COUNCIL OF THE CITY OF PHILADELPHIA CONTINUED PUBLIC HEARING COMMITTEE ON FISCAL STABILITY AND INTERGOVERNMENTAL COOPERATION - - - - Room 696, City Hall Philadelphia, Pennsylvania Wednesday, April 7, 2004 10:15 a.m. - - - - RESOLUTION 040276 - Resolution providing for the approval by the Council of the City of Philadelphia of a Revised Five Year Financial Plan for the City of Philadelphia covering Fiscal Years 2005 through 2009, and incorporating proposed changes with respect to Fiscal Year 2004... PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN FRANK DICICCO COUNCILMAN JACK KELLY COUNCILMAN MICHAEL NUTTER COUNCILMAN BRIAN O'NEILL COUNCILMAN JUAN RAMOS COUNCILMAN FRANK RIZZO - - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 259 I N D E X RESOLUTION 040276 JANICE DAVIS, Finance Director....... 260 ROBERT DUBOW, Budget Director........ 266 JOYCE WILKERSON, Chief of Staff...... 267 JOSEPH C. VIGNOLA, PICA.............. 303 260 04/07/04 - FISCAL STABILITY - RES. 040276
Good morning, everyone. I don't think we're going to wait any longer for Councilmembers to come in. And we do have a quorum. This is the continued public hearing of the Committee on Fiscal Stability and Intergovernmental Cooperation regarding Resolution No. 040276. Ms. Wilkerson, would you approach the table, please? Councilman DiCicco wants to be excused for about minutes. 13 Ms. Wilkerson or Ms. Davis, I think 14 we're all very confused about the 15 self-insurance health benefits. Can you explain what the Administration means by self-insurance? And how would the program work?
I still have the pain. I'm a trooper at this point. 261 04/07/04 - FISCAL STABILITY - RES. 040276 By self-insurance the Administration means a program under which, instead of using an insurance carrier to absorb the risk, the City would, in fact, itself bear the risk of our employees' use of healthcare. Currently, we pay an insurance premium which is intended to cover not only the cost of providing healthcare, but also a risk factor and any profit or reserve requirements of the company with whom we contract for this insurance. Under a self-insured plan, the risk factor would be eliminated, as would the profit factor, if you will, because the City would stand in the place of the insurance company. As I mentioned last week, there are three models, one under which the City would entirely administer the plan. There is another where we would contract with a third-party administrator to provide administration, but not access to their network. And then there's a third model in which we would contract with a third-party 262 04/07/04 - FISCAL STABILITY - RES. 040276 administrator and would also have access to their doctor and hospital network. The City hasn't decided yet which model it would adopt and we're in the process of developing our strategy more fully.
Who would make the determination if a medical procedure is covered or not?
The decision would be made under each of the three scenarios. One, by the insurance company who's currently making it if we went to a model where we use their network. Second, by the third-party administrator if we only hired a third-party administrator to do administration. That third-party administrator will use the same standards that are used by the insurance company currently in place. And then the model under which the City would do administration, there is a standard that is used across the industry, and that would be the same standard that the City will employ. So it would be the City under where the model where we're providing administration, third 263 04/07/04 - FISCAL STABILITY - RES. 040276 party-administrator where we're hiring a third-party administrator only for administration, and a third-party administrator where the network would again be the third-party administrator.
Could you tell us how the City would save money with this plan?
The City immediately saves the risk factor, the amount that's automatically layered in to protect the insurance company against the risk it's absorbing with our employees. We'd also save that reserve/profit piece that the insurer gets on our premium.
Would this mean that the City would discontinue the HMOs?
The City could create its own HMO. There are cities that have used the HMO model. Roughly 90 percent of the cities in the United States are using some self-insured model. And the extent to which you want to use the model, the only thing is, that limits it from being purely PPO to being 264 04/07/04 - FISCAL STABILITY - RES. 040276 HMO. The City could, in fact, contract with an HMO-type relationship of doctors and hospitals to create its own HMO.
You know, I had asked, I believe last week, if the City was ever self-insured, and I was told we weren't. But people in my staff assure me that, I believe, in the late 1970s, probably early '80s, that we were self-insured.
The model that the City used back then was a cost plus model, which isn't the modern day self-insurance model. It was, from what I understand, a tack-on of 10 percent over basic costs and it was not well managed and there were some problems. The traditional model had come into play mid-'80s. The new model came into play mid-'80s and it is a true self-insured administered program. Any program is only going to be as successful as the administration of the program is. We are taking time with our strategy to make certain we have a strategy that works. We can't save money, we can't protect the 265 04/07/04 - FISCAL STABILITY - RES. 040276 employees' benefits if we continue to do what we're doing now. And so our strategy is, one, to protect the employees' benefits. We can't maintain the level of benefits we have now under an insured plan if we continue to go insured. Our best option for keeping the employees with the highest level of coverage is the self-insured model. That's why we're exploring the self-insured model.
Well, I would assume by your testimony that this will certainly not be going into effect during FY '04.
We may see some benefits of it in FY '04 -- I'm sorry, in FY '05, not FY '04. You're correct.
As we develop the plan, we will come back to City Council with briefings. 266 04/07/04 - FISCAL STABILITY - RES. 040276
It was an inadvertent touch. I will ask some questions later.
I have a question. Are you still planning on removing and pruning the trees for next year?
How much funding would that be compared to previous years?
I have the budget detail back at the office. I'd have to get you that number.
Each District Councilperson, I believe -- does that come out of their allotment, you might say?
No. There's a contract that runs through the Managing Director's Office for tree trimming and tree removal.
I have another 267 04/07/04 - FISCAL STABILITY - RES. 040276 question. You plan on spending $20 million on demolition of vacant buildings over the next five years. And I've sat through the NTI Program for seven hours. I've been listening to testimony that had to do with more or less removing and demolition of buildings and whatnot. Now, I have no problem with hazardous, of course, buildings that must be taken down for safety reasons, but there doesn't seem to be any plan on what to do. Is this going to spur development? Where is the economic growth involved in this whole plan with NTI?
