Okay. Have you looked at the revenue assumptions in FY10 and throughout the Five-Year Plan? 183 4/14/09 - WHOLE - BILLS 090212, etc. COMMISSIONER RICHARDSON: Yes.
Do you agree with them? COMMISSIONER RICHARDSON: My responsibility is to collect the money. I can't say anything else than that.
Well, were you consulted during the estimating process?
As the Revenue Commissioner said, that's not what he does. He doesn't look at projections. There are people in his department who help us do analysis of collections. That's part of what forms our projections. But he does not do projections.
So just for the record, the Commissioner of Revenue was not consulted with respect to the revenue assumptions in the Five-Year Plan?
That's correct. His job is to collect revenues. 184 4/14/09 - WHOLE - BILLS 090212, etc.
His job is not to figure out growth assumptions in the economy. That's not what he does. We talk to other people about that, like economists.
Okay. Councilman Clarke touched on this. Under Section 19-1307 of The Philadelphia Code, the Department of Revenue is authorized to grant deferrals, in whole or in part, of increases in real estate taxes. Deferrals may be granted for any increase or portion thereof of real estate taxes due to an increase in assessed value of real estate that is greater than 15 percent in any given year. There's a bunch of factors that are laid out in the Code there. Is this program publicized in 185 4/14/09 - WHOLE - BILLS 090212, etc. what you send out with the tax bill every year? COMMISSIONER RICHARDSON: It's not within the tax bill, sir.
So how does the public know about this? COMMISSIONER RICHARDSON: Again, we have to do more outreach to let folks know about the payment plans and deferral payment plans that they have an opportunity to be afforded to.
I thought your response to Councilman Clarke was that all of these programs are in the final tax bill. But this one is not? COMMISSIONER RICHARDSON: In the final tax bill?
In the tax bill or like -- yeah. When we send a tax bill, do we let people know about every program that's available to offset costs? COMMISSIONER RICHARDSON: That's not in the tax bill.
It seems to 186 4/14/09 - WHOLE - BILLS 090212, etc. me that might be a good place to -- a good use of that stamp would be to include information about these programs for people. How often does the Revenue Department --
Councilman, I'm sorry to interrupt you, but we do have other Councilmembers waiting.
How often has the Revenue Department granted deferrals under this program? How many did you grant in 2008 and 2009? COMMISSIONER RICHARDSON: I can't quantify for you yet. We will get you numbers for 2008 and 2009.
Thank you. COMMISSIONER RICHARDSON: Again, as I said, as of 2007, there was 12,235 folks that were in the senior 187 4/14/09 - WHOLE - BILLS 090212, etc. citizens program. In totality, we have 20,680 who are in the programs that we offer.
I don't think any of those are the program that I'm discussing, though. Thank you.
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam Chair. Commissioner, I think that maybe you ought to look at what we were discussing earlier, taking credit cards for City payments. I'll tell you why. There are a lot of companies, big companies, that don't charge a convenience fee, and I learned that the reason is that in most cases, the next day, the next day the money is in their bank account. Many big companies do not charge a convenience fee. There's still 188 4/14/09 - WHOLE - BILLS 090212, etc. a few. But I think we really need to look at what is the upside and the downside of doing it, because I'll tell you that I know a lot of people that have sent their tax payment in, and I'd like to know what departments or what bills are paid that the Revenue Department handles. I don't know. Do you handle the water bill or Water Department's bills, the payments for the water bill? But I really think you should look at the convenience fee issue, because if you get your money within a few hours after the transaction is completed -- I know some folks that pay their real estate taxes. Twenty days later the check still hadn't cleared. So I'd like you to comment on both of those, and why does it take so long for the City of Philadelphia to post a payment for real estate taxes and other bills that a physical check is sent in. COMMISSIONER RICHARDSON: Again, the Department takes all taxes and 189 4/14/09 - WHOLE - BILLS 090212, etc. Water Revenue bills. As regard to individuals sending checks in for payment that's taking days, again, are they 5 sending in the coupon with that check as 6 well? 7
Everything 8 is right. Everything is right. 9 COMMISSIONER RICHARDSON: I 10 will look into it. Again, I haven't 11 heard a problem at all people getting -- 12 their checks taking that long. 13
Well, nobody 14 is going to call and complain that their 15 check took 20 days to cash, but I think 16 we need the money, and to have it out 17 there and not in our account is not a 18 good thing. 19 COMMISSIONER RICHARDSON: I 20 understand that, and we're trying to make sure that the money gets in the bank faster than what it has been getting into. So I will take a look into that as well.
