taken into consideration in determining Plan B reductions?
It was taken into consideration. It's why these things weren't in Plan A, and we know that each one of these creates a real challenge for us in terms of managing to make sure that they don't, for example, lead to a decline in revenue or that our financial 51 4/14/09 - WHOLE - BILLS 090212, etc. accounting system doesn't fail. So it would present some real challenges for us in making sure that these bad potential contingencies don't happen.
Thank you. The Chair recognizes Councilman Green.
Thank you, Madam Chair. To follow up on the question about Plan B, would you please -- and I'm asking every department this -- would you please provide the Chair with the exact positions in your department, exact 200 funds, whatever, that would be cut in Plan B so we can understand fully what the Plan B budget is. And if you don't have it --
No; we have it. What I'm concerned about is, because our department's positions is relatively small, there are exact people who are in Plan B who may not know that they're 52 4/14/09 - WHOLE - BILLS 090212, etc. there yet. So I'm worried about -- we can give you the numbers --
Well, you're asking us to approve a budget that's contingent, and I want to know what that is.
I guess what I'm asking is, can we give you the number by unit instead of each specific position?
Okay. So do you happen to know -- have you compared what a three-tenths of one percent increase in the wage tax means to the average family on the chart that the Administration provided on of the Five-Year Plan compared to, in terms of dollars out of pocket for a family, compared to the real estate property tax increase? 53 4/14/09 - WHOLE - BILLS 090212, etc.
We've done a number of comparisons and scenarios for what wage tax increases would mean compared to property tax increases, and when we provide the chart that Councilman Kenney asked for, we can include that information.
Would you be surprised to learn that the average Philadelphia family would pay $250 less per family to the City if we go with a wage tax versus a property tax, which would mean seniors who are retired pay nothing more?
Right. We know -- and we're going to go back to an area where we've had disagreement before. One of our big concerns about the wage tax is what other implications it would have in Harrisburg, and so when we look at scenarios, we look at other potential impacts, which would have a very different outcome for taxpayers here.
What 54 4/14/09 - WHOLE - BILLS 090212, etc. legislator has told you that we won't get our sales tax increase if we increase the wage tax?
What we've been told is that there would be a severe negative reaction. I mean, the first thing they told us is --
-- the gaming revenue was at risk. I'm not going to tell you names of people we had private conversations with.
Because we've all spoken to legislative leaders too, and they told us as long as we're building casinos, it's not a problem.
Would you ask the member to please identify who has 55 4/14/09 - WHOLE - BILLS 090212, etc. told him that there would be no 3 implications if we raise the wage tax?
Could the Chair please ask the member if he could identify which legislative leaders has told him there would be no implications if we raise the wage tax.
I've spoken to a number of caucus leaders and also people in the leadership in the state House.
Well, if Mr. Dubow is expected to give names, perhaps you should do the same.
Okay. Just wanted to know if we play on an even playing field here. Thank you.
Have you spoken to people in leadership that have told you that? 56 4/14/09 - WHOLE - BILLS 090212, etc.
Okay. And have they told you that since the Mayor announced that the casinos were going to be up and running in FY11?
So in the last four days you've had conversations with leadership?
The Mayor announced that the casinos would be up and running a couple of weeks ago, not just four days ago.
Okay. Well, I guess this is a point we'll have to disagree on.
The major point here is that we'll save Philadelphia families on average $250, 57 4/14/09 - WHOLE - BILLS 090212, etc. and for people who make $50,000 or less, which is most of this city, the percentage of their income, according to the chart that you have on of the Five-Year Plan, the percentage of their income that will be paid to the City in taxes will go from 1.2 percent to about half a percent of their household income, which is significant for families at that level.
And this, again, goes back to our difference in assumptions of what might happen in Harrisburg.
Okay. Well, we can resolve that one before May 31st, I imagine. The assumptions of stock market performance in the Five-Year Plan, so what assumptions is the Administration making about the performance of the stock market over the Five-Year Plan?
The Plan uses actually projections by the pension 58 4/14/09 - WHOLE - BILLS 090212, etc. fund's actuary and uses the fund's assumed return, which would be eight and a quarter if we get the change in amortization.
So what's the baseline in terms of -- my recollection is, when we looked at the rebalancing and when the budget stat sessions were held, was that you are basically holding the fund's earnings to zero throughout the Five-Year Plan.
We assume a 30 percent reduction in Fiscal Year '09, and it's been about percent through the 24 end of February, the loss. And then we 25 assume kind of a return to normal, which 59 4/14/09 - WHOLE - BILLS 090212, etc. I think some of we're actually starting to see, and that you get to about -- you get back to the fund's earnings assumption.