Most of the properties that are coming down are properties that are imminently dangerous. In some situations, the decision is made to take down adjacent properties in order to create a package that has the potential of being developable. There is development happening. A lot of the development in neighborhoods where we're doing demolition requires some level of subsidy, either through tax credits or CDBG, 268 04/07/04 - FISCAL STABILITY - RES. 040276 and so the actual development frequently will await there being funds identified for development to happen.
Well, what I'm getting at is, I know developers and people interested in, of course, investing into these communities. What they want to see is they want 8, 10, maybe properties at one time 10 rather than one here and one there. 11 In other words, it's not going to 12 spur anyone's interest to see if you have three or four homes in a five or six block radius. That's not going to do it. It's going to spur development when you rip down an entire block maybe. Then a developer or a builder or a contractor would be interested in going in there and investing his money, private dollars to go into that.
Before any building is put into a demolition package, there's a team of people that sits down that includes the District Councilperson, City Planning, Redevelopment Authority, L&I, and they talk about those kinds of issues when they assemble 269 04/07/04 - FISCAL STABILITY - RES. 040276 the packages. A lot of times, though, the decision about how aggressive to be will also turn on relocation issues. Because of the pattern of housing and deterioration, the decision to be more aggressive is not made because it would entail widespread relocation of residents. I think if you were to look at some areas in the 5th District with Councilman Clarke where we actually have funding for replacement housing, a real effort is made to create a large enough parcel of land so that we can attract developer interest. In fact, we had 10 developers respond to the RFP to develop in that area, in part because we were willing to be a little more aggressive about relocation so that we ended up with a community that made sense after all the work and all the investments were made.
That's going to be included, I imagine, in the economic summit that you're planning on in June, I believe, or May?
I would think that 270 04/07/04 - FISCAL STABILITY - RES. 040276 some of the community development, some of the housing issues would be wrapped into that.
I have a problem when you're removing these homes or demolishing these homes and then just leaving vacant land and putting a cyclone fence around them. It just doesn't spur development, to me.
We're not doing cyclone fencing any longer. If you were to go down 31st Street in North Philadelphia and Strawberry Mansion, which was actually the first demolition package that we identified, and if you were to compare what we had before, you had vacant lots, abandoned buildings. You saw just an extensive amount of drug trafficking going on. You saw a neighborhood that was out of control. If you were to go back to that same block now, what you would see is an area that is greened. It has post and rail fences, which we're trying to work with the Mural Arts Program in some situations in order to coordinate the mural arts with the greening 271 04/07/04 - FISCAL STABILITY - RES. 040276 activity. You get a sense that this is a neighborhood that has potential. Before the City undertook the demolition and vacant lot management, we drew on the experience in the Empowerment Zone where they had used this kind of strategy, as opposed to the individual lot with the cyclone fence, with no attention being given to how the demolition left the condition of the land. What they found was you actually have a lot less short dumping. You have a lot less maintenance problems in the long run if you include in the demolition specs some level of greening. Throughout the City you can find instances where neighborhoods look much better, where we're seeing a huge increase in values in some places in the City. Because even though all the parcels aren't large enough for development right now, you have a development that has the blight in it controlled. You have the drug corners under control. It's not going to be a short 272 04/07/04 - FISCAL STABILITY - RES. 040276 process. These neighborhoods deteriorated over a 50-year period. It's going to take a while to bring them back. But we think we positioned neighborhoods for good things to happen. We're constantly trolling for additional resources for development. When tax credits or the state or federal government announces opportunities for resources, we're making application and have been successful in pursuing that.
Could you give me an update on that Brewerytown Project?
Brewerytown is a project that has a number of different components. One part of it is the tax credit transaction. There's a building that will be converted into apartments. It's going to be a mixed-income development, some of them affordable housing units, there are other parcels that are targeted for townhouse development. Some of those require demolition of commercial property. The City has committed to doing that. The NTI people were here last week 273 04/07/04 - FISCAL STABILITY - RES. 040276 with a resolution to amend the NTI budget. We also have legislation that's been transmitted that would provide the necessary appropriation. The demolition is being held up because we don't have the appropriation. We've also had to move horses that were, you know, stables in operation. We've been to court. We've removed the horses. It's been a very, very complicated project that has required that Kevin and the people in Housing work very closely with City departments trying to manage a lot of different components. But we think that if we're going to be successful in rebuilding some of these neighborhoods, we have to have strategies for tackling challenges like this. It's going to end up at the end of the day with hundreds of units of new housing. I think it's going to be a strong neighborhood. It's adjacent to the park. It's at the west end of Girard Avenue. We have a commercial corridor planned. The Empowerment Zone folk have been working with foundations and others putting together a 274 04/07/04 - FISCAL STABILITY - RES. 040276 commercial corridor strategy that we think is really exciting. We're committed. We're working with the developer. We've hit a glitch. We're going to work through that and expect to be able to accomplish the demolition in very short order.
After the demolition of that building, the Western would proceed with the --
That's right. The Western is working already. It has one tax credit for the rental housing component. We have other parcels we're picking up through acquisition. That is already in place. We're working with the Housing Authority on some components. There are a lot of moving pieces. It's going forward. We do need to get the resources to do the demolition.
You mentioned about that one complex that you built 210 units, I believe. You have mixed use, you say?
Mixed income. Do 275 04/07/04 - FISCAL STABILITY - RES. 040276 you have any track record of how that works?
In Philadelphia, it depends. There's mixed-income housing in parts of Spring Garden around 18th and Wallace. There are $600,000 townhouses that have been sold. They were developed by a community development corporation that at the same time developed public housing units in the same block in some instances. And so it depends from neighborhood to neighborhood. It depends on how strong the neighborhood is. We have housing, public housing, that is being redeveloped around Martin Luther King, the old PHA project, and areas of southwest Center City. Kenny Gamble and the Universal folk are developing mixed-income housing. It really does vary.