What about 190 4/14/09 - WHOLE - BILLS 090212, etc. the convenience fee again? What are you going to do? COMMISSIONER RICHARDSON: Convenience fee, again, we will talk with the various departments in the City that are working with that to look at that moving forward as time moves on with the contract. So it's not just Revenue that's involved in that. So there are other departments.
There could be an indirect savings of not having to handle the payment, that it's posted right into the account, you have the money immediately. So just to say that you're paying the credit card fee to the credit card company, there may be some indirect savings that you haven't identified that could make that a very good way for people to pay their bills. So you will follow up on that? COMMISSIONER RICHARDSON: We will follow up on it.
Thank you, 191 4/14/09 - WHOLE - BILLS 090212, etc. Commissioner. Thank you, Madam Chair.
Thank you, Madam Chair. Commissioner, I want to first compliment you on your aggressiveness, because I think you've been aggressive. We've had a number of conversations relative to collection of revenue that's due the City in a number of different areas. Some of the things I brought to you privately and we've talked about and you followed up on. So I do believe that the will is there to do the best you can to get our money in. One of the things that continually arises during the course of 192 4/14/09 - WHOLE - BILLS 090212, etc. this budget crisis discussion is this mythical $300 to $400 million in real estate tax that's owed the City. And I'm constantly getting letters from people or phone calls or people on the street, Don't cut one ounce of service until you collect that $300 or $400 million in real estate taxes. Could you give us a little kind of description or narrative as to the condition of those tax bills and how old some of them are and what the cost is to collecting some of them relative to being held in estates, in different states, where the people who had owned the property originally had passed on, the kids are scattered throughout the country or we don't know where they are. Could you talk a little bit about the reality of the real estate tax collections on the arrears. Because I remember -- just one extra thing. I remember the last couple Administrations we've had these kind of tax sales and lien sales and all that 193 4/14/09 - WHOLE - BILLS 090212, etc. kind of stuff, and it seemed to me that during the course of those activities, the property tax that was really collectible is what we sold off or what we gave to companies to collect. Could you talk a little bit about the reality of collecting $400 million in back real estate taxes? COMMISSIONER RICHARDSON: To be honest with you, Councilman Kenney, I don't really want to comment on it, because, again, the Law Department is more proactive on working with the delinquencies in the real estate. Is the beast realistic that it's about 250, 300 million or more? Yes, it is, unfortunately. The Law Department is proactively working --
That's on paper? COMMISSIONER RICHARDSON: On paper, yes. The Law Department is more proactive on working with various 194 4/14/09 - WHOLE - BILLS 090212, etc. agencies and within their own offices to collect the money that is owed on real estate taxes. Again, unfortunately, we're not really involved in that process with the real estate side on collections, because, again, with the processing going past the 90 days, it's going to them. But it is a real issue.
So it's mostly Law Department responsibility? COMMISSIONER RICHARDSON: Yes, sir.
That's correct. It's mostly Law Department. But it's important to note that when you look at aging of bills, anything that gets beyond a few years becomes very difficult to collect.
People are gone. They've moved away. It's hard to track 195 4/14/09 - WHOLE - BILLS 090212, etc. down the original taxpayer. The number on real estate tends to look bigger in other areas because we're much slower to write off because there's a property there.
Or a vacant lot, right. But the Law Department has more details. But you're right, that a lot of that number is not really collectible.
You were in the government I believe in some form or another when I think we did something in the Rendell Administration, we did something in the Street Administration relative to trying to accelerate the collection of real estate taxes as a result of real estate tax bills that are actually collectible, and aren't those the ones that these companies or lien sales really gravitate to? I mean, they kind of pick up the low-hanging fruit or the medium-hanging fruit, but the stuff 196 4/14/09 - WHOLE - BILLS 090212, etc. on the top they have no interest in either?
Right. And even that didn't turn out too well, because that was the tax lien sale, and a lot of that turned out to be not collectible.
