Commissioner, on -17 of your detail, you're requesting $152,000 for printing of business tax packages. What information is contained in the package? COMMISSIONER RICHARDSON: That's the business privilege tax returns that we're sending out to all the businesses in the City. It's their 2008, last year's, tax return information that they need to send in to us. That's primarily what the package is. If you want a copy of one, we can try to provide 109 4/14/09 - WHOLE - BILLS 090212, etc. you with a copy of one.
I'm not following. COMMISSIONER RICHARDSON: Kind of sort of you get in the mail your --
When you say "printing of business tax packages," I may be interpreting it one way and I think you're probably saying it's a bill? COMMISSIONER RICHARDSON: No, it's not a bill. It's your tax return for that year. For example, you get a tax return booklet from the IRS or from the state for your personal income tax. That's the kind of package that we're sending out to the various businesses in the City of Philadelphia.
Commissioner, are you telling me these 110 4/14/09 - WHOLE - BILLS 090212, etc. are forms that we're sending to people that could possibly be printed out on a computer at their end? COMMISSIONER RICHARDSON: Yes. That's what -- some of them are. Some people can't print these out. Again, we're looking -- for example, the long form for your business privilege tax, that's not being printed out currently on the system. We're looking to do that for next fiscal year.
So we're spending all this money and we could put the burden on the taxpayer to print the documents that they need to fill out rather than us send them blank papers? COMMISSIONER RICHARDSON: We are trying to do that for next fiscal year's tax returns, to do that so they can print them electronically or be part of software packages that they can get them.
Thank you, Commissioner. 111 4/14/09 - WHOLE - BILLS 090212, etc. Thank you, Madam Chair.
You're welcome. Commissioner, on -25 you're requesting an increase of $104,500 for mail center equipment. What equipment will you be purchasing? COMMISSIONER RICHARDSON: That is part of the Quantum payment processing equipment we're looking to purchase that will help us getting payments remitted faster through the system.
And how much is it going to cost? COMMISSIONER RICHARDSON: It's for an inserter and another mail machine.
I'm sorry. I didn't hear you. COMMISSIONER RICHARDSON: An inserter and another mail machine.
Again, can you tell us why you need this equipment now? Can it wait or be delayed for another year? 112 4/14/09 - WHOLE - BILLS 090212, etc. COMMISSIONER RICHARDSON: Again, we're doing over 480,000 water bills a year, plus tax return packages and other mail that we do for the City. We are the mail department for the City of Philadelphia pretty much. So we need new equipment to continue to move forward. Again, the mail department -- the U.S. --
Sometimes there's mail we don't like to receive. COMMISSIONER RICHARDSON: That's true. But that's what the equipment is for.
Thank you, Madam Chair. I'm sorry. Your first answer to the question was that you were 113 4/14/09 - WHOLE - BILLS 090212, etc. purchasing a Quantum software. COMMISSIONER RICHARDSON: My first response was incorrect. That's for the mail room, for mail room equipment, not for payment processing.
So payment processing, that will be an electronic payment processing system that you're putting in place? COMMISSIONER RICHARDSON: No. 12 That is a piece of equipment.
No, no. I understand. The information I'm seeking is, are you purchasing the software that you mentioned in your first answer to the Chair's question? COMMISSIONER RICHARDSON: We are talking with the CIO, Allan Frank, to start looking at that, for electronic portal for people to pay their taxes.
Are you aware that the Oracle Business Suite that we currently own provides for an electronic portal and electronic 114 4/14/09 - WHOLE - BILLS 090212, etc. payments? COMMISSIONER RICHARDSON: I don't know that, but that is probably what Mr. Frank is going to talk to us about so we can move forward for 2010 for April 15th.
We need to not spend money on new software when we own many of the packages we can implement in every department and save money. I also would say as a point of information that it sounds like a mail sorter, a piece of equipment, could perhaps be purchased under the Capital Budget rather than with general operating funds, and I make that suggestion. And if you could report back why that's not part of the Capital Program to the Chair. Thank you.
No. 24 I'm sorry. We have other Councilmembers -- 115 4/14/09 - WHOLE - BILLS 090212, etc.
You're fine. The Chair recognizes Councilman Jones.
Thank you, Madam President. Commissioner, I must say that this is my second year hearing your testimony and I have to admire your tie. COMMISSIONER RICHARDSON: Thank you, sir.
It is a definite upgrade over last year and hopefully indicative of revenues coming in to the City of Philadelphia. Let me ask you a couple of questions. One, in your testimony you mention that you're getting ready to fill 34 current vacant positions out of the Water Revenue Fund, I believe? COMMISSIONER RICHARDSON: Yes.
Help me to 116 4/14/09 - WHOLE - BILLS 090212, etc. understand how a department applies for Water Revenue Fund and is it specifically for collections for that department? COMMISSIONER RICHARDSON: It is for customer service and collections and some technology that we want to bring in some folks to manage the Project Ocean going forward.
So who determines whether your request for additional staff should be funded? Who controls that process of making your department eligible versus another department? COMMISSIONER RICHARDSON: We met with the Water Department in November to go over our budget for FY10.
So the Water Department has a board or how is that -- I'm trying to get my arms around who determines whether that specific set of revenue should apply to your specific department versus some other worthwhile departments. 117 4/14/09 - WHOLE - BILLS 090212, etc. COMMISSIONER RICHARDSON: Because it's Water funded, I guess we go through them for the request. That probably is vetted out between Council to approve the Water Fund.
So at some point, we actually approved these positions within another budget, particularly the Water Department, or we will? COMMISSIONER RICHARDSON: You have to approve the Water Fund, I'm pretty sure.
So as a subset of that, it will go then to you? COMMISSIONER RICHARDSON: Right. That's under the Water Fund that comes to us.
All right. As you requested this Project Ocean is $20 million investment in software, will that result in less outsourcing of collection activity by your department? COMMISSIONER RICHARDSON: 118 4/14/09 - WHOLE - BILLS 090212, etc. Hopefully it would, if everyone will pay their bills on a timely manner. However, for those that are delinquent, we will still probably be using collection agencies via through the Law Department.