So just to close the loop on this, at the end of February the market was much lower than it is today.
So how much more money, assuming the market's at 8,000, not the end of February rate, how much more money does that add back in by year to the Five-Year Plan? And you don't have to answer that now. If you could get it to the Chair.
Well, no. What you have to look at actually is kind of where you end the year. In looking at it each month doesn't get you to where you'll be at the end.
And you would need 60 4/14/09 - WHOLE - BILLS 090212, etc. to have the actuary do another run. And the other thing to remember is that because of what was going on in the market in the pension fund, we did some shifting of our investments, so they're more conservative now. So that at least for this year, what the market does has less of a direct -- I mean, it still has a large impact, but what the stock market does isn't as determinant of what the fund does as it would have been in earlier years.
No. The pension fund, in terms of where new investments would go, switched its allocation to be more conservative.
Okay. But it's your testimony that you're basing it off a 30 percent decline. As of the end of February, we were percent down. 25
Maybe. We haven't seen -- I haven't seen our March numbers yet. I don't know where we are.
Okay. So what difference will that make if we assume percent down over the Five-Year 10 Plan and 25 percent down over the 11 Five-Year Plan and 15 percent over the 12 Five-Year Plan, if you could just provide 13 that to the Chair, because my time is up. 14
Thank you. The Chair recognizes Councilwoman Brown.
Thank you, Madam President. 62 4/14/09 - WHOLE - BILLS 090212, etc. I'm being very redundant, but I do want to underscore the fact that numbers really do tell the story for us. So when you've heard from a number of us that are deeply concerned about senior citizens, we look forward to that information that gives us the hard data, because that then informs us of how great the impact will reach.
Thank you, Madam Chair. So on the City's website is a chart called Efficiencies Service Enhancements for FY09 and FY10 Budget. Are you familiar with that chart?
I haven't seen the chart on the website, but I've seen charts that show our efficiencies. 63 4/14/09 - WHOLE - BILLS 090212, etc.
Okay. So many of these efficiencies are encouraging. However, for most items on the chart, no savings or efficiencies are put in in terms of dollar savings. So there's some identified which happened in FY09 that have specific dollar amounts, but the chart contains many items that don't have dollar amounts of savings, probably 30 or 40. Do you know what you're anticipated to save from those items?
I think those are all items that we want to implement, but that we do not have full plans of implementation yet for, so we don't know what the savings are.
Would you provide to the Chair your best guess of what those efficiencies will save the City?
For the ones where that's possible, yeah. For ones where we don't have an idea yet, there won't be 64 4/14/09 - WHOLE - BILLS 090212, etc. things for me to give you.
Well, you anticipate some savings or they wouldn't be on the chart.
I guess what I'm saying is, if we don't have good information, I'm not going to make something up, but we'll --
If you can't provide a number for an item that's on the chart in terms of savings, explain what information you need in order to come up with a solid number for savings in your response to the Chair.
Thank you. So the proposed FY10 budget includes 439,000 roughly reimbursement from the Philadelphia Parking Authority to the Bureau of Administrative Adjudication for processing of appeals and contested parking violations. I have several questions provided by the technical staff. 65 4/14/09 - WHOLE - BILLS 090212, etc. Is this an allowable cost for the PPA?
Okay. And how about under Philadelphia Parking Authority's bond covenants permit this?
Yeah. I mean, as far as -- yeah. This is a permissible cost for them.
And let the Chair know your response to that. 66 4/14/09 - WHOLE - BILLS 090212, etc. When we delegated authority to the Parking Authority, it authorized PPA to collect all revenues due to the City, except fines and penalties from contested on-street parking violations, and to pay the City said revenues in excess of costs incurred by the Authority. Because the PPA is not authorized to receive revenues from contested parking violations and does not incur any costs related to them, what is the basis for PPA paying the City's costs in collecting these revenues?
The basis is that this is still a function related to PPA activities.
Does the Administration proposal require, regarding the PPA reimbursement, require an amendment to the 1983 ordinance that delegated on-street parking authority to the PPA so as to provide for reimbursement of these costs?
It seems like what 67 4/14/09 - WHOLE - BILLS 090212, etc. would make sense for us, since you have this list of questions, is for us to -- it sounds like you probably want a legal opinion rather than a Finance Director opinion. So if you want to get us those questions, we'll pass it on to the City Solicitor.
Okay. That's great. And you may want to get back to the Chair about this. For the general provisions set forth in Section 16 of the Operating Budget ordinance, for each provision please describe the purpose of the provision and how often the provision is utilized, and then please identify any provisions that have been added in the past two years and the reasons for adding them.