But as far as the Law Department being able to collect $400 million in back real estate taxes or $300 million, whatever the number is, because the number gets bigger every time I hear a complaint, that's not a realistic --
At least realistic both in accomplishing it and doing it at a cost that doesn't exceed the cost of the lien?
Yes. I 197 4/14/09 - WHOLE - BILLS 090212, etc. wanted to ask a question in light of what we are reviewing could be a potential property tax hike. Other than the deferral programs, what would be the cash flow impact if we allowed people to spread out their bills over a longer period of time, say six months to a year, if we went up to a percent increase, 10 which is what is being requested? 11 COMMISSIONER RICHARDSON: I'd 12 have to try to quantify that for you. I 13 couldn't tell you today. 14
Okay. I 15 don't know if Rob wants to add to that. 16 Rob? 17
In light of the fact that we're being asked to vote on a potentially 20 percent real estate tax increase, what would be the cash flow implications or impact if we allowed people to spread out their 198 4/14/09 - WHOLE - BILLS 090212, etc. taxes over six months or a year, depending on the financial situation, and lifting our current deferment for our income qualifications?
If people were able to pay later, the issue for us, particularly in 2010, is that our cash position is fairly weak. It's one of the reasons that we might end up having a fund balance that's as high as it is, is to make sure that we don't run out of cash. With those deferrals, there would be a heightened risk that we would actually run out of cash during the year.
Thank you. The Chair recognizes Councilman Green.
Thank you, Madam Chair. Mr. Dubow, while you're there, what is the portion of the real estate 199 4/14/09 - WHOLE - BILLS 090212, etc. tax owed that is delinquent within the last year, last two years?
I'd have to get back to you on that. I don't have that with me.
Okay. Because you would agree that there is some significant portion, on the order of $20, $40, $50 million, of real estate tax that is collectible?
There is definitely a portion that's collectible, and we are aggressively pursuing that.
How much does the Five-Year Plan or does FY10 calculate from a revenue assumption that we will collect in what are currently delinquent real estate taxes?
In 2009 it assumes 42. 200 4/14/09 - WHOLE - BILLS 090212, etc.
Yeah. In 2008 -- let me finish. In 2008 it was 36 million. And the original budget for 2009 was 36. So we took it up from last year and the original budget by $6 million.
Okay. And maybe we can do even better in 2010 if we hire staff either in Revenue or in Law and go after some of these people.
Well, the other thing that happens when you look at delinquents going up from 36 to 42, some of what you've done is captured people who then become part of the current. So if you have six for two years in a row, it means that there's actually an increase in the number of delinquents you're bringing in, because you have a portion that's staying delinquents and a portion that go up.
Sure. So we've consistently heard discussion about 201 4/14/09 - WHOLE - BILLS 090212, etc. how Revenue doesn't have enough bodies to accept more payments from people, so --
Well, for example, with respect to the collection of money from attorneys who do business in the City but are out of town, we're only going to send out 50 every two weeks because we don't have enough people to answer the phone calls when those numbers come back. I just think we need to be more aggressive with collecting this money. I see the Mayor on TV out there, but maybe we ought to behind the scenes build up the back-office operation that will let this happen.
We are being more aggressive, and as the Commissioner said, we have given them more staff to be more aggressive in going after delinquents.
Okay. So you'll provide the Chair with the aged 202 4/14/09 - WHOLE - BILLS 090212, etc. accounts receivable for delinquent taxes?
That's okay. So, Commissioner, you've testified that after 90 days you lose control of the collection of -- is that any kind of tax or is that just Water Revenue? COMMISSIONER RICHARDSON: Water Revenue and all taxes.
And all taxes. So if somebody is 90 days late on their real estate tax, it leaves you and it goes to the Law Department? COMMISSIONER RICHARDSON: Let me rephrase that. With real estate, no, 203 4/14/09 - WHOLE - BILLS 090212, etc. you have a year to pay your real estate tax bill.
Okay. So it's a year and 90 days for real estate. So for one year real estate stays in your department? COMMISSIONER RICHARDSON: Real estate stays in our confines for a year, and then after that --
So can you describe to me what happens from a systems and a workflow process operation in your department if somebody's real estate tax bill is 30 days late. COMMISSIONER RICHARDSON: Well, first of all, you have up until February 28th to get the one percent discount. So you're going past 30 days. Then you're due by March 31st. If that is the situation, our department is not built to continually try to call them via phone or something. What happens after December 31 of the current year, they are then in the process to go to get a lien against 204 4/14/09 - WHOLE - BILLS 090212, etc. them and a certified letter is sent out for the delinquency.