To answer your question, Councilman Kelly, on the tree trimming, it's $2.9 million in the '05 budget. And it's included in the Managing Director's Office budget. 276 04/07/04 - FISCAL STABILITY - RES. 040276
On the self-insurance proposal, the State is self-insured, I believe. Do we know that for a fact?
They're self-insured. There have been many entities around the State, school board, school districts, cities, towns, even counties that have asked the State if they could piggy-back on the leverage they have with 50,000 employees in their self-insurance. They used the Blues to contract out the administration and everything, but they used the power of the numbers. That's their number of employees. They also, I believe, self-insure all their retirees because they have lifetime health benefits for retirees. So there's some fairly large numbers out there. Do you think it would be worthwhile for the City of Philadelphia to enter into at 277 04/07/04 - FISCAL STABILITY - RES. 040276 least preliminary discussions with them to see if that were possible? Because 6,000 looks like a lot compared to some cities that aren't that large. But it's a drop in the bucket, probably, compared to the State if we were buying into those lower costs.
It does make sense. And, in fact, there is already a consortium within the Philadelphia area brought together by Ballad Spahr that's looking at just that kind of maybe City regional consortium, looking at the Community College, SEPTA. There are a lot of bodies being insured in the area. And so that is something to consider.
Pennsylvania League of Cities is doing the same thing, trying to create a program either using the State or using a non-Blue Cross provider. That's one national company now that is really getting aggressive.
It's the only way we can protect the benefits of the employees. Insurance is eroding our ability to provide the effective coverage. 278 04/07/04 - FISCAL STABILITY - RES. 040276
As great as Blue Cross is, it's still pretty much a monopoly in the area. Until some strong competition comes in, it doesn't give them any incentive. On the Water Department, two things. One, you mentioned at the Capital Budget hearing if the $125 million reserve transfer for stimulus occurs, there isn't just a $4 million payment, but there's the loss of the interest on the $125 million on the Five-Year Plan. Is that already in? Is that loss in the Five-Year Plan?
Second question, again, involving the Water 279 04/07/04 - FISCAL STABILITY - RES. 040276 Department. I know the 43 percent increase proposed over four years includes the new assumption of water lateral responsibility in the street area. But I also know that it's an eligible Capital item just as a water sewer pipe is because of the life span of one of those pipes. I have a deep concern, having been fairly closely involved in this issue for a while now, that the laterals are going to get credit or blamed for the size of the increase. It would seem to me we could segregate out the laterals, move them over to the Capital and then we could find out what the real increase is. Because right now I don't believe the actual replacements that go on each year are anywhere near what they will be once the Water Department becomes responsible. Because it's very difficult to force people with a threat of a shut-off to get their laterals replaced. It has to get so bad that we basically give them the ultimate ultimatum because of the hardship and the cost involved, 280 04/07/04 - FISCAL STABILITY - RES. 040276 which is understandable. However, the Department also knows that there's a whole lot of laterals under the streets that should be replaced. They can start doing that, so you're going to have a much larger number once you get into the responsibility shift. It seems to me that rather than hitting the Operating Budget and causing the rate increase, especially one this large when all these other things are happening with the budget, that we should give a lot of consideration to the rate increase only involving ordinary operating costs that we've always had, and separating out the cost of the lateral and moving them over to Capital. If it turns out later that it makes sense, at least you'll see the cost. Because in every conversation I've had with the Water Department, there's a catch-up period. There's going to be a period of catching up to the laterals that need replacement that aren't so severe that we force people to do it. We know when we drive 281 04/07/04 - FISCAL STABILITY - RES. 040276 down the street and the Water Department is on these streets and they see buckling and they see highs and lows of peaks and valleys in the street, they know there's a problem under there. It may not be causing an immediate situation that requires a shut-off notice order to have the lateral replaced. But can you give some consideration to that? Because I think you've got two problems. One is, I think there's an overblown perception being sent out there that this lateral change is going to punish people with a 43 percent increase. And secondly, there are other reasons why these increases are occurring. We can separate them out and say, "This is what the increase is because of normal things that happen in the Water Department and this is why your rates are going up. And to the extent that your rates are going up because of the $20 million change in the stimulus" -- well, actually, that has to come out of the City, right, the $20 million?
That won't show in 282 04/07/04 - FISCAL STABILITY - RES. 040276 there.
The $4 million will have to too, right? The surety payment.
But the other things that cause the increase are things like there was a reduction in State aid, a normal change in inflation and salaries over time.
People have been waiting all these years for some fairness in this area, and it is a dramatic improvement on behalf of customers. Now, for them to think that they're getting this enormous rate increase to pay for some neighbor who had some bad luck this year with a water lateral break that they would have had to pay for otherwise -- because people start shifting their fairness definitions when it's not them that's the unlucky person or the unlucky household. I think we can at least clarify how much of this increase is because of things like you just mentioned, Mr. Dubow, and 283 04/07/04 - FISCAL STABILITY - RES. 040276 seriously look at the Capital side of things for the laterals. I mean, the Commissioner was very clear, that because they last more than five years -- well, most of them last a lot longer than five years, 25, 30, 35, 50 years, just as our sewers do, and they'll last a lot longer with the Water Department being involved and taking care of some other conditions that help contribute to it under the street.
Water has an analysis that breaks out the causes of the increase by type, so we can show you that. And then we can also talk to them about how the rate increase would look if we were paying the improvements through Capital and paying debt service.
Thank you, Madam Chair. I want to refer to the introduction 284 04/07/04 - FISCAL STABILITY - RES. 040276 of the City of Philadelphia Five-Year Fiscal Plan. In the introduction -- and I'll quote, "Reimbursement from the State for highway patrol cost. The Commonwealth of Pennsylvania patrols state highways in every county except Philadelphia. Since the State does not conduct these patrols, the City has deployed officers to fulfill the State's responsibility. The cost of the patrols is now $5.6 million annually, and the City can simply no longer afford to perform the State duties. As a result, the City will seek full reimbursement from the State for those costs." To the Chief of Staff, last week I asked if the Administration is prepared if we don't get this reimbursement to direct the Police Department to cease these patrols and force that responsibility to the State. Secondarily, I'd like to know from the Budget Director, where is this $5.6 million in the Five-Year Plan? Is it in or is it out?