Your testimony notes that reductions to the Finance budget in November 2008 rebalancing plan included reductions in 68 4/14/09 - WHOLE - BILLS 090212, etc. professional service contracts such as that for maintenance of the automated contract information system and cancellation of the upgrade to the Accounting data warehouse. How was the ACIS maintenance contract changed?
My name is Catherine Paster, First Deputy Director of Finance. The contract was changed in the '09 rebalancing. There were a couple of enhancements in the contract that we chose not to do. So the -- I'm sorry; in the system. So the system still functions. It's just some added benefits that we won't be allowed to have. I don't know what they are at the moment exactly.
Okay. Are you looking at, as part of the technology changes that are going to be proposed by Mr. Frank, going to the Oracle Systems Business Suite that the City owns and sort of getting rid of these Legacy 69 4/14/09 - WHOLE - BILLS 090212, etc. systems that cost a lot to maintain by outside contractors?
I know that's all part of discussions that we're having with the CIO.
Do you mean do we show savings from that in the Five-Year Plan?
-- do you plan to do it during the five years, whether or not you show savings?
That is what we've been talking about with the CIO. So we do hope to get that done.
And you anticipate no savings in your department as a result of this change?
We don't think that savings would be that large. We haven't quantified them yet.
Okay. I'm still waiting for reports from outside consultants and vendors with respect to the implementation of the technology changes that Mr. Frank is recommending, and I think a lot of the questions that were asked in the last two weeks, had we received responses when -- as far as I know, we've received no responses.
That's not accurate. We sent over well over 16 responses last week. 17 (Bell rung.) 18
That is, no 19 responses were provided to that question 20 other than the Deloitte report, which you gave us last year.
I think what the CIO said is that's the only report he had from last year.
That's not 71 4/14/09 - WHOLE - BILLS 090212, etc. correct. They just assumed that's what we were talking about, is what he said during his testimony. So I have many more questions on the topic of efficiencies in government, but first I need the response of Mr. Frank to all of my questions asked him last week. When can I have those, do you think?
Well, he sent a response over. I mean, I don't know what else to tell you. He did send a response.
He sent a response prior to his testimony. He sent a response to the questions that were asked during the Five-Year Plan.
Oh, okay. You're asking about the questions that were asked -- I'm sorry. I thought you were asking about that specific question. I don't know. I wasn't at his hearing. I don't know what questions were asked, but we can find out.
Okay. I 72 4/14/09 - WHOLE - BILLS 090212, etc. think Councilman O'Neill suggested sort of a kind of timeframe that we have for getting us timely questions, which was 5 hours. Is that something we can -- 6
Oh. 9 What kind of standard can we 10 expect so that we can be able to timely 11 ask different departments questions 12 based -- a lot of the questions that we 13 ask at the beginning, especially in the 14 Five-Year Plan, are necessary to ask the 15 department specific questions, and we 16 have a lot of departments appearing 17 before us. How long do we have to wait 18 to get answers to our questions? 19
It really depends 20 on the question. We try to get answers 21 over as quickly as we can. Some answers 22 require a lot of research and gathering a 23 lot of data and hearing back from people. 24 Those may take time. Some of them are relatively simple and we can turn them 73 4/14/09 - WHOLE - BILLS 090212, etc. around within a couple of days. But it really does depend on how much work is required to get the answer.
Well, it's just really not acceptable, because the questions that we ask now, especially of your department and other departments, will flow through to every question that we want to ask every department that's going to appear before us later. And, Madam President, we're going to have to have these departments back twice or three times until we get the answers to our questions. Thank you, Madam President.
I understand that we do get the answers as quickly as we can, but we want to make sure what we get you is accurate, too.
Last year I received most of the answers to my questions three days before we were required to vote on the entire budget, and it's just not going to be acceptable. 74 4/14/09 - WHOLE - BILLS 090212, etc.
Thank you. Are there any other questions from members of the Committee of Mr. Dubow? The Chair recognizes Councilman O'Neill.
On a more serious note, Mr. Dubow, since Councilman Green reminded me that hours passed a 16 long time ago, was that a complicated 17 request -- and if it was, I certainly 18 would understand, because it's eight days 19 now -- when I asked the Chief of Staff 20 and yourself for just a list of the 21 people under the Mayor, salaries and 22 titles and comparative to the last 23 Administration? You said some things 24 take longer.
I'm assuming that took longer, but I'm sort of having trouble with the complication of it. It seems pretty straightforward. Is that one of those sort of drag-your-feet answers?
No. We'll get that to you. If I could lip read, I would actually be able to tell you exactly what we're doing. They're trying to tell me where it is and I -- but we'll have that soon.
Thank you. Any other questions from members of the Committee? (No response.)