Is that a goal of yours, to reduce the outsourcing and be able to do that internally? Because every time we outsource, we give a commission, I'm imagining, and that's less dollars in our treasury. COMMISSIONER RICHARDSON: It is less. However, within the Charter, the case will stay with us for 90 days, then they go into the Law Department. The Law Department is responsible for all the collection agency contracts.
So after you're done making your initial attempt, then it goes to them? COMMISSIONER RICHARDSON: Yes.
Okay. You, I see, did approximately $3 million in Class 200 contracting; is that right? 119 4/14/09 - WHOLE - BILLS 090212, etc. COMMISSIONER RICHARDSON: You're talking the Water Fund or the General Fund?
I thought it said that you did -- I see you have a list of MBEs and WBEs here within your testimony. COMMISSIONER RICHARDSON: Yes.
And that comes up to how much? COMMISSIONER RICHARDSON: That comes up to 870 -- well, all the contracts that we have comes up to $870,452.
So you've outsourced in Class 200 less than a million dollars? COMMISSIONER RICHARDSON: Yes.
And of that, your minority and female participation is what percent of them? COMMISSIONER RICHARDSON: Minority participation is 14 percent and women participation is 24 percent. 120 4/14/09 - WHOLE - BILLS 090212, etc.
Repeat that for me. COMMISSIONER RICHARDSON: Fourteen percent for minority businesses and percent for women businesses. 7
What was it 8 last year this time? 9 COMMISSIONER RICHARDSON: I 10 don't recall what it was last year. I 11 can get back to you with that answer. 12
I think that 13 that's -- again, I'm trying to, as best I 14 can, when departments do a good thing or 15 make an improvement, kind of put that on 16 the record, too. We have a tendency to 17 accentuate the negative and not kind of 18 underscore the positive, as Blondell 19 Reynolds Brown, Councilwoman at-large, 20 would say. So we're going to try to -- 21 so if you could give us last year's 22 participation numbers and then juxtapose 23 them with this year's, it would be worth 24 doing. You said the Law Department 121 4/14/09 - WHOLE - BILLS 090212, etc. should get that question on collections, correct? COMMISSIONER RICHARDSON: Collection agencies?
What is the average age of your receivables now and has it changed based on the recession? COMMISSIONER RICHARDSON: I have to get back to you on that, on the average age of receivables. Again, within our department, anything that goes past 90 days gets moved on to the Law Department for further collection activities.
Okay. But you would probably have a delinquency rate within that percentage of expected revenues, which I think will give us a lot of indication if this recession is going to get worse or getting worse and having a negative impact on our budget. So if you could provide that to the Chair 122 4/14/09 - WHOLE - BILLS 090212, etc. and she can distribute it to Council, what was the aging report from last year versus this year and is the number of delinquent accounts increasing. COMMISSIONER RICHARDSON: I can try to provide it to you.
You're welcome. The Chair recognizes Councilwoman Brown.
Thank you, Madam President. Good morning, everyone. Let me pick up and underscore where Councilman Jones left off. Background: Last year I sent a letter to the Mayor asking that every single department, when they come before us, tell us specifically their percentage of MBE/WBE. This year I'm augmenting that last by saying not only stipulate the percentage of MBE/WBEs, but also tell us of those, which are prime 123 4/14/09 - WHOLE - BILLS 090212, etc. contractors and which are subcontractors, because that gives us a better picture. And I'm going to augment that further and say in the presence of Mr. Dubow that we want to know '08 numbers, '08 numbers, so that we can really see what's happening from year to year. And I've been assured that I do not have to put that in writing, so I want to stipulate again -- can we ask Mr. Rob Dubow to come to the witness table, Madam President?
I just want to go on record again to say how important it is to us that we have the numbers, which you have here today, Mr. Revenue Commissioner, but you told us the percentages, and when we're reading 124 4/14/09 - WHOLE - BILLS 090212, etc. testimony, we'd like to be able to look at a grid and actually see the progress or not. And so I'm asking again that all departments come to us showing the percentages. The amounts are fine, but the amounts put up against the big picture tell us nothing.
Both years, as well as those who are prime and those who are subcontractors. Because more and more we're hearing from women and people of color, We're sick of being subcontractors, we are now at a capacity where we want to be considered for opportunities to be prime contractors. And so if we're going to move the needle, we need to know how and if department managers are seeking to raise the level of opportunity, if you will, for those who can qualify to be prime and subs.
Thank you. So enough on that for now. If you could, reflecting on the article that was in the paper dated November 13th, '08, just give us an update on where you are with the list of the top 50 business tax delinquents. COMMISSIONER RICHARDSON: Well, currently -- you're talking about the website delinquency listing?
Yes. COMMISSIONER RICHARDSON: 1.6 million has been collected and 1.6 million is set up in payment agreements currently.
So as a result of that tactic, there's clearly been some response. COMMISSIONER RICHARDSON: Yes. The goal of the tactic is, the folks that are going on the list are the most egregious people and are probably not going to pay you, but it's stimulating compliance with someone else saying, I 126 4/14/09 - WHOLE - BILLS 090212, etc. don't want to be on that list. So those folks are starting to come clean and get compliant and take care of their responsibilities.
Okay. Do you think there's any role for Council on our end to assist in that enterprise, or no? COMMISSIONER RICHARDSON: Sure. I think Council, for one, if you can get the word out to the businesses in your various districts, letting them know if they are delinquent -- you can view the website and see for public information if they're delinquent -- to come talk to us, set up a meeting, set up some payment agreements. I think also to follow up with a previous question, if anybody in your districts that you know that are sending payments into us or may have questions about do I send my payments in, what do I do with this tax return or this coupon, the more you can help us out, the better 127 4/14/09 - WHOLE - BILLS 090212, etc. it is for the City and for the Revenue Department.
Is that website broken down by councilmanic district with the listing of those businesses? COMMISSIONER RICHARDSON: No, it's not. We're hoping that as we move forward with the process, because we're still in our baby steps and infancy, that we can start getting more creative and looking at doing that or perhaps by zip code.