With respect to the first part of your question, I did ask the 285 04/07/04 - FISCAL STABILITY - RES. 040276 question to the Mayor if it was his intention to pull Philadelphia Police off the state highways, and he has not made a final decision about that, about leaving the roads unprotected.
Just a second, please. Mr. Dubow, could you comment on where the $5.6 million is in the Fiscal Plan?
Yes. If you look at the Mayor's Operating Budget and brief, and you go to , it shows revenue from other governments for the Police Department, and it shows patrolling state highways, reimbursement, $5.6 million.
I'm sorry. I don't have the box here, so anybody that wants to ask questions, if you would indicate. Councilman Nutter.
Good morning, 286 04/07/04 - FISCAL STABILITY - RES. 040276 Ms. Davis, Ms. Wilkerson, and Mr. Dubow. Ms. Davis, I wanted to go back to the earlier questions with regard to the self-insurance issue. I was not here at my seat when it started, but I picked up on the other side of the room. I thought I heard you say something to the effect that the City could create an HMO?
I wasn't sure if I took that down correctly, but is that what you said?
You create the relationships with the individual doctors, capitating their amounts, also with the hospitals, capitating their amounts, and then use the services in that fashion.
Are there any details or documents on how this would work or anything that we could glean from other places 287 04/07/04 - FISCAL STABILITY - RES. 040276 that have this in place?
I'm certain I can get some for you. Ninety percent of the cities are using some form of self-insurance.
And I think in response to the Chair's question, the issue here is that, I mean, what, we're cutting out some amount of cost or cutting out a, in essence, I guess the middle person?
The risk factor is the amount that the insurance company assesses to protect them against an over-usage by our employees of healthcare.
And how would we protect ourselves from the same thing?
There will be over-usage by some and under-usage by others, and it is that balance. We take the risk. We'd set up a reserve, probably equal to about three months, but you are going to protect yourself. 288 04/07/04 - FISCAL STABILITY - RES. 040276 Because not every employee, although you're being assessed a risk fee on every employee, not every employee is a super utilizer. I, for example, hate doctors. I try not to go. I think there are a lot of others like Mr. Dubow who probably never goes.
It's balancing out those who are users against those who are not users, but we're being charged for every employee as though there were that risk.
In the current situation, we pretty much have a relationship with one company?
They're the only ones in 289 04/07/04 - FISCAL STABILITY - RES. 040276 town.
No one else is able to provide services at the level that we require.
It depends on the model that the City chose. The City could administer it itself. The City could hire a third-party administrator that only did administration, or the City could, in fact, hire Blue Cross as its third-party administrator and take advantage of its network of doctors and hospitals.
Why would Blue Cross want to enter into that kind of arrangement? I'm assuming they must know that the current arrangement is much better for them, right?
Well, the current arrangement has that risk factor. But they do, in fact, serve as third-party administrators for quite a few people. What 290 04/07/04 - FISCAL STABILITY - RES. 040276 they give up is the risk factor.
And just from a process standpoint on any of this, who implements and/or decides what program we end up with? What is the process to get you there? Who, if anyone, must approve it? And what's Council's role in determining this or any other benefit program?
This was asked at the last hearing. The Law Department is developing a letter that responds to those questions, and rather than go ad hoc, I'd rather rely on their document.
No. If you went down that road already, that's fine. Mr. Dubow, I wanted to ask you with respect to a response that you just gave to Councilman Kelly. It's kind of not on my list, but from some previous work, you indicated that the dollar amount in FY '05 for tree trimming was $2.9 million? Did you say that?
I thought a 291 04/07/04 - FISCAL STABILITY - RES. 040276 couple years ago -- I don't know whether it was the '01 budget or the '02 budget, I thought that that number was somewhere up in the $4 to $6 million range, maybe when the program started and -- I mean, the Mayor had significantly increased the amount of money -- and maybe I'm confusing both the combination of tree trimming and possibly removal. And then at some point we got rid of the backlog of the dead and dangerous, and then there was going to be a shift of some of those dollars into the tree trimming area. But I thought the number was much higher just a few years ago.
I think we started out with a million dollars in Fairmount Park. We added this money to it. So what I'm really talking about -- and I should have been clear -- is the additional money that's in the MDO. I don't ever remember it being 6. I don't remember it being that high.
Okay. I think maybe we were trying to get to 6. Maybe that's why I have that number. 292 04/07/04 - FISCAL STABILITY - RES. 040276
And we had a schedule for getting rid of our backlog of imminently dangerous trees, and we're ahead of schedule on that.
So is the 2.9 number the real number, or are you saying that --
All right. Let me turn a little bit of attention to PGW. I think there are at least four different resolutions floating around Council related to PGW. But at one that I attended recently, I know Mr. Knudsen and I think Mr. White were at the table and I asked them about kind of the future of the company, and they were at a hearing, I think, for one of the items was a surcharge issue. First, I recall there was a report back in an earlier point in time considering a 293 04/07/04 - FISCAL STABILITY - RES. 040276 possible sale of the company, and that we had either -- we the City or PGW or PFMC had brought someone on to take a look at that particular issue. What's the status of that report?
The City retained Lehman Brothers. The report was not finalized. I think that in the early drafts, the analysis seemed to indicate the same thing as everybody's analysis. It indicated the company carries so much debt and has so many liabilities that there really is no net earnings to the City. It is probable that rates would go up for the customers. There were a number of reasons that made that ill-advised at this time. The future of the company continues to be very difficult, and the company is looking at trying to diversify its customer base. It relies extensively on residential customers. The number of commercial and industrial customers has been reduced over the years. The company is looking at strategies to try to diversify the customer base. We 294 04/07/04 - FISCAL STABILITY - RES. 040276 have some assets that create value for the company and we're trying to identify strategies for making better use of them.