So the answer to the question is, from March 31st when it's due to December 31st, even though it remains within the jurisdiction of your department, nothing is done, no 9 mail is sent? COMMISSIONER RICHARDSON: We continue to bill them. That's really about it.
How often do you bill them? COMMISSIONER RICHARDSON: We bill them on a monthly basis.
So if somebody hasn't paid, every month you send out a bill? COMMISSIONER RICHARDSON: Yes.
I'm sorry. I couldn't hear your response. DEPUTY COMMISSIONER HALEY: We would bill quarterly a reminder notice, but they're sent out on a month -- 205 4/14/09 - WHOLE - BILLS 090212, etc.
Oh, quarterly, not monthly? DEPUTY COMMISSIONER HALEY: Yes.
So you bill 7 quarterly or monthly? COMMISSIONER RICHARDSON: You as an individual would get a quarterly, but we're billing monthly to all the taxpayers that are delinquent for real estate.
I'm confused. You send out notice quarterly? DEPUTY COMMISSIONER HALEY: Yes. They're cycled. There's actually bills that go daily.
So you're billing monthly in your system in terms of calculating interest, but you're only sending out bills quarterly? DEPUTY COMMISSIONER HALEY: Yes.
No phone calls are being made? 206 4/14/09 - WHOLE - BILLS 090212, etc. COMMISSIONER RICHARDSON: We are not built for phone calls, sir, outbound calls rather.
You're welcome. The Chair recognizes Councilman Kenney.
Thank you, Madam Chair. Just relative to real estate tax collection, if you live in a house and don't own it, the property owner gets the bill or the tenant gets the bill? COMMISSIONER RICHARDSON: The property owner should be getting the bill, not the tenant.
So in order to get a property tax bill, you have to actually own the property in the City? COMMISSIONER RICHARDSON: Yes.
And if you don't own the property in the City, you 207 4/14/09 - WHOLE - BILLS 090212, etc. don't get the bill? COMMISSIONER RICHARDSON: If you don't own the property, no. 5
So it's not mailed to the house; it's mailed to -- COMMISSIONER RICHARDSON: It should be mailed to the property owner. So you may be living in Florida. The bill should be going to your mailing address in Florida, if you change your address.
Does it make any sense to mail it also to the house? COMMISSIONER RICHARDSON: Not really, because then the taxpayer confidentially is being taken away, because my bill you should not know about.
But the same process is followed quarterly with the out-of-state owner when it's a tenant-occupied residential property? COMMISSIONER RICHARDSON: Yes. 208 4/14/09 - WHOLE - BILLS 090212, etc. The tenant -- the owner is the one accountable for the bill, not the tenant.
Any other questions from members of the Committee? (No response.)
Thank you very much. COMMISSIONER RICHARDSON: Thank you, Madam President. MR. McPHERSON: The City Treasurer is next.
Thank you. Madam Chair, with respect to the discussion about real estate taxes and other delinquent taxes, given the responses that we received today, that it's really not within the control of the Department of Revenue, I would expect that the City Solicitor will arrive prepared to answer the questions that 209 4/14/09 - WHOLE - BILLS 090212, etc. we've asked of the Department of Revenue today that he said only the City Solicitor can answer. Thank you, Madam Chair.
Good afternoon. Welcome. Please identify yourself for the record --
Rebecca Rhynhart, City Treasurer. Good morning, Council -- can you all hear me?