Okay. Because I know that would be a great service to district Councilmembers. On the last page of your testimony, last paragraph, you talk about how the Department of Revenue and the Division of Technology are working on substantial improvements to the website. Talk about what they are. COMMISSIONER RICHARDSON: Well, one, if you look at our website, it looks 128 4/14/09 - WHOLE - BILLS 090212, etc. different. Two, we're providing more information on our website for reporting on a monthly and a weekly basis what the collection efforts have been in the City. We're posting our regulations and rules on the website. You have more access and easier use to get to things now for tax credit applications. It's more easier to get to -- it's more easier to navigate than it was in the past, I will say. Our ReveNews, our newsletter that we do quarterly, is on the website as well. So it's more opportunities for people to go in and feel more comfortable as they're looking at the website and seek information a little bit more readily faster than they did in the past.
I do know of one constituent who was okay and able to complete the federal tax form and the state form, but when it got to the City form -- I wish I had that document with me -- the question was asked -- the City 129 4/14/09 - WHOLE - BILLS 090212, etc. form became very, very cumbersome for them and that they're computer literate -- (Bell rung.)
That is amazing. Sorry, Madam President. I've lost my train of thought. That bell went off. COMMISSIONER RICHARDSON: To help your question, if someone has a question in regard to their tax returns or forms, they can come to our 4th Floor in Room 430 for taxpayer assist. That is a service we provide to the taxpayers in City of Philadelphia for free. Also, if you're looking for them to do their filing electronically online, that's something we're trying to move forward to in the future, as you can do your federal and state online and send it through electronic portal that goes to them without sending a copy into us.
Can I wrap 130 4/14/09 - WHOLE - BILLS 090212, etc. up on this question, Madam President?
Please. Thank you. When filing online, the website asks you to fill in your income, and when calculating a tax due, it asks customers to multiply that by zero. Anything times zero equals zero. And this taxpayer knew for sure that they owed the City dollars, but on that specific form, it says whatever that number is times zero equals zero. COMMISSIONER RICHARDSON: If you want the taxpayer to call my office, we can talk to them.
Okay. All right. I'll leave it there for that. Thank you, Madam President.
You're welcome. The Chair recognizes Councilwoman Sanchez. 131 4/14/09 - WHOLE - BILLS 090212, etc.
Thank you, Madam President. I want to thank the Revenue Commissioner and his office. I know both Rob Dubow, my office and yours have been working on many different collection processes. So I want to thank you on the record for your willingness to indulge us as we try to seek out and improve our collections. That said, I wanted to echo what President Verna mentioned earlier, because this happened less than two weeks ago. We had a business owner who had about 44 different accounts and was coming in with $100,000, and we had quite a bit of difficulty finding a staff person that wanted to collect it, and even when I sent my legislative staff across the street, we went to one person and they said, Well, it's almost 3 o'clock, I don't do this anymore, you got to go to a supervisor. And it took us about half an hour to navigate someone 132 4/14/09 - WHOLE - BILLS 090212, etc. who wanted to take $100,000. So I think there's some room 4 for improvement there. I don't want to name names, but any time a Councilperson is sending over a business person to pay, we may want to think about how we do that, especially with multiple accounts. The other thing was that he had to write out multiple checks, because your department claimed that they did not have ability to separate it, and I think we ended up at like 20-something checks versus 44 checks. But that's a problem, so it's something that should be looked at. I don't know if we have a special supervisor, a point of contact in those types of cases. I would just hope that if I'm encouraging my businesses to come in and pay taxes because we need money, that that doesn't happen, because that's a problem. And I didn't call you personally because we got it resolved, but I just wanted to let you know that 133 4/14/09 - WHOLE - BILLS 090212, etc. there's a lot of room for improvement. One of the issues that came up in some of the community sessions I've been having is about our electronic bill 6 pay. What do we currently charge people who pay their bills electronically? COMMISSIONER RICHARDSON: 2.49 percent.
2.49 percent? Is there anything that we can do about that high cost? Because for some folks, for your average person and people on fixed incomes, you would think if we're encouraging them to pay it electronically so they don't get a dollar money order and a 40-something cent stamp, they almost -- what they've said to me is, I prefer to do it that way, which causes more labor for you because of the fee. COMMISSIONER RICHARDSON: We are trying to work with the group that we use trying to do a restructure of the fee. I will say to you that if any 134 4/14/09 - WHOLE - BILLS 090212, etc. taxpayer you have may have a bank account that they do electronically through their bank, they can do it free of service and pay their water bill, if that's what they're looking to do. If they're doing their tax returns, it's just a matter of sending a check in.
So if they do it through their bank fee, it's free of service, but if they do it on your online -- COMMISSIONER RICHARDSON: If you're using your credit card, you're going to pay for the service. But I will say they can use their bank accounts or do it by bank by phone or ACH payment that way as well.
If they do bank by phone? COMMISSIONER RICHARDSON: There's no fee for that.
So it's only when they use your website? COMMISSIONER RICHARDSON: When 135 4/14/09 - WHOLE - BILLS 090212, etc. they're using the City's payment organization, there's a fee for that.
Okay. COMMISSIONER RICHARDSON: To follow up on a question or back to your statement earlier, if there's a situation where you have a taxpayer that's coming in with that kind of money and those amount of accounts, I would like that you would call us and let us know in advance so we can set somebody to the side. And afterwards you can tell me who that individual was, please.
Okay. What would you say is our estimated outstanding debt in water right now, delinquents, really delinquent accounts? While they respond, why is it that we don't have an ability to take one check and split it? COMMISSIONER RICHARDSON: For tax payments?
Yeah. DEPUTY COMMISSIONER HALEY: I 136 4/14/09 - WHOLE - BILLS 090212, etc. would need more information as to whether court fees, sheriff's sales cost, why it would have to be split. If it was all tax, there's no reason to split.
Okay. I guess my question is, once we know what the outstanding debt is, if we've done an analysis of what -- if we did an amnesty for that Water Revenue piece of it, have we done them in the past? What have they generated? Because that number is going to be huge when they -- do you have the final number? DEPUTY COMMISSIONER BETHEL: Yes.
What is it? DEPUTY COMMISSIONER BETHEL: Good afternoon. My name is Michelle Bethel. I'm the Deputy Revenue Commissioner for Water.