Seeing none, this Committee will stand in recess until o'clock this afternoon. Thank you. (Luncheon recess.) 76 4/14/09 - WHOLE - BILLS 090212, etc.
Good afternoon, everyone. The Committee of the Whole is now back in session. Our next witnesses will be? MR. McPHERSON: Is the Revenue Commissioner. (Witnesses approached witness table.)
Good afternoon. Welcome. COMMISSIONER RICHARDSON: Good afternoon.
Please identify yourself for the record and proceed with your testimony. COMMISSIONER RICHARDSON: Sure. Good afternoon, Council President Verna. Keith J. Richardson, the Revenue Commissioner. With me today is the Deputy Commissioner for Tax, James Haley, to my left, and Michelle Bethel, the Deputy Commissioner for the Water Revenue Bureau. We are pleased to be with you today to discuss the proposed FY 2010 77 4/14/09 - WHOLE - BILLS 090212, etc. Operating Budget for the Department of Revenue. The Department of Revenue is responsible for the collection of all revenue due to the City and for the enforcement of tax ordinances for the City and School District of Philadelphia. The Water Revenue Bureau is specifically charged with the collection of all water and sewer payments. The Department performs these duties while delivering quality customer service to all customers and taxpayers. The FY10 General Fund appropriation request for the Department of Revenue is 16,414,209. This is a decrease of 984,362 from FY09 estimated obligations of 17,398,570. This decrease is achieved primarily through reduced professional service contracts requirements, $270,000, along with reduced postage costs associated with eliminating business tax mailings for taxpayers who use preparers and through 78 4/14/09 - WHOLE - BILLS 090212, etc. elimination of certain mailings that have been identified as non-essential, 450,000. In addition, we will reduce full-time staff by eight positions through selected attrition, for a savings of 164,361, and eliminate a one-time non-recurring equipment purchase of $100,000. The Department is requesting 12,498,246 in Class 100, personal services, to fund 263 full-time and two part-time positions, $3,263,014 in Class 200, purchase of services, and 652,949 in Classes 300 and 400, materials, supplies and equipment. On the Water Fund, FY10 Water Fund appropriation request for the Department is 22,165,547. This is an increase of 1,645,146 from FY09 estimated obligations. The Department is requesting 10,990,857 in Class 100, personal services, which is an increase of 948,857 over FY09 estimated obligations. This funding will enable us 79 4/14/09 - WHOLE - BILLS 090212, etc. to fill as many as 34 current vacancies and reach staffing levels of 270 full-time positions in FY 2010. The Department is also requesting 9,873,851 in Class 200. This is an increase of 454,789 over FY09 estimated obligations due primarily to additional costs associated with enhancements of the new water bill 11 system, such as design of a new more customer-friendly bill, programming costs to implement interactive voice response applications to the Water Revenue Bureau's automated call distribution system and a postage rate increase expected to occur in May 2009. We are requesting 1,288,839 in Class 300 and 400, materials, supplies and equipment. This is an increase of 241,500 from FY09 estimated obligations due to increased requirements for computer and office equipment associated with full staffing of the Water Revenue Bureau. The FY10 Acute Care Hospital 80 4/14/09 - WHOLE - BILLS 090212, etc. Assessment Fund appropriation request is 145,000. This is the same as FY09 estimated obligations. The Department received Department of Public Welfare funds to support the implementation of a monetary assessment on the non-Medicare net operating revenue of acute care general hospitals located in the City. The new hospital assessment program is intended to generate additional revenues to fund Medical Assistance expenditures for hospital emergency department services in the City. The program is also expected to generate additional funding to support the City's public health clinics. The FY10 appropriation is 30,000 in Class 100, personal services; 100,000 in Class 200 for purchase of services; and 15,000 in Class 300/400, materials, supplies and equipment.