Good morning, Council President Verna and members of City Council. I am Rebecca Rhynhart, 210 4/14/09 - WHOLE - BILLS 090212, etc. City Treasurer of the City of Philadelphia. I am pleased to provide testimony on the proposed Fiscal 2010 Operating budget for the Office of the City Treasurer. The Office of the City Treasurer is responsible for the distribution of checks and electronic payments and the investment of bond funds and operating funds not needed for daily disbursements. In addition, the Office is responsible for new bond issuances and the management of 8 billion of outstanding debt, including debt issued for the General Fund, Water Department, Aviation Department and Philadelphia Gas Works. The Fiscal 2010 budget as proposed provides the necessary funding for the Office of the City Treasurer to accomplish these core responsibilities. The Office of the City Treasurer assumed the responsibility of debt management during Fiscal 2009. The 211 4/14/09 - WHOLE - BILLS 090212, etc. Office has managed to bring this function into the budget and reduce the Office's proposed budget over the Fiscal 2009 budget when the Office of the City Treasurer was responsible for only cash management. The highlights of the Fiscal 2010 budget request by proposed expenditures are as follows: The $653,801 in Class 100 funds represents 80 percent of the Office's proposed budget and funds 13 positions. In order to accomplish a Class 100 expenditure reduction despite the addition of a position transferred from the Finance Department to handle the debt management responsibilities of the Treasurer's Office, one accountant position was cut from the budget. In addition, a vacant position was lowered in title. In total, $84,191 in savings was realized in Class 100, which represented over ten percent of the total Office's Fiscal 2009 budget. This 212 4/14/09 - WHOLE - BILLS 090212, etc. resulted in $25,791 in savings after taking into account the transferred position. The $73,088 in Class 200 funds is unchanged from Fiscal 2009 and includes funding for a study to examine authorized depositories' lending practices. The contract for this study represents 65 percent of Class 200 expenditures. The combined Class 300/400 amount is $24,224 for supplies and equipment. This is unchanged from the Fiscal 2009 budget. The City Treasurer's Office is focused on efficiencies in the distribution of payments, as well as efficiencies in the deposit of revenues into City bank accounts. Direct deposit for City workers and pensioners is encouraged, and we have seen a steady increase in participation, from 70 percent in Fiscal 2004 to 75 percent in 2007 to 78 percent in March 2009. There 213 4/14/09 - WHOLE - BILLS 090212, etc. is an even higher participation among pensioners, as about 85 percent of pensioners receive payments through direct deposit. In addition, the Office has been focusing on reducing the amount of check payments received and increasing the amount of revenues received through direct deposit as this increases interest earnings. Interest earnings on invested funds are down this year because of the low interest rates. However, the Office has not experienced any losses on its investments despite the tough market conditions, which is considered a direct result of a prudent investment policy. Because of the market turmoil and bond insurer downgrades which occurred over the last year, the Office of the City Treasurer has restructured or refunded over 750 million of debt, resulting in lower interest rates paid by the City. In addition, the Office coordinated the issue of 350 million of 214 4/14/09 - WHOLE - BILLS 090212, etc. tax and revenue anticipation notes in November and 165 million of general obligation bonds in December to fund capital projects throughout the City. The Office continues to work on restructuring and/or refunding existing debt issuances which are experiencing problems in the market.
The Office commissions an annual study that analyzes the lending practices of the authorized depositories in the City. The most recent study for calendar year 2007 was delivered to members of Council in mid March. The Treasurer's Office issues an annual Request for Information to be completed each year by the authorized depositories in which they must state their community reinvestment goals, respond to the annual lending study and address any disparities in lending. Fiscal 2009 appropriations supported one Treasurer's Office contract with Econsult Corporation and MFR 215 4/14/09 - WHOLE - BILLS 090212, etc. Consultants in the amount of 47,500. The Office had a 50 percent participation rate in contracting opportunities for MBE/WBE firms. I appreciate this opportunity to provide testimony regarding the proposed Fiscal Year 2010 budget for the Office of the City Treasurer. I will be happy to answer any questions that Council may have regarding my testimony.
Thank you. The Chair recognizes Councilwoman Brown.
Madam President, I'm going to yield to Councilman Jones, who has a pending calendar schedule, and I'll come back on my round.
Thank you, Councilwoman Blondell Reynolds Brown, and 216 4/14/09 - WHOLE - BILLS 090212, etc. thank you, Madam Chair, and thank you, colleague Green for yielding so that I can make this. I have one quick question. Last year and as a part of a cost-savings measure submitted, we had talked about electronic transfers from Revenue's checks to various departments to the City of Philadelphia, and I wanted to get an update a year later as to when we could expect the elimination of paper checks generated by the Commonwealth of Pennsylvania which are to the City of Philadelphia, which loses annually $1 million in interest payments that we could receive a year that goes a long way to deal with a lot of the vital services that we're considering cutting. Where are we in working out a protocol relationship with the Commonwealth of Pennsylvania to eliminate paper checks?