Please pull the microphone closer to you. Thank you. 137 4/14/09 - WHOLE - BILLS 090212, etc. DEPUTY COMMISSIONER BETHEL: The outstanding delinquency is 163 million. And in reference to the amnesty program, it is my belief several years ago a program did take place, and actually we are in discussions with having a similar program, but we've just started, so we don't have any numbers or how we would roll that out at this point. (Bell rung.)
Of the 163, is most of that principal? Do you have the breakdown? Can you give that to the Chair? DEPUTY COMMISSIONER BETHEL: Yes.
So you're saying you're doing an analysis to determine whether an amnesty program makes sense at this point? DEPUTY COMMISSIONER BETHEL: Yes.
When do 138 4/14/09 - WHOLE - BILLS 090212, etc. you think you'll make some final decisions? DEPUTY COMMISSIONER BETHEL: We're hoping to make those final decisions quickly so we can roll it out at the beginning of the fiscal.
You're welcome. The Chair recognizes Councilman Clarke.
Thank you, Madam President. Good afternoon. COMMISSIONER RICHARDSON: Good afternoon.
Sorry I wasn't here for all the testimony. I don't know if this issue came up about the senior citizens tax relief program. COMMISSIONER RICHARDSON: Nothing came up about that.
And I know 139 4/14/09 - WHOLE - BILLS 090212, etc. I had some conversations with you actually earlier this year on the expansion of PACENET because of this whole real estate issue that has now risen to the top of the food chain as it relates to issues that have gotten people's attention. I think it was in 2001 or 2 when there was this significant assessment issue in the City of Philadelphia and Council was making all sorts of proposals about caps and all types of real estate protection programs, and I understand that at that time -- actually, I know Councilman Rizzo had worked with the former Mayor on putting together one of the programs. There are a number of programs that I understand are currently available for tax relief, not just to seniors but to other people, such as deferrals and installment plans, and, one, I would like for you to possibly get us through the Chair a list of every potential problem that's allowed under the existing code that does not 140 4/14/09 - WHOLE - BILLS 090212, etc. require state authorization. Two, can you talk to me about the marketing strategy for these various programs? Because it's my understanding that a lot of people either, one, don't know or don't take advantage of even the senior citizens relief program. We actually did a flyer. We were giving out flyers because we were hosting a meeting for the Mayor in Strawberry Mansion, and I actually -- I got to tell you, I included my little Darrell Clarke update along with the flyer. Since I was paying somebody to put flyers out for the meeting, I might as well put my newsletter out, too. Economies of scale. But I was surprised at how many people actually came to the meeting that had no idea that there was a senior citizens program that had been expanded to include more people. Can you talk to me about how your department markets or makes people aware of that other than just simply posting a notice? I think 141 4/14/09 - WHOLE - BILLS 090212, etc. they put an application in the mailer for the assessment. COMMISSIONER RICHARDSON: Yeah. Notice goes out every year with the tax bill November, early December. We really don't do marketing per se, because that's spending money. We're more on the enforcement side of trying to collect the money. Again, to let you know, there's about 20,680 people right now that currently are involved in our programs. We're involved in an installment program for low income --
Slow down. Slow down. Involved in what kind of program? COMMISSIONER RICHARDSON: The various programs that we offer --
Twenty thousand? 142 4/14/09 - WHOLE - BILLS 090212, etc. COMMISSIONER RICHARDSON: Twenty thousand six-eighty. Of that, we have the installment program for low income. We have the low-income senior citizens plan, which as of December of '07 is 12,235 folks who are in that plan as well. We also do provide for --
Is that in PACENET or is that PACE? Because I think we got the notices out late. COMMISSIONER RICHARDSON: Right. That's part of PACENET. We are still taking applications. We didn't stop that window for folks, because it came up kind of late this year. So that's still available. We also do provide a tax credit for anyone in the national corridor or the Reserve that's on active duty also.
Okay. So beyond -- because you say you don't do marketing, because I understand you're revenue, you're supposed to collect money, not give money away. Is there any 143 4/14/09 - WHOLE - BILLS 090212, etc. way that we can have some sort of strategy to make sure that people take advantage of these programs beyond simply asserting something that is -- maybe it's not your department since that's not your charge. COMMISSIONER RICHARDSON: We're working with the Administration to look at doing something that way right now currently for the programs.
Okay. Well, in the meantime, can you get us a list of all of the existing or potential programs as allowed under our existing code that don't require state authorization to the Chair? COMMISSIONER RICHARDSON: Yes, sir.
Thank you. Thank you, Commissioner. Thank you, Madam President.
Commissioner, with that same information, can you let us know just how many people 144 4/14/09 - WHOLE - BILLS 090212, etc. are enrolled in each of the programs? COMMISSIONER RICHARDSON: Sure.
Madam President, can I add how many people would be eligible versus how many are enrolled also. COMMISSIONER RICHARDSON: We can't quantify how many people are eligible. That's going to be real hard for us to quantify low income and seniors in the City of Philadelphia.
Thank you. When we initially proposed the bill, the Administration and former Revenue Commissioner did come up with a pretty accurate estimate, because at the time, they weren't supportive because it was going to cost the City a certain 145 4/14/09 - WHOLE - BILLS 090212, etc. amount of revenue in the middle of the calendar year. So somehow they were able to determine the eligibility of all of the seniors portion. So shouldn't you be able to know that? Because they gave me to the dollar. They said, This is what it's going to cost us. This is why we can't do it. COMMISSIONER RICHARDSON: I will go look for that information. I know currently within the state level for the property tax rebate program from citizens in the City of Philadelphia, there's 74,000 applicants, but, again, it could be more, it could be a number we're missing, but we will try to get that information for you.
Wait a minute. Say that again. COMMISSIONER RICHARDSON: Within the Commonwealth of Pennsylvania tax rebate program for renters or for property, there were 74,000 applicants from Philadelphia. 146 4/14/09 - WHOLE - BILLS 090212, etc.
Is that just renters or is that both renters and homeowners? COMMISSIONER RICHARDSON: For both.
Is it categorized in terms of renters versus homeowners? COMMISSIONER RICHARDSON: They can probably break that out for us, yes.