Enhancements and accomplishments: The Department has improved customer service performance 81 4/14/09 - WHOLE - BILLS 090212, etc. measures while closely monitoring costs to deliver these services. For the period July 1, 2008 through December 31, 2008, the Taxpayers Services Unit handled 21,100 walk-in customers, a seven percent increase over FY09 original projections of 19,750 for this period. The average wait time for these customers was 27 minutes, seconds, a full 2 minutes and 11 47 seconds less than the Department's 12 original projection of 30 minutes. For 13 the same period, the Water Revenue Bureau Customer Service Unit handled 37,037 and serviced these customers in an average wait time of 7 minutes and 51 seconds, 1 minute and 14 seconds less than the projected wait time of 9 minutes and 5 seconds. These performance improvements were achieved while reducing overtime costs on a department-wide basis versus the same period last year. For example, total overtime charged to the General Fund in FY09 for the period July 1, 2008 82 4/14/09 - WHOLE - BILLS 090212, etc. 8 percent decrease compared to the 340,000 in overtime used during the same period of FY08. The Water Revenue Bureau achieved similar results. Total overtime used for the period July 1, 2008 through December 31, 2008 was 263,777. 9 percent decrease compared to the 350,978 in overtime used during the same period in FY08. Increasing electronic transactions: The trend in using electronic transactions continues to increase. These transactions include credit card payment of taxes and water and sewer bills, ZipCheck or ZipPhone for direct payment from a bank account of water and sewer bills and debit or credit payments for those registering from the Automated Clearinghouse. In FY07, 1,198,177 electronic transactions were received. This number increased to 1,355,087 in FY08, and in FY09 it is projected the number will increase to 83 4/14/09 - WHOLE - BILLS 090212, etc. about 1,515,000. In the last quarter of FY09, the Department will install an additional remittance processing machine and add a second shift of workers to improve processing times of all incoming remittances. Council staff was given a tour last spring of the payment processing area and is aware of the challenges our staff face in processing payments during the annual tax season. 7 million machine transactions in FY09 and anticipates the full impact of the additional equipment will be felt in FY10 through reduced time to process machine transactions, resulting in quicker deposits of all receipts. Our Compliance Division hired five revenue examiner trainees to increase the number of business audits performed and to ensure all taxpayers are paying their fair share. In FY09, the Department expects to generate 16 million 84 4/14/09 - WHOLE - BILLS 090212, etc. in new audit assessments, a four and a half percent increase over FY08. The full impact of this hiring will be achieved in FY10, resulting in increased audit initiatives and increased ability to perform travel audits. It is anticipated that FY10 audit assessments will increase by percent over FY09 10 projected estimates. 11 In an effort to support our 12 Compliance Division initiatives, full 13 staffing of our Investigation Unit was 14 achieved. This resulted in a significant 15 number of audit and tax discovery leads 16 that resulted in increased tax 17 assessments in FY09 in excess of a 18 million dollars. New and improved water billing system: In January 2008, the Basis2 water billing system developed from Project Ocean began production. Since that time, it has successfully issued each of the approximately 480,000 monthly water bills. In April of 2008, the 85 4/14/09 - WHOLE - BILLS 090212, etc. system was turned on for automated delinquency and shutoff processing. During the first quarter of FY09, we completed our first year-end financial and audit reporting on the new billing system.
In the first quarter of FY10, we will introduce a new water bill design that is more informative and easier to read and understand. Enhanced public outreach: To ensure that taxpayers understand their financial responsibilities and the process involved with paying taxes, the Department of Revenue has expanded its public education and outreach efforts. The Department has sent representatives to community festivals to answer questions and provide literature to the City's taxes and made numerous presentations to tax practitioners and other interested organizations. In September 2008, the Department of Revenue launched ReveNews, a quarterly e-newsletter about tax policy and 86 4/14/09 - WHOLE - BILLS 090212, etc. administration in Philadelphia distributed via e-mail and available on the Department's website. It has nearly 600 subscribers and the list grows daily. In partnership with the Division of Technology, the Department of Revenue is also working on substantial improvements to its website to improve the ease of use and offer additional information. In FY09 the Department has contracts with the following MBEC/WBE/DBE certified contractors: Peripheral Systems, Pace Data Systems, Wendy Miller, Irina Sheynfeld. The Department also has a contract with Information Services Partner, Inc. in the amount of $425,920. While this contract is not a minority, the contract subcontracts 102,221 to Pace Data Systems, an MBE, and 55,370 to Peripheral Systems, a WBE. Thank you and this concludes my testimony. We are available to answer any questions. 87 4/14/09 - WHOLE - BILLS 090212, etc.
Thank you, Commissioner. The Chair recognizes Councilman Greenlee.
Thank you, Madam President. Good afternoon, everyone. COMMISSIONER RICHARDSON: Good afternoon, sir.
I just had a question, and I know that you talk a lot about staffing in here, because -- and I'll preface this by saying I'm not blaming any of you guys for this, but a lot of times people in my office tell me that when they deal with Revenue, they're told, Well, one of our problems is we don't have enough staff. They're told that by the people they deal with in the Department. Now, I know you talk about filling these current vacancies in Water Revenue. Do you feel comfortable that you have enough people to do the job, if 88 4/14/09 - WHOLE - BILLS 090212, etc. you will, or at least do it up to where you are now, or do you feel that there could be problems? I know that's a tough question for you. COMMISSIONER RICHARDSON: Right now I think we're giving C effort. I think with the additional folks we're looking to add to the complement, it will help us to move forward and provide a quality service to our customers.