Well, based on the current finances and certainly the more recent proposal, this cash receipts, often referred to as the surcharge, I mean, is there a plan in place that would indicate -- whatever our definition of financial stability would be and efficient management operations, is there any plan that shows the company reaching that status in the next three to five years?
Ms. Davis can venture her own opinion. I think three years is certainly aggressive. Five years may be aggressive. A lot has to do with factors we don't control. The run-up in the cost of natural gas has been unprecedented. The successive years with the run-up in the cost of natural gas is something that perhaps the nation should have foreseen. It did not. But for that, I think we would be much closer to being on a real road to recovery. This was a 295 04/07/04 - FISCAL STABILITY - RES. 040276 setback when you talk to people. You know, folk don't expect it to last forever. They're talking three years maybe, but it will never go as low as it was. The company is now trying to do a better job trying to forecast exactly what it's going to look like. As you know, we have new collection initiatives in place and they are -- I think while the company is still in trouble, we're doing a better job collecting this year than last year, despite the fact that the bills represent a bigger challenge for the customer. There are some things going on in the company that indicate that we can do a better job with collections than we might have thought. And we don't know exactly how good we can get because some of those initiatives are still fairly new. But we're trying to put together a realistic picture of what it's likely to look like in the coming years.
Ms. Davis, did you want to venture into that territory?
No. I left my crystal ball home with my broom, so... 296 04/07/04 - FISCAL STABILITY - RES. 040276 (Laughter.)
Let me ask this question. First, is this a business that we should still be in as a municipal government?
An honest answer, probably not. And the reason is that because we are in -- unlike water where our raw product is something that is available to us --
Yes. We're competing in a market where you have to be able to move with that market. The pressures of that market are greater when you're looking at a city with the demographics that we have, that we are unable to spread our cost over a larger customer base because we can't go outside of the City and pick up residential customers. Any gas company in Philadelphia would face some of the problems, but our company is also saddled with a lot of the 297 04/07/04 - FISCAL STABILITY - RES. 040276 social service costs that we, the City, have burdened it with because we don't want people to die in their homes because they don't have heat. It is for humanitarian reasons that we are still in the business. But the business won't be profitable as long as we're in it for philanthropy.
I understand that. How do similarly situated northeastern large cities -- and I understand that with every word it's narrowing the universe, but Philadelphia, Pittsburgh, New York, Boston -- I mean, I don't know how cold it gets in Baltimore in the winter, and there must be others somewhere in the northeastern corridor in the mid-Atlantic states, how do they ensure that people don't die in the winter? And in many instances they are not in this particular business.
Their governments probably pick up more of the social service cost for homelessness or whatever. What we do inside of PGW by having a liberal CRP program 298 04/07/04 - FISCAL STABILITY - RES. 040276 or whatever is allow people to stay in their homes longer. Appliance repair and parts and all of that, those are different ways of providing homes for people by not having them leave their homes. These other cities that don't have municipal gas companies probably accomplish it through either their philanthropic community. I know in some cities you have a dollar on whatever bill to cover that. So you have a lot of those types of things. And then the government picking up itself or the counties and the states picking up a larger part of that social service cost, because those people will end up homeless.
One of the things that the company has been doing is meeting with the State Delegation and lobbying at the administrative level in the State trying to get a larger share. You do have other states -- and we can get you some of the testimony we've been giving elsewhere -- that make many millions of dollars available for off-setting some of the social cost. I think that's one of the challenges, that even if a private 299 04/07/04 - FISCAL STABILITY - RES. 040276 company were to take over PGW, the problem wouldn't necessarily go away for the City. Utility service is something that we know from past experience is a primary indicator of abandonment in neighborhoods. There have been studies done in the past that overlay abandonment with utility shut off, and it seems to be a causal factor. But I can get you some of the testimony. We are working with the State Delegation. We've been working with Secretary Richman trying to do a better job securing our fair share of both the LIHEAP and the Crisis funding. And we've been lobbying at the federal level trying to increase the pie so that we can offset some of the customer's inability to pay.
Can I ask both of you in your official capacities, Ms. Davis, as Director of Finance -- and I know you have another longer title which I know starts with Secretary, but it is a little difficult -- Secretary of Financial --
We can that leave home 300 04/07/04 - FISCAL STABILITY - RES. 040276 with my broom.
All right. Fine. We'll say Director of Finance. I at least know that. And Ms. Wilkerson, as Mayor's Chief of Staff, I'd like to ask you in an official way if whether through PFMC or the financial advisors that already work for the City or if there is some other entity that we might contract with to provide us with a plan option which, on the one hand, incorporates all the programs that we can that demonstrate some ability for the City of Philadelphia not to be in this particular business anymore, which would then naturally, I would think, have a less financial impact on the City of Philadelphia. Because you then also have to take into consideration the $18 million payment we always expect to receive, that I think this budget anticipates not receiving, a $45 million loan outstanding that they say they're going to pay -- and I know in their hearts they want to. My grandmother used to tell me that I had deep pockets and short 301 04/07/04 - FISCAL STABILITY - RES. 040276 arms. I never kind of get to the money on the repayment. That gives us a number of options on what we would do and how we would address all of these particular issues and give us an array of options that we might be able to pick from that that actually make some sense on behalf of the overall citizenry of the people most affected by it. And I guess when you talk about what some other cities do, especially in the northeast, support they get from county governments or state governments, I mean there are many opinions around here about some of the things with regard to certainly the City and the State as it relates to the School District, for instance. But there was a negotiative process. We can debate until the cows come home, you know, whether we like all of the things that came out of it, but there is certainly that example. And I know from previous position, Ms. Wilkerson specifically is well aware of negotiations that took place in the early 302 04/07/04 - FISCAL STABILITY - RES. 040276 Rendell Administration years as Mayor related to DHS, and concerns and complaints that had been expressed for some amount of time about shortfalls in a variety of programs which, quite honestly, we don't hear a whole lot about anymore. I'm not saying that all those problems have been fixed, but there are a couple models that the City has had experience with, with a positive outcome. Now, that's obviously a big request and a whole lot of information, but do you have any sense of what it would take to put something like that together?