Sure. We identified $135 million of paper checks 217 4/14/09 - WHOLE - BILLS 090212, etc. that we had been receiving from the Commonwealth of Pennsylvania. We have enrolled about 60 million of that to date in direct deposit. We have 75 million remaining. We've broken that down, looking at payments of checks of over $1 million, and there's about checks over 9 $1 million, which the Treasurer's Office 10 staff is working on right now converting 11 those to direct deposit. And then we 12 will look at those of 500,000 and greater and go from there.
So out of the how many checks annually we get? Number of checks, not amount.
So we are at the percent mark, 50 percent mark? 22 Where are we? 23
Well, in the 24 amount, the dollar value, we are 25 almost -- we've transferred over about 40 218 4/14/09 - WHOLE - BILLS 090212, etc. percent of the checks. And I think now that we've identified what the larger checks are, I think it can happen -- we can at least get it down to about 30, 40 million in checks pretty quickly, I would say over the next month. Once you get down to checks that are pretty small and a few thousand dollars, they're harder to identify, but I think we need to take care of the big ones.
Well, Treasurer Rhynhart, that's real progress. So I will spare you the sermon I was going to give you about what a million dollars buys. It broke down into 17 firemen, approximately 25 policemen. It 18 was about 66 percent of the after-school 19 programs and about all of the Recreation 20 Department's sports and athletics budget, 21 and it was about -- we went through -- 22 I'll spare you what a million dollars 23 buys, because we're 40 percent there, and 24 I appreciate the effort. If we can get a 25 hundred percent there. As we start to 219 4/14/09 - WHOLE - BILLS 090212, etc. plug the leaks, we can take care of the big things and have a confidence that we're at a high peak of efficiency. So, Madam Treasurer, I am pleased to hear that 40 percent is better than no percent, but I don't want to come here again next year where we aren't at least double that, to 80 to 90 percent of the checks. Now, I understand some of the smaller checks present a problem because it's hard to get an account. It may be a one-time, two-time payment. That doesn't make sense. But we can achieve a greater efficiency of beyond 40 percent, and I'm going to look forward to that progress report. Thank you, Madam Chair, and thank you, colleagues, for allowing me this opportunity.
And thank you for bringing it to our attention, Councilman Jones. 220 4/14/09 - WHOLE - BILLS 090212, etc.
Thank you, Madam President. Good afternoon. Let me commend you on the, I guess, percentage of the participation rate of MBE/WBEs. If I'm reading your testimony correctly, that amounts to just two companies, one being Econsult and the other being MFR Consultants that helps yield that 50 percent?
The Treasurer's Office has one contract in the budget, and MFR is a minority and women-owned firm.
And they have a rich track record of service. Discuss, if you will -- you write in your testimony "efficiencies in the distribution of payments and deposit 221 4/14/09 - WHOLE - BILLS 090212, etc. of revenues." Just discuss what that means.
Sure. I think in the deposit of revenues is what I was just discussing with Councilman Jones. The faster we get revenues deposited into the bank accounts, we can earn interest on that money. So paper checks of large amounts that take a week or two to process into the system, it's lost interest earnings. So that's what it means, the focus on that.
Are you at liberty or willing to say what City agency has been the most egregious in not doing the check deposit turnaround in a way that meets your goals, and specifically -- I'll leave the "who" out. Is there any particular City department where you've seen improvement, let's put it that way?
Yeah. I think it's not department by department. It's more just the method of paying. 222 4/14/09 - WHOLE - BILLS 090212, etc.
What type of incentives, information do you offer to employees and pensioners to participate in direct deposit? I'm amazed often times those who still do not -- have chosen not to use that method of handling their business.
Right. We actively encourage participation in direct deposit. We've spoken to central personnel to encourage employees to enroll in direct deposit. On the pension side, I know the pension -- maybe Pensions could speak to this as well, but I know that they have sent out information in their newsletters for people to participate in direct deposit, and their numbers are up to 85 percent.
What is the number? 223 4/14/09 - WHOLE - BILLS 090212, etc.
And what would you attribute the factor that caused that increase?
I think we've seen a steady increase year over year, so I think people are moving towards direct deposit. I think they probably agree with what you said, that it makes sense. There's some people, though, that obviously don't.
I think that's it for me. Thank you, Madam President.
You're welcome. The Chair recognizes Councilman Green. 224 4/14/09 - WHOLE - BILLS 090212, etc.