And that's over all the services? Because I see you talk about filling those vacancies in Water, but then I see you say we reduced full-time staff by eight positions through selected attrition. COMMISSIONER RICHARDSON: Well, mind you that the tax side is General Fund. Water Revenue side is not General Fund money. So, again, we know with the General Fund side, we're losing folks to attrition and with the retirements that are coming in. So if we could replace them, that would be great, but we don't 89 4/14/09 - WHOLE - BILLS 090212, etc. foresee that happening within the next fiscal year.
You talk about generating revenues. Do you see your present position able to generate the same revenues as last year percentage-wise or more, if I'm making sense with that question? COMMISSIONER RICHARDSON: I have an idea what you're trying to say. Will the same revenue that was collected last year come in this year? I can't project that. Given the economy, as we all know, we can't forecast what the business privilege tax returns coming in hopefully starting tomorrow will be, because we know some businesses may be out of business or have generated less revenue in 2008 than they did in 2007. I can't say that. We, as a department, are trying to be more creative in working with our enforcement tools and generating especially within audits and discovery 90 4/14/09 - WHOLE - BILLS 090212, etc. more assessments on businesses that are not complying with the City of Philadelphia.
I guess what I'm getting at, do you feel that whatever revenue is generated, if it's less, it won't be because of staffing issues? COMMISSIONER RICHARDSON: No. 11
You do not? COMMISSIONER RICHARDSON: Not because of staffing issues, no. 15
Okay. Just to give you one example, but I've heard this a few times. People get notices from the Law Department saying you haven't paid certain taxes or whatever. They produce proof that they paid months ago, and the Law Department, lawyers for the City, have told us, Well, one of the reasons is, it takes Revenue a long time to give us that information. Do you see that? Is that how 91 4/14/09 - WHOLE - BILLS 090212, etc. you see it and do you see that -- if so, do you see it improving at all? COMMISSIONER RICHARDSON: I don't see it that way. However, again, we are working with the Law Department more in conjunction now to improve some things, improve reporting. Access to the system is a little bit better than we had in the past.
Okay. Because I guess just generally where I'm going with this is, if obviously the Department is a revenue generator, that it seemed if staff was cut back too much, that would hurt the generation of revenue. It's almost the old saying about penny wise and dollar foolish. But you don't feel that that is a problem? COMMISSIONER RICHARDSON: At the current staff level that we're at, I think we can continue to collect the revenue that is owed to the City, and, again, moving forward with the hiring of new auditors, again, we're being more 92 4/14/09 - WHOLE - BILLS 090212, etc. proactive now doing more travel audits, I think we will continue to create more assessments that will be owed to the City of Philadelphia. I think also because of our educational outreach to practitioners and to the business communities, I think that is telling folks they need to start getting compliant. I think also this fiscal year we've started with the delinquency of businesses on the website. I think that has started stimulating more compliance. We've been more proactive now doing audits with parking lots in the City of Philadelphia. Just, for example, today we had one business come in and comply and pay a very large sum of money that we didn't anticipate. So I think because we're out and about now, that will start stimulating compliance to --
Doing more outreach kind of thing. COMMISSIONER RICHARDSON: Doing more outreach. That's how it happens.
Good 93 4/14/09 - WHOLE - BILLS 090212, etc. enough. Good luck. COMMISSIONER RICHARDSON: Thank you, sir.
You're welcome. The Chair recognizes Councilman Rizzo.
Thank you, Madam Chair. Good afternoon. COMMISSIONER RICHARDSON: Good afternoon, sir.
Commissioner, I wasn't going to talk about this, but since you brought it up, Project Ocean. I thought we heard the last of Project Ocean, to tell you the truth, but now it sounds like we're asking for additional funds to complete the, how you say it here, additional costs associated with the billing system. 94 4/14/09 - WHOLE - BILLS 090212, etc. I understand this project has been very expensive to our city. How much of the money for Project Ocean came from your budget and this 454,000 additional? Could you give us the total cost of implementing the water bill, including the 454,000? COMMISSIONER RICHARDSON: Repeat your question again, please.
Project Ocean, the water bill, in your testimony you're asking for another 454,000 and, in your words, it is an increase because of the estimated obligations due primarily to the additional costs associated with enhancements to the new water billing system. The new water billing system is Project Ocean, correct? COMMISSIONER RICHARDSON: Yes.