I'd rather make the inquiry and try to identify the expertise and come back to you with a dollar figure for what it would take, who might do it, as opposed to guesstimating.
Councilman, at this time I would like to recognize Mr. Vignola, who is here to testify. And if you don't mind, we'll continue on with our hearing. I know he has other commitments 303 04/07/04 - FISCAL STABILITY - RES. 040276 and I promised him that we would get him heard when he came in.
Absolutely. I didn't know he was here, Madam President.
Good morning, Madam President and Members of Council. My name is Joseph C. Vignola. I'm the Executive Director of the Pennsylvania Intergovernmental Cooperation Authority, known as PICA.
And we all received your letter under date of March 30th, 2004, and I thought that perhaps you would like to discuss that for the record and perhaps elaborate on it somewhat.
Madam President, if I may, I think the letter speaks for itself. This was an unusual step on my part to send this letter to the Mayor and City Council at the beginning of its budget deliberations. But upon receiving the draft of the Five-Year Plan, and myself and the two members of my staff giving it a review, we had questions 304 04/07/04 - FISCAL STABILITY - RES. 040276 about certain of the revenue estimates. Given the timing that we wanted to get the letter out to the Mayor and Members of City Council, we did not go into the expenditure side, but we're concerned about the revenue side. I think you, Madam President, have heard me say time and time again that I don't believe PICA as an appointed board should substitute its judgment of that of elected officials. However, PICA does have a statutory mandate, and my position has always been, both when I was a member of this Body and in the last nine years that I've been the Executive Director of PICA, that if the revenues are there, then it's for the Mayor and the Members of City Council as the elected representatives of the people of the City of Philadelphia to determine how best to allocate those revenues, i.e., spend the dollars. My concern is that in the budget that was submitted, the revenues are not there. And we highlighted it over a Five-Year Plan to the tune of a little under $300 million. And for next year's budget, 305 04/07/04 - FISCAL STABILITY - RES. 040276 that's FY '05's budget that you are currently considering, we're talking about a budget impact of a little over $50 million, and that ranges from the discussions Councilman Nutter was just having vis-a-vis PGW to some of what we're characterizing as aggressive tax assumptions, and also some revenues that are going to come about as a result of what we characterize in the letter as new legislation. New legislation, meaning that not only is the adoption of this budget which is new legislation, but it's going to take legislation by the General Assembly in Harrisburg or by the Congress of the United States to allow the City to attempt to get these revenues. When you add that all together, we're talking about an adjusted fund balance of under $300 million short and the dollars in question over five years of a little over $300 million.
Mr. Vignola, first of all, I appreciate you coming and I 306 04/07/04 - FISCAL STABILITY - RES. 040276 appreciate your letter. I think it's an extraordinary situation that we face here. Give us a worst case scenario.
Well, the worst case scenario is that in addition to not receiving these revenues --
Let me clarify. I'm sorry. I should have made the question a little longer. Worst cast scenario, the PICA board's strong recommendations from staff doesn't think this is something they are going to approve because of concerns you have now still being out there, either in whole or in part. We never had that before. But could you walk us through what would occur?
The statute which set up the PICA and the cooperation agreement by which our relationship with the City of Philadelphia, which was a contract that was entered into in January of 1992 between PICA and the City so that PICA issued the bonds, set forth a procedure for review. Without going into the statutory 307 04/07/04 - FISCAL STABILITY - RES. 040276 time deadlines is that PICA does not consider the budget, per se. It considers the Five-Year Plan. However, the first year of the Five-Year Plan is the budget. And the budget and the first year of the Five-Year Plan have to match. So whether I'm talking about the budget or Five-Year Plan, for our purposes they're interchangeable. PICA considers the Five-Year Plan only when it's passed by City Council by resolution and transmitted to us. We have a time period in which to accept or reject the plan. If we accept the plan, everybody goes home for the summer. Your question is, what if we reject the plan. If we reject the plan we have to state the reasons upon which we are rejecting the plan. It then comes back to the City for correction in accordance with our objections. There is a time frame with all of this. Then it comes back to us. If we believe, again, everything is reasonable, if we believe the corrections are reasonable and we approve the plan, we just go about our business. If we 308 04/07/04 - FISCAL STABILITY - RES. 040276 then again reject the plan, this then becomes the time when the next step for PICA is to declare the City at variance with the Five-Year Plan. Since there is no Five-Year Plan in existence, it's really the Five-Year Plan that was for last year, and that triggers some ceremonial steps in that the quarterly reports become monthly reports. But if there is not an additional correction phase, then PICA is obligated to begin the process of withholding state funds that flow from the State to the City of Philadelphia. Without getting into any of the state funds that are there, suffice it to say that PICA receives 1-and-a-half percent PICA tax, which is the first 1-and-a-half percent of what we call the wage tax on residents and on the business privilege tax and the gross receipts tax. After we pay our debt service -- and our debt service this year is about $85 million -- there's about $200 million left over. That flows routinely. Every Friday, I sign a voucher and transmit the money from the State to the Trustee. The Trustee puts some 309 04/07/04 - FISCAL STABILITY - RES. 040276 of the money into a debt service account, puts the rest in the City account, and the City draws it down. That flow would be stopped. So if you divide 50 by $200 million, you're talking about $4 million a week stops there. Also, the Treasurer of Pennsylvania is required to look at those funds that come to Philadelphia in given categories and not transmit them. So it becomes a real cash flow cash crunch crisis, and that will continue until the variance, i.e., a Five-Year Plan that's agreed to by PICA, is approved. It is not something that any of us want to contemplate.
At the same time you usually don't send a letter out prior to the budget hearings either.
You usually don't come in and testify at this point in the budget process.