It's been a tough year for you in this job, and we thank you for everything you've done for the City this year. I know it's been -- you're a new Treasurer and it was a very difficult market with respect to everything we're trying to do. So I want to thank you.
So following up on Councilwoman Reynolds Brown, have you examined giving people electronic pay stubs or the option of electronic pay stubs in addition to the option of direct deposit?
We've discussed it. I think in order to do that, we would need to create some sort of Internet server for people to log in and get that information. It's something 225 4/14/09 - WHOLE - BILLS 090212, etc. that I think we'll continue to talk to DOT about, Department of Technology about.
Well, how much what would save, though? Doing electronic pay stubs instead of --
Which the federal government does, state government requires.
It would save some money. I think, though, when we're looking at it, we're also looking at there's the up-front cost of creating the system, and also if we went only to electronic pay stubs, there might be additional issues with people that don't 226 4/14/09 - WHOLE - BILLS 090212, etc. have access, Internet or e-mail access.
Sure. That's true. And the federal and state government have hardship exemptions. Okay. So if you could provide the Chair with what it would cost to do that and basically a reason for why we're not currently at least offering it as an option to people who receive direct deposits electronically currently anyway.
And how many 227 4/14/09 - WHOLE - BILLS 090212, etc. actually have received deposits during your tenure?
Wachovia, PNC, Citizens, First Republic, Commerce, United and Mellon Bank of New York.
I know we are trying to hold less in cash deposits and have more in investment, which is smart strategy, but in terms of even the cash deposits, of those depositories which have received money in the five or six, is a lot of the money concentrated in one or two institutions?
Well, Wachovia is the main, I would say, is our main account. 228 4/14/09 - WHOLE - BILLS 090212, etc.
And Wachovia still exists in terms of its local organizational structure even though it was taken over by Wells Fargo?
Well, what I've been told is that the Wells purchase or the merger between Wells Fargo and Wachovia, Wachovia still has the name Wachovia and they're looking and analyzing their systems, but it looks like, from what I've been told, that it won't be until 2011 or later when they 229 4/14/09 - WHOLE - BILLS 090212, etc. actually have some system changes. So they're going slowly in terms of any changes that occur.
If Wells Fargo went under, would Wachovia then disappear?
I don't know if it would disappear, but it would definitely negatively impact them, yes.
So it would impact the fact that a majority of our deposits are there?
And what's the current status of the agreements we 230 4/14/09 - WHOLE - BILLS 090212, etc. have with Wachovia? When were they updated? Are they still binding?
Sure. We have a payroll contract, which is almost done being negotiated and should be submitted for introduction to Council within the next few weeks for the session.
And are we looking to, in addition to that contract and authorizing Wachovia as a payroll depository or continue that relationship as payroll depository, for the record, are we looking at having some backup in terms of other institutions that might be qualified because we don't know what's going to happen out there in terms of Wells Fargo and any other institution?
I understand we're looking to go to contract with one, but the question is, are we looking to authorize others as payroll depositories and are we setting up a back-up plan? Because when Wachovia got in the 231 4/14/09 - WHOLE - BILLS 090212, etc. business, it was said on the record by the previous City Treasurer it was because they were the biggest and, therefore, they were thought to be able to withstand anything that would happen in the market. And, therefore, in retrospect, we don't know what's going to happen, and, in fact, it's some of the larger companies, the national banks, that are struggling even more so than community banks. So I guess the question just is, should all our eggs be in one basket or as we move forward in this process, are we going to look to at least have back-up plans in terms of other depositories for payroll purposes?
I mean, I think that there's risks. There are risks with any bank, so -- I would say that there's risks. There is a requirement, a state law that requires the banks to collateralize at 102 percent of our deposits. So whatever we have in deposits, they have at the fed or another 232 4/14/09 - WHOLE - BILLS 090212, etc. nationally recognized bank in collateral. We are -- on the pension bank accounts, which have been held by Bank of New York Mellon, we do have an RFP out right now, which is due back later this week from banks, to see for a competitive process. So I think we keep looking to the different banks and do have a competitive process.
I'll ask the question in a different way. How many authorized City depositories are qualified to hold payroll deposits?
Oh, just for payroll? I believe it's just Wachovia, but I'm not -- that is correct, yes.