So the likelihood that the person that qualifies under the state rebate program is probably also eligible for PACENET, right? COMMISSIONER RICHARDSON: Possibly. But there could be more than that number right there that we don't know about. Some folks, as you know, are afraid to fill out applications and apply. We can try to quantify as best we can. It may take some time to come back with that data.
Thank you. 147 4/14/09 - WHOLE - BILLS 090212, etc. Thank you, Councilwoman.
Thank you. The Chair recognizes Councilman Green.
Thank you, Madam Chair. Good afternoon, Commissioner. COMMISSIONER RICHARDSON: Good afternoon.
You testified the Department has hired five new revenue examiner trainees and it's on track to generate million in new audit 16 assessments, a 4.5 percent increase. You also testified the Department is now, quote/unquote, fully staffed its Investigations Unit and that following up on audit and tax discovery leads will yield over million. I think I just heard you say that you, because of this group, have increased collection over just a couple months by $215,000, more than paying for these five auditors. 148 4/14/09 - WHOLE - BILLS 090212, etc. What is the cost per revenue examiner trainee? COMMISSIONER RICHARDSON: That's about 50,000.
I guess the question really is, what's the break-even point at which additional hires would not yield more revenue? COMMISSIONER RICHARDSON: The break-even point where they would not be generating more revenue -- what was your question again?
Well, my question is, hiring five seems to be very successful. What would hiring 50 bring in? They're all paying for themselves. I mean, why wouldn't we hire 50? COMMISSIONER RICHARDSON: I think we have to quantify that. I don't know. I couldn't tell you hiring 50 would it be a plus or minus for the City. We'd have to quantify that.
Well, how about hiring ten more? Are you confident 149 4/14/09 - WHOLE - BILLS 090212, etc. that would provide us with more revenue than the cost? COMMISSIONER RICHARDSON: Put it this way to you: Anyone or any additional bodies you want to give us for our department to collect more revenue, we appreciate it.
Will they pay for themselves? COMMISSIONER RICHARDSON: Yes.
Until what point? COMMISSIONER RICHARDSON: I can't tell you what fiscal year that it would not be paying for themselves. Again, I don't know.
In other words, if we gave you ten more, could you collect another 16 million that you weren't -- if we gave you 20 more, could you collect 32? If we gave you -- COMMISSIONER RICHARDSON: Keep in mind, it's not collecting. It's assessing. So we're assessing more 150 4/14/09 - WHOLE - BILLS 090212, etc. dollars on audits and discovery cases, not meaning the money is coming in.
Fair enough. COMMISSIONER RICHARDSON: But I can't determine and say if you give me ten, can we do 32 million more. Yes, we probably could. We could probably do more travel audits for the City, but I can't tell you if that's going to guarantee X amount of dollars in the equation.
Well, I mean, it seems to me that that's a very basic thing that a business plan for your department should have the answer to. You should know the break-even point where hiring more auditors will not provide a return. So, I mean, I don't even -- I don't know how to respond to the fact that you don't know the answer to that question. If you could please very quickly do an analysis and provide it to the Chair so that we can see what providing you with more bodies will do in 151 4/14/09 - WHOLE - BILLS 090212, etc. terms of assessments, and then I guess we can look at assessments, apply a historical collection rate on them and make sure people continue to pay for themselves, and provide you with the resources you need to increase our revenue in the City of Philadelphia. Will you provide that to the Chair, please? COMMISSIONER RICHARDSON: I will get that to her.
Is that something you can get to her in one week? COMMISSIONER RICHARDSON: No. 16
How long will it take you to get that to her? COMMISSIONER RICHARDSON: I can't quantify that for you. I will get it to her as quickly as we can.
How about two weeks? COMMISSIONER RICHARDSON: I will get it to her as quickly as we can.
Maybe it's 152 4/14/09 - WHOLE - BILLS 090212, etc. something we should have thought about this entire year, since I asked the same exact question last year, and also the Freshmen specifically raised this 6 issue six months ago. 7 So you prepared a memo last 8 summer summarizing various business 9 privilege tax loopholes, including ones 10 related to corporate structure and 11 unrelated business activities of 12 non-profits. Can you provide an update 13 on your efforts to close those loopholes 14 and what it has yielded the City, if 15 anything. COMMISSIONER RICHARDSON: At this current time, I cannot provide an update to you. We are still vetting the two regulations that we have out for it, and I have to make a determination. I do not want to talk about that publicly at this present time.
I'm sorry. Why don't you want to talk about it publicly? 153 4/14/09 - WHOLE - BILLS 090212, etc. COMMISSIONER RICHARDSON: Because I have to make a decision on both of those regulations that we have put out to the public and I have not made a decision yet. I can talk to you offline about what we are doing.
Are there any changes to state law needed to close these loopholes? COMMISSIONER RICHARDSON: No, there is not.
Okay. Do you have an estimate if we close them how much it will bring the City? COMMISSIONER RICHARDSON: No, we do not.
Well, then why do you want to close them? COMMISSIONER RICHARDSON: Because there are tax loopholes right now that businesses and some non-profits are getting through the system currently. You can't quantify them yet because we haven't been out to all of the various 154 4/14/09 - WHOLE - BILLS 090212, etc. organizations that may be taking advantage of these loopholes. So to quantify that, we can't say. We can discuss it offline of once the decision is made.
I think the Freshmen identified some of these 9 loopholes and put the potential revenue 10 on the order of -- Councilwoman Sanchez 11 worked on this -- over $10 million. 12 So it's your testimony that 13 whatever closing these loopholes will 14 bring into the City in terms of 15 additional revenue is not a part of the Five-Year Plan? (Bell rung.) COMMISSIONER RICHARDSON: Say your last part, please.
Closing these loopholes in terms of additional revenue is not a part of the Five-Year Plan currently? COMMISSIONER RICHARDSON: It is not quantified within the Five-Year Plan, 155 4/14/09 - WHOLE - BILLS 090212, etc. you're correct.