So it sounds like we're still dumping money into this development of a water bill when I understand well in excess of $20 million has already been put into this project. 95 4/14/09 - WHOLE - BILLS 090212, etc. And I asked earlier I think to the Budget Director of what really did we spend, not just from your budget, from IT, from -- again, one of the confusing things about government is, the source of funds come from so many directions, we can never figure out what something costs us. So how much money did you spend on developing this water bill? Am I correct that this is additional money to bring Project Ocean to completion? COMMISSIONER RICHARDSON: Yes. When the system went live for Project Ocean, they were under budget by a million. So they spent about $5 million in 2007. Currently, we're asking for additional money because, again, the system needs enhancements for collection purposes. It's not built. You can't buy a system built with everything you need, so the system has continued to have enhancements that we need to help with collections, to help with municipal courts, to help with getting things to 96 4/14/09 - WHOLE - BILLS 090212, etc. the collection agencies as well.
Well, what I'd like to -- and the Budget Director doesn't need to come. I think one day we really need to know, we really need to know, because I just don't want to make up numbers. I hear that it could be 30 million. I hear it could be 40 million that we spent and eventually abandoned many of the parts of the project and got something that's very more basic than we originally anticipated when Project Ocean was still first put on the drawing board. We were trying to design something that we probably should have bought to begin with from a vendor. But my question again is, do you know how much the Revenue Department has kicked in to Project Ocean, your direct money? COMMISSIONER RICHARDSON: I'll get that information for you and get back to you.
And then the 97 4/14/09 - WHOLE - BILLS 090212, etc. Budget Director or the Finance Director, please, could we some day know what this -- I don't want to use the word "boondoggle," but what this project actually costs the taxpayers of the City of Philadelphia. The other issue that I'd like to take a minute to discuss with you is something before your time as Commissioner, is the police reimbursable overtime program. As you know, during this budget process, a few years ago we realized that police officers working off duty and the police officers were being paid, and the City was not doing a very good job, the Police Department at the time, of collecting the money from the companies or individuals that the police officers were working for. And I had this conversation earlier and I remember the number was about $6 million that was written off, and I understand that Revenue has come to the rescue of the Police Department, which I appreciate, 98 4/14/09 - WHOLE - BILLS 090212, etc. and has involved yourself in that process of managing oversight to make sure that the police do what they do well, fight crime, but the Revenue Department does what they do well, collect money. Is it safe to say that this police reimbursable overtime program is on track? I'm hearing that there was a time recently where we were starting to get into the hole again, and I hope that's not the case. COMMISSIONER RICHARDSON: As I expressed to you last year, I wasn't happy with the program. However, this year we've met with Deputy Commissioner Gaittens and Deputy Mayor Gillison. We're moving forward to make this a better program. We are looking forward to now trying to require the businesses that are in Philadelphia using the police or ones coming through the City to start making their payments go automatic to us thought ACH. So we're trying to set some parameters. Anything $5,000 and above 99 4/14/09 - WHOLE - BILLS 090212, etc. that they may owe us, we want our money cleared, not a check being mailed to us. (Bell rung.) COMMISSIONER RICHARDSON: So we're trying to also have the system that this is built electronically, so when you're going to go into the Police Department, you put your information in there, we want to also capture -- because the delinquency in the past, the corporate officers who were dealing with the company, how to reach them and contact them, so if they're going to go by the wayside and become delinquent, we have a way to reach them. But I'm confident to say with the Police Department we're moving forward being more progressive and trying to do things more in a 21st century of electronic Internet usage for these businesses and capturing the money faster, too.
Commissioner, we wrote $6-plus million 100 4/14/09 - WHOLE - BILLS 090212, etc. off. Am I hearing that we still don't have the full engagement of the Revenue Department in this process? COMMISSIONER RICHARDSON: We are engaged in this process because we're trying to change it to make the police do their job and us collect the money. We're trying to take it to electronic age. So that's where I'm trying to say we're going with this further. We've been meeting with them already to move forward with this.
Commissioner, this has been going on now for over a half a dozen years and I cannot believe what I'm hearing today, that we -- I was hoping to hear you say that this program is solid as a rock, and that's not what I'm hearing. COMMISSIONER RICHARDSON: What I'm trying to say to you is, I can't talk about the past. We are trying to change the ways of the past to make this a better program. 101 4/14/09 - WHOLE - BILLS 090212, etc.
Commissioner, we've been here now a year and three months, and I think in a year and three months, that's a significant amount of time and I think it's enough time to have this program on a solid footing. COMMISSIONER RICHARDSON: Well, as I said to you, I think this program is doing much better than it did last year when I started. Am I going to say are we on solid rock? Nothing is really on solid rock. I'm confident to say this program is moving forward. I'm not going to say that they wrote $6 million off in this program. We are moving forward to do a better job of collecting money automatically instead of by check to have the policemen do their jobs on the streets and, as you said, Revenue to check the money coming in. So we're doing things, again, in the mindset of the 21st century electronically instead of doing paper coupons, sending in a 102 4/14/09 - WHOLE - BILLS 090212, etc. check.