Well, I would like to characterize my appearance here as testimony. 310 04/07/04 - FISCAL STABILITY - RES. 040276 The President requested that I come by and explain my letter, and I felt it important to the Mayor, the Members of City Council and to the people of Philadelphia that I do that. And if I didn't do that, then the last paragraph of my letter wouldn't mean anything because I said I'm available. I'd be more than happy to consult because the cooperation agreement and statute talks about PICA consulting with the City in the formulation of the plan. If I may go back, you could say, "Well, why this year? Why not two years ago, three years ago, four years ago?" This year, the fund balance that we enjoy from $300 million all the way down, we don't enjoy anymore. So that if there was room for error in prior years, there is none this year. We have been consistent -- even when I was a member of this Body, we consistently passed budgets that were not structurally balanced. But because of the targeting budget process and then the eventual accumulation surpluses, we were always able 311 04/07/04 - FISCAL STABILITY - RES. 040276 either to balance the budget outright or in the latter years. The latter six years of the Rendell Administration actually add the fund balances. And then in the latter four years of the Rendell Administration, the first three years, four years of the Street Administration, continue the tax cuts. That's unbelievable. What the citizens of Philadelphia have to know is, are we doing something wrong? Well, when you consider the fact that over the past eight years we've cut taxes by over $375 million, the wage and the business taxes; we transferred an additional approximately $270 million to the School District all from the same tax base. Where did it come from? It came from the City side of the ledger. And we have to have a government that fits that size now.
You mentioned that there's this cooperation aspect to the statute and to your agency. It's even part of the name. At some point prior to us passing a budget that we may be fairly certain is not 312 04/07/04 - FISCAL STABILITY - RES. 040276 going to get approved by PICA, what would your recommendations be from a consulting or cooperation mode that we should be dealing with, both Council and the Administration, but if it's just Council, it's just Council, so that we don't throw you a budget that we know is going to get bounced back? That doesn't accomplish anything.
I agree, Councilman. I think we have to start with the revenue estimates, and take a long, hard look at, are we going to get the money from PGW? Before I sent the letter, I met with the CEO of PGW, along with my staff, and he told us certain things that had to happen. The most likely of the three was that there would be an increase in collections, and he wouldn't know what effect that would have on PGW's budget until the end of August. Getting more money from LIHEAP, we contacted people in Washington, both from the American Gas Association, the Public Gas Association, Senate and House staffers that we knew on the Energy Committee, and they said, 313 04/07/04 - FISCAL STABILITY - RES. 040276 yes, there's a bill being bandied for $3.4 billion in LIHEAP money. The Bush budget has $1.8 billion. And, guess what? We're not going to rock the boat. We're grateful that the Bush budget kept the $1.8 billion in. So to try to get extra money from LIHEAP, I don't think it's real. We talked to people at the American Gas Institute, the American Gas Association. I have family who trade on the Mercantile Exchange. My deputy has friends at a Mercantile Exchange. Their view of gas prices over the foreseeable future is, possibly in 2006 gas prices will decline a little bit, but not to any historic lows or not even to 2003 prices. But then again, they're predicting -- and these are the people who do it for a living, who trade in this commodity -- they predict natural gas prices going back up after 2007. One of the reasons being is that normally you have wildcatters come in, that because of prices are high, they think they can make a buck by wildcatting, and that helps drives the prices down. The problem is the 314 04/07/04 - FISCAL STABILITY - RES. 040276 start-up cost for these wildcatters, because the cost of the steel rigs and the steel that goes into the rigs and all of that is at an all-time high and they can't get it on-line in time to do it. So we don't think the perfect storm that PGW wants to help them get out of their short-term financial mix is there. You have to go no further than your Chief Budget Officer, Mr. McPherson. He'll tell you how the $18 million has been paid over the past 10 years from PGW. The only good thing to note is that that $18 million is an $18 million that was set in 1972. If you factored in today's costs, it would be $150 million. So we're lucky in the sense that we're only dealing with the $18 million this year. But again, I look at a Five-Year Plan, it's $135 million, Councilman. That is in jeopardy.
Mr. Vignola, this dwindling down of the surplus in the last couple of years, where without the surplus we would not have been in balance, was PICA doing any forewarning, any consulting with the 315 04/07/04 - FISCAL STABILITY - RES. 040276 Administration calling for this day happening if certain things weren't corrected?
Yes, we were, sir. You have to look no further than our staff reports on the Five-Year Plan where we constantly warned about right-sizing government, that the cost of government was too high, that we have to look to economies of scale. And you can check all of our reports on our web page and you could see it replete with ideas given this scenario. Now, on top of that, we got hit with something else which is, again, beyond our control in that the cost of our pensions have increased because the whole stock market underperformed, and that has driven the cost of our MMO, our Minimal Municipal Obligation. So all of these have collided to come by. And PICA also supported -- I was here testifying on behalf of the tax cuts because we said in our reports that for Philadelphia to be competitive, for Philadelphia to grow, it must ease the tax burdens.
Are you aware 316 04/07/04 - FISCAL STABILITY - RES. 040276 of legislation pending in Harrisburg that would reduce the MMO? Several municipalities and other governmental bodies have asked for elongation of the number of years.
Can you explain how that may help us, if something like that were passed? I know that we're the only entity in the State that has a July 1st fiscal year, so we don't get the same impact.
There comes a point in time that if you go from 30 to 40 to 50 years, you really don't --
I believe that we are. We don't save all that much. The thing that will save us is the recovery that we're seeing in the stock market and the increase on the return of our investments. The ultimate thing that could save us is that maybe as we go into the 21st century, we have to rethink that benefit that we all receive, that is a City pension, and 317 04/07/04 - FISCAL STABILITY - RES. 040276 what would be the vehicle for a City pension in the 21st century. I mean, when the pension plan was designed early on, if a City employee made $1,800 a year, it was a lot of money. And having a lifetime pension then beginning at 55 at 2-and-a-half percent of their average salary sounded pretty good. It was attractive. That's how you got somebody maybe attracted into government. But now at certain levels, municipal employees, given their benefit package, make more than someone in private industry would make.