It is not quantified. So if you can quantify that for the Chair, we'll be able to add that revenue to the Five-Year Plan. COMMISSIONER RICHARDSON: Unfortunately, I may not be able to quantify that for her. Again, I appreciate the Freshman providing us 11 with the information of thinking it's $10 12 million, though. 13
Okay. Why 14 can't you quantify that within the next 15 two months? COMMISSIONER RICHARDSON: We'll attempt to put something together for you.
Thank you. I have more questions, Madam Chair, but I don't know if someone else --
Yes. We have other Councilmembers that want to be recognized. Thank you. 156 4/14/09 - WHOLE - BILLS 090212, etc. The Chair recognizes Councilman Rizzo.
Thanks, Madam Chair. Commissioner, you mentioned something a minute ago. Maybe you can explain the process. It has to do -- I think you said you handle the mail? COMMISSIONER RICHARDSON: Yes.
Just the mail that's mailed outside? Do you handle the delivery of mail to the offices? COMMISSIONER RICHARDSON: No, we do not.
The reason I'm asking that question -- and I think this is going to be a tough challenge for you, but I've collected for years now boxes of U.S. mail that came from the 7th Floor to the 5th Floor, from the 1st Floor to the 5th Floor, from MSB, all with postage on it, and I think the Freshmen 15 stole that one from me, 157 4/14/09 - WHOLE - BILLS 090212, etc. because I talked about that before they were even here. Isn't there something -- again, I don't even have a current list of where inner-office mail -- and I think the Department of Public Property handles that -- and how it even works. But why do we have so much mail that's being mailed via U.S. mail within our building? COMMISSIONER RICHARDSON: We don't do the mail for City Hall or City Council. I can't speak upon what mail is coming out. We can look into that, though.
City Council does a pretty good job of moving our mail around. I'm talking about when the 2nd Floor sends a Councilmember a communication, if it's not hand-delivered, guess what? It's got postage on it. COMMISSIONER RICHARDSON: We are looking at mail now currently being delivered within buildings that should 158 4/14/09 - WHOLE - BILLS 090212, etc. not be getting a stamp on it. I understand what you're saying. So our group is pulling those pieces out to make sure that they get hand-delivered instead of sending out the postage.
But I think what I'm hearing is that you need to coordinate -- I think Public Property handles inner-office mail and they deliver to the various City agencies throughout the City where they have a mail run or what. Maybe we ought to get it all on the same page and figure out why I have this box of mail that's got hundreds of dollars of postage on it that came from MSB or City Hall from one floor to the other. I mean, it sends such a terrible message to even employees during tough times that we're willing to use U.S. postage to deliver something two floors. So if you could figure out, maybe work with -- and give us some feedback. Maybe you can have a meeting 159 4/14/09 - WHOLE - BILLS 090212, etc. with the Public Property Commissioner to see if there's something we can do. Because what's that old cliche? Every little bit helps. COMMISSIONER RICHARDSON: Again, mail that's coming into our shop now that is from one floor going to the next, we're pulling out mail that can be hand-delivered or sent back to Public Property's offices, and now people are picking up the mail themselves in departments. So we're cognizant of that as we're trying to save money for the City to make sure that we're not sending things out that could be delivered or put in people's boxes.
Well, that's a good first step, but I hope the process isn't where you throw it in a box and it's something important and it sits for a week before it gets back to Public Property for hand-delivery or manual delivery. So the process really, I think, 160 4/14/09 - WHOLE - BILLS 090212, etc. needs to be reviewed, because that's one of the problems that people have told me. They say, The reason I put postage on it, because we really don't have a good internal delivery process in our government. So if you could work on that and maybe talk to Commissioner Schlotterbeck to see if coming together might make this a better process. And, again, at the end of the day, you might be able to pay for that new machine by just the money you save. Thank you, Commissioner. Thank you, Madam Chair.
You're welcome. The Chair recognizes Councilwoman Brown.
Thank you, Madam President. You mention in your testimony that you charge a two percent fee for filing paperwork online. Was that 161 4/14/09 - WHOLE - BILLS 090212, etc. accurate? COMMISSIONER RICHARDSON: For the payments.
For the? COMMISSIONER RICHARDSON: The payment by credit cards.
So those dollars are actually, I guess, going to the credit card service? COMMISSIONER RICHARDSON: Yes.
Because that's their requirement? COMMISSIONER RICHARDSON: Yes.
Thus, the City sees no yield in that? COMMISSIONER RICHARDSON: Yes.
So you're doing them a favor? COMMISSIONER RICHARDSON: Yeah. They're getting the fee.
But the yield is that you get -- the City benefits from receipt of those dollars? COMMISSIONER RICHARDSON: 162 4/14/09 - WHOLE - BILLS 090212, etc. Getting the money quicker, yes.
So you do believe then in your estimation that is efficient for those who opt to use that method of payment? COMMISSIONER RICHARDSON: I think it is, yes.
You're welcome. The Chair recognizes Councilwoman Sanchez.
Thank you, Madam President. To my colleague's point, if I have a debit card or let's say I have a mileage card, again, and I choose to use it, then I'm paying 2.49 percent of my bill payment, which is a problem for people on fixed incomes. While the options of people paying online is one for many seniors, because they're on 163 4/14/09 - WHOLE - BILLS 090212, etc. fixed incomes, how they transact with them means -- because they don't know when they can pay their bill. So they end up using their debit card, and therein lies the problem. That's where I'm getting it from, so that you understand that. As it relates to the $163 million outstanding, how much of that is fines and penalties and how do we determine fines and penalties on principal? DEPUTY COMMISSIONER BETHEL: That was a breakout that I said I would get back to you what the breakout of that is. So I don't have that readily available.
So how are fines determined? What's the level? If you owe a certain amount, when do fines and penalties start triggering, and interest? COMMISSIONER RICHARDSON: Fines would occur, one, if it goes to municipal 164 4/14/09 - WHOLE - BILLS 090212, etc. courts to pay for the court fee. Also maybe issues with the collection agencies on fees that they may be using as well. So that's when that would start. Your interest is going to start calculating once you start missing your first regular payment from the first 30 days.
How many companies do we have doing discovery work for us currently? COMMISSIONER RICHARDSON: Currently, there are -- I want to say none, because there are new contracts going out to collection agencies from the Law Department. So right now we'll tell you none.