How much money do we have -- and I know I'm out of time. The next round I want to ask you the question. I'll ask it now so if you don't have the answer. How much money do we have on the street presently? And I'll end right now. I'll come back to you. COMMISSIONER RICHARDSON: To answer your question, thus far as the end of the third quarter, we've collected 10,571,632, and it's roughly to say about on the street there's about $4 million.
Uncollected? COMMISSIONER RICHARDSON: At this current time.
I think we're heading back into some trouble here. So we might have to have a hearing or have everybody in this Chamber to kind 103 4/14/09 - WHOLE - BILLS 090212, etc. of discuss this program, because I can't imagine that we have allowed this program to continue if we're not able to collect the money from the people that use the services of our Police Department. COMMISSIONER RICHARDSON: That's why we're working with the Police Department now to collect our --
Commissioner, again, no disrespect. A year and three months is a long time. This program should be really -- this program should be in better shape than it's in at this point. And I'm not going to beat it to death now. We might have to have a hearing on this. Thanks. Thank you for your indulgence, Madam Chair.
Thank you. Commissioner, can you tell us how long it takes your department to deposit a taxpayer's real estate payment? 104 4/14/09 - WHOLE - BILLS 090212, etc. COMMISSIONER RICHARDSON: It generally will take no more than a week to get a check into the bank. Again, I'm going to tell you the reason why I'm saying that to you, when the money comes in, we'd like to get it in within to 8 48 hours. Just in the last quarter 9 alone, we've had 69,942 exception payment 10 processing issues with real estate 11 payments coming from taxpayers in the 12 City. What that means is, a taxpayer is 13 probably sending us a check but no 14 coupon, send us a coupon and maybe didn't 15 send a check. So it takes us time away 16 from processing things when we have to 17 continue to move forward to take care of 18 these exceptions. 19
20 Commissioner, I am telling you without 21 any hesitation that we know of people who 22 have told us that they're waiting months 23 for their check to clear, and you're 24 saying that you deposit the check within 48 hours. Tell us what the process is. 105 4/14/09 - WHOLE - BILLS 090212, etc. COMMISSIONER RICHARDSON: Again, the process is, if a taxpayer sends in a coupon and a check --
What is the coupon? COMMISSIONER RICHARDSON: When you get your real estate bill, you have on your coupon 2009 real estate tax bill.
Oh, the insertion that you send back. COMMISSIONER RICHARDSON: Right. So once we have that, we can process that with the check through our billing system, our processing system. That doesn't take long at all. Again, we have a lot of folks -- again, I said over 69,000 -- that are sending in a check without the coupon, and that takes us time to pull it out of the process to research the information from an individual. So that may delay that timeframe of getting into the bank a little bit longer as well.
We 106 4/14/09 - WHOLE - BILLS 090212, etc. know someone, I think it's about two months now or close to two months. Perhaps something is wrong with the mail, and I'm going to suggest that he either call your office or call his bank. COMMISSIONER RICHARDSON: He can call me. As I said before, if anybody here has a problem with a taxpayer not getting their credit, please call us. So, I mean, we're here to try to service them. I haven't had any calls or complaints in regard to people getting their tax real estate payments paid, so this is news to me.
Commissioner, what steps has the Revenue Department taken to increase the delinquent collections? COMMISSIONER RICHARDSON: Right now, again, we're working with the Law Department on various initiatives. We as a department are, again, working with them on the delinquency as being posted on the website of businesses in the City 107 4/14/09 - WHOLE - BILLS 090212, etc. of Philadelphia. We're also looking to enhance our audit functions. We've increased staff. As I said, about five new auditors have come on board. Just in the two months they've been there, they were able to collect themselves from doing taxpayer assist over $215,000. So we're working that way. Again, we're looking to match wage taxes that are being paid by taxpayers that may not have business privilege taxes -- they're not registered for business privilege tax in the City of Philadelphia. We're working on various initiatives like the parking lot tax, and we're working on the initiative that we got here from Councilwoman Sanchez that's going to be pretty fruitful for us as well. Again, we're looking at using the data that we receive from the IRS to continue to help us with projects here in the City of Philadelphia. We're trying to do outreach again with regard to the school income tax that people say they don't 108 4/14/09 - WHOLE - BILLS 090212, etc. know about. So we're trying to make sure that we are proactive in getting that information out as well. So we are daily trying to think of programs that will help increase revenue in the City of Philadelphia. We're trying to be more proactive in tackling the delinquents that are currently on our books and trying to come to resolutions with the Law Department on those cases as well.