So the Revenue Department has no one doing discovery work? COMMISSIONER RICHARDSON: We don't have a contract anymore. The contracts for any collection agencies will go to the Law Department now. 165 4/14/09 - WHOLE - BILLS 090212, etc.
They're all going to go through the Law Department; you won't handle it? COMMISSIONER RICHARDSON: Yes, ma'am.
So how are we going to determine which accounts get passed over to discovery or for collections? COMMISSIONER RICHARDSON: Once we send the cases to the Law Department or they tell us who they want us to send them to the agencies, we will know better then.
Isn't the collection rate the sooner, the better? So at what point are we sending those accounts for collection? Is it 120 days? Is it 60 days? COMMISSIONER RICHARDSON: I can't tell you that answer. Again, anything past 90 days goes to Law. We're trying to work on a parameter of when to start sending things that are fresher out 166 4/14/09 - WHOLE - BILLS 090212, etc. to the agencies instead of waiting for a longer timeframe.
Going to the point that Councilman Green was making, because of the way we can contract with these companies going to the issue of not committing to long-term staffing, what are we going to have in these new contracts to allow us to increase our ability to collect earlier? Because my understanding is from some of these collection agencies, they get the accounts six months, a year out, which makes the rate of collection less and less and less. If we're talking about efficiency and we're not willing to commit to the internal staff, what are we going to do differently in the new fiscal year to generate a larger percentage, which is that 60- to 120-day window? COMMISSIONER RICHARDSON: Well, again, we're working together in unison to start setting parameters for fresher 167 4/14/09 - WHOLE - BILLS 090212, etc. cases to go out to the agencies instead of waiting, as you said, six months, eight months to a year. So we're working right now with Law to make that determination.
How many companies was the City using prior to this new contract? COMMISSIONER RICHARDSON: For collection agencies or for discovery?
Both, collections and discovery. COMMISSIONER RICHARDSON: RCB was discovery, was one.
What kind of discovery work were they doing? COMMISSIONER RICHARDSON: 1099 work they were looking at.
One of the things in our work, we've discovered that there's a lot of business loopholes that obviously you don't want to talk about publicly. Have we considered in this new round adding some discovery work 168 4/14/09 - WHOLE - BILLS 090212, etc. as it relates to that? COMMISSIONER RICHARDSON: We haven't discussed that, but it's something to consider.
Okay. COMMISSIONER RICHARDSON: Again, probably the loopholes are businesses that are probably paying us or registered to pay some kind of BPT to the City. So it wouldn't be a discovery effort. A discovery effort is going to be on a case, for example, that may be registered as a business but not paying BPT or not having a wage account with the City, somebody that you've discovered and you've brought into compliance. A loophole business probably has been around for years, is registered with the City, may be paying some sort of tax but not paying their fair share.
Right. But my point is, with contracting of these discovery companies, we're not losing anything and we're potentially 169 4/14/09 - WHOLE - BILLS 090212, etc. finding revenue. So my issue is, why aren't we being more aggressive with it for both of those that you mentioned? COMMISSIONER RICHARDSON: Well, for the loopholes is because that will be more of an audit situation than a collection agency, because there may be some rules and regulations and things that they may not be cognizant of that an auditor may be.
But these are contingency fees based on if they find something. So there's less cost for us for the work. So why aren't we being more aggressive? COMMISSIONER RICHARDSON: Again, with the loophole companies that we're talking about, again, some of these companies are already in business, already in place, may be paying us some form of BPT but not paying us what they may owe us. A collection agency could do discovery work on that, but then the question may be, What are you assessing 170 4/14/09 - WHOLE - BILLS 090212, etc. us for, what is this. They may not know all of the ramifications of the various rules and regulations set up by the fiscal code to say it is a tax loophole. So that's not really there laying the work per se.
But there's some discovery companies that also do collection, who can also collect, that can do the discovery and then also collect, and we can contract with them on a contingency basis. COMMISSIONER RICHARDSON: That's possible.
I'm concerned, for instance, in the list that we forwarded over to you around lawyers and out-of-town lawyers. That could be profitable if we're aggressive with it, because it's a timely situation. If we're not on this on a timely basis, then we're going to recover less and less of that. COMMISSIONER RICHARDSON: You 171 4/14/09 - WHOLE - BILLS 090212, etc. weren't here earlier. I gave you kudos for sending that to us --
I heard it. I was listening from upstairs. COMMISSIONER RICHARDSON: And I kind of didn't want to put that out there publicly what the list was from. So we know that. We recognize it. That was a program we did years ago, but we appreciate it, and it's something we're moving forward with now within our discovery group.
So what's the timeframe on that? COMMISSIONER RICHARDSON: On the project working?
Mm-hmm. COMMISSIONER RICHARDSON: We're starting to implement that now. Again, because the list is very big, we're doing it in increments. We're looking at doing potentially sending out 50 letters every couple of weeks.
Do we 172 4/14/09 - WHOLE - BILLS 090212, etc. have to do it internally or can't this be something that we give to a company and say, Go out, find us what you can? COMMISSIONER RICHARDSON: Because it's fruitful, we would like to do the project first instead of paying the fee on top of it. So if you send it out, we lose percent of what we could 10 have kept in-house. So we have it and 11 we're going to work it first. 12
So when 13 you say it's fruitful, what are we 14 talking about? 15 COMMISSIONER RICHARDSON: It's 16 potentially fruitful because, as you 17 know, there are probably a lot of 18 counselors that are from outside of Philadelphia that aren't registering or paying us. So why would we want to give it out to someone and them charge a fee and we're losing out? So if you owe me $100, we're only going to get $81 instead of the full hundred.
I guess 173 4/14/09 - WHOLE - BILLS 090212, etc. my concern is the issue of timing again. The further dated this material comes, it's less likely you're going to get 100 percent anyway. In some cases because we're dealing with an industry that is contracting, because of the economy they may be out of business by the time we get to them. This is a judgment call. It's not something that we counted on before, so it's easy enough for us to give to someone and say, Come back and give us what you can off of this list. I'm just worried that -- again, I think institutionalizing how we do that moving forward I think is an important piece of revenue, but this list is dated already. So I'm a little concerned that we're going to miss out. COMMISSIONER RICHARDSON: We can look at that once the collection agencies are in place working with them on the list.
What's 174 4/14/09 - WHOLE - BILLS 090212, etc. the timeframe for the new contract? COMMISSIONER RICHARDSON: I don't know. You have to talk to Law about that. I defer that to them.
Okay. In terms of if we go up on our sales tax, one of the loopholes or one of the areas where we'd have to monitor is if people begin to travel outside of Philadelphia to purchase goods that then end up in Philadelphia. Are we looking at what things we're going to have to ramp up to make sure that on the manufacturing cars, those types of areas where people could potentially go to Delaware and purchase, how we make sure that we collect our portion? COMMISSIONER RICHARDSON: Unfortunately, I can't give you our response to that, because that is a state tax that's being collected. So a use tax form would probably be sent out from the Department of Revenue in Harrisburg. That wouldn't be our bailiwick to deal 175 4/14/09 - WHOLE - BILLS 090212, etc. with that.
So we depend on them to do that search and that analysis? COMMISSIONER RICHARDSON: The Bureau of Trust Fund Taxes collects our sales tax for the City, so they would look at doing analysis for that. We couldn't determine that analysis for you.
Thank you, Madam Chair. Just following up on Councilwoman Quinones-Sanchez's question about -- how many people are on the list that she was referring to? COMMISSIONER RICHARDSON: How many people are on the list?
Yeah. What's the number of -- COMMISSIONER RICHARDSON: I'll 176 4/14/09 - WHOLE - BILLS 090212, etc. get back to you, because I don't know the number off the top of my head.
It's over a thousand, would you -- COMMISSIONER RICHARDSON: I will get back to you. I'm pretty sure it is. I don't know the number off the top of my head.
Let's just assume it's a thousand, then. Why would we send out 50 a week, which would take weeks, 50 every two weeks versus 14 sending out a thousand? 15 COMMISSIONER RICHARDSON: Then 16 the staff has to deal with the thousand 17 potentially calling in at one time, plus 18 the other projects we're doing. So then 19 the question is going to be, Well, I left 20 a message, they couldn't get back to me. We're juggling about six or seven projects now waiting for people to call back. It's not realistic when you have a staff to do that at one time.
So if you 177 4/14/09 - WHOLE - BILLS 090212, etc. had the staff to do that, it sounds like it would pay for itself. COMMISSIONER RICHARDSON: Possibly, but, again, that project may come to an end eventually also. So back to your question about when does it become a break-even. We can't determine that.
That's a great point. So why not collect 81 percent very quickly in the current budget year when we need the revenue as opposed to going weeks into the year 15 at some point starting when? 16 COMMISSIONER RICHARDSON: As I 17 responded to Councilwoman Sanchez, I said 18 we will look at that. 19
Okay. Do 20 you have any estimate of how much you believe is outstanding just on the list Councilwoman Quinones-Sanchez provided to you? COMMISSIONER RICHARDSON: I cannot tell you that because I do not -- 178 4/14/09 - WHOLE - BILLS 090212, etc. I can't quantify how much is owed because you don't know how much an attorney is getting paid per hour or what their rate is. So I don't know.
But you can make some assumptions. So why don't you assume the average rate is $250 an hour and that they were each in Philadelphia three hours every single day and just -- which is a very conservative estimate, in my view, if you have people coming in from out of town, and provide to the Chair what that total revenue number would be. Okay? COMMISSIONER RICHARDSON: (Commissioner nodding head in the affirmative.)
Thank you. The reason I say is because I believe this number will be in the millions of dollars, and we'd like to -- I'd certainly like to include it in this year's revenue. A lot of people talked about 179 4/14/09 - WHOLE - BILLS 090212, etc. the 2.49 percent fee for paying with a credit card as opposed to -- and you said you can pay ACH. So can I go on the website and pay directly from my bank account? COMMISSIONER RICHARDSON: What are you trying to pay?
My property tax bill. COMMISSIONER RICHARDSON: If you set it up that you want the check to come to the City, you probably could.
No, no. On the City's website. COMMISSIONER RICHARDSON: No. 17
So I can't do an ACH payment like I can do with my American Express bill or Visa bill, and you're trying to set it up for that? COMMISSIONER RICHARDSON: We're trying to set it up towards like an e-TIDES that you can electronically send through a portal for the future.
How much 180 4/14/09 - WHOLE - BILLS 090212, etc. does it cost you to process all of the checks you receive every year; do you know? Have you like taken that function? COMMISSIONER RICHARDSON: For each check it takes us to process, about 41 cents.
Forty-one cents per check? COMMISSIONER RICHARDSON: Yes.
Okay. And that's all the employee time, their fringe benefits, which are in the Finance Department, et cetera? COMMISSIONER RICHARDSON: I'm not quantifying what's in the Finance Department.
Could you provide the Chair with a breakdown of exactly how you reached that figure? COMMISSIONER RICHARDSON: Mm-hmm.
The Acute Care Hospital Assessment Fund, how much revenue is that fund expected to generate 181 4/14/09 - WHOLE - BILLS 090212, etc. in FY09 and '10? COMMISSIONER RICHARDSON: I'll get back to you. I think it's about to 5 million, but I'll get back to you with 6 that number. 7
Will this funding, which is dedicated to emergency room-related medical assistance expenditures, have any impact on costs incurred by the City in the Health Department or otherwise? COMMISSIONER RICHARDSON: No, it should not.
Okay. Why not? COMMISSIONER RICHARDSON: The costs that -- we are being paid by the Department of Public Welfare, so it's not money that -- we'll be using that money to take care of the transactions, the information technology side of things. So it wouldn't be a situation that's going to be costing us. We're budgeting that out properly. 182 4/14/09 - WHOLE - BILLS 090212, etc. (Witness approached witness table.)
Yeah. There's a piece of the Hospital Assessment money that goes to the Revenue Department to cover their costs. I think that's what the Revenue Commissioner is talking about. There's another piece that will go to the Health Department to cover some of their costs, and I think when they're here, they can describe to you how that will be used.