On the pension, is our recovery mirroring the State's recovery on the investment side?
I don't know what the State is doing, but we're doing very well.
We were talking earlier before you got here, I asked a question about a lot of governments would like to piggyback on the State's self-insurance for 318 04/07/04 - FISCAL STABILITY - RES. 040276 medical costs because of the size of the employee pool and retiree pool. It seems that we have such large pension costs -- I know you've been involved with the pension side -- that if we have such a giant entity like the State investing and getting good returns in part because of the size of their portfolio, that we could cut a lot of costs and get a better return.
But historically the last couple years, the State underperformed. They had negative growth as well. I can only speak for my agency because I have to sign the check.
But I have to sign the check, the employee reimbursement check, to the State from our funds. And for two years I did not have to make a pension contribution as the employer to the state fund because the fund was so big and growing. But in the last two years, I had to start making a contribution because investment returns were 319 04/07/04 - FISCAL STABILITY - RES. 040276 down. Our pension plan, we're right at the 70 percent level. And for those people who receive a pension who have invested pension, who are going to get a pension, for all practical purposes, that plan is fully funded. If the City, quote, went out of business tomorrow, the municipal pension plan could pay all its obligations. But actuarially, there's an unfunded accrued liability that we still have to make up.
Because we're treated like a private company in terms of the hundred percent?
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam Chair. Mr. Vignola, maybe you can explain these numbers. You talk about this $18 million annual payment. We talk about the $45 million payment that's going to be due in 320 04/07/04 - FISCAL STABILITY - RES. 040276 Fiscal Year 2007. Is it all or nothing? If they don't have $18 million and they could give us $7 million, why aren't we taking what they can give us? Why if they can't come up with $18 aren't we asking for something other than that?
Councilman, I don't know the answer to that. I never turn money down if someone's going to give us money. But I have to look at it as there's a contract there, and the contract calls for $18 million. Then there's an additional contract that calls for the repayment of $45 million, and these revenues are plugged into the Five-Year Plan to help balance the Five-Year Plan. So if we get 7, that's great, but we're still 10 short. And if it's 10 short over five years, that's $50 million. And if they're not making the 18, how are they making the 45? That's $95 million. And the plan is still $95 million out of balance.
But I would still rather it be short by a smaller number than a bigger number and play catch-up at some time. 321 04/07/04 - FISCAL STABILITY - RES. 040276 But I guess I need to know, maybe they have $17,999,000, and say they can't make the deal because they're a dollar short, are they playing with us?
I will answer the former question and not the latter question, Councilman. I don't know, but that is a good question to ask.
Could I ask the Administration why we're not asking for whatever they can kick in here? Can I ask the Budget Director that question? Is that appropriate? Or the Chief of Staff, the Finance Director, whoever? I know that they're going to say -- the gas company is going to say, "Well, we don't have anything."
Well, at this point, the gas company doesn't have any of the $18 million that they can really spare. Their situation this year, and probably for the next two or three years, will be a cash flow situation. They do not have the cash in hand 322 04/07/04 - FISCAL STABILITY - RES. 040276 to actually make the payment. We can't expect any part of it. Just from a cash flow standpoint, none of it is available.
Do you know that as a matter of fact? Do we know that they cannot come up or they cannot cut internally to come up with the $18 million? Are we just accepting that? Because if I ran that place, I wouldn't be hot to give up the $18 million.
Well, we've spent quite a bit of time with their financials. Again, I could draw on Mr. McPherson's experience with the company. The company is cash poor. We've drained, for whatever reason, into paying for debt service, paying for gas. They are cash poor. We've looked at ways of cutting the cost of their services. But again, once you strip our purchasing gas, gas procurement, there is very little -- it's sort of when we do our rainfall of where our expenditures lie. You get down to maybe $2 or $3 million that you even have an opportunity to attempt to reduce and not even eliminate at that point. 323 04/07/04 - FISCAL STABILITY - RES. 040276
They claim that that company is running as efficiently and lean as possible. I understand it's a gas utility and it needs to have a certain number of people to operate it safely and efficiently. How can you convince me that in fact that's true?
I would never attempt with any government organization to tell you that it's running as leanly as it could. It's an oxymoron when you say government and completely efficient. There are efficiencies that could probably still be garnered, but those would be in the neighborhood now of saving $100,000. Maybe if we looked at vehicles -- and maybe it's not even that because they have reduced their fleet. I don't know that there are significant numbers outside of perhaps restructuring completely the way the company does business, and that would be subject to labor negotiations. A lot of their costs for healthcare are costs that they occur for retirees. These are lifetime costs. We have not figured out 324 04/07/04 - FISCAL STABILITY - RES. 040276 how we can get the company out from that type of requirement. So there are things that are obviously ways to save additional money, but those are subject either to negotiation or perhaps some legal challenge.
Well, don't you think based on what we've been hearing here, that we're about to create this surcharge on the customers that can pay, don't you think it's time that we restructure this company? Other gas utility companies that I know are lean and mean, and from what I understand from some of the executives of these other companies -- and being a municipally-owned company, does not mean it cannot run efficiently. That's supposedly the independence that the chief executive officer says he has, that he can do what needs to be done there. So I'm telling you that other executives of gas utility companies kind of snicker because they don't believe we're sincere in managing that place as well as it can be managed. Layers of management, the executives in between each other. I think at 325 04/07/04 - FISCAL STABILITY - RES. 040276 some point somebody's really got to bite the bullet and restructure that place, get it to look like other utility companies that are investor-owned, and we wouldn't be in this situation. So is it safe to say that if we're not going to get the $18 million, based on what Mr. Vignola just said, we're not going to get the $45 million in Fiscal Year 2007?
We're still hoping that we will get the 45. It is essential to us that we get it. So we're still hoping that we get it. We are eliminating some of the services that they are providing that aren't core services. We've also discussed and will probably push a little harder on consolidating maybe some of the things that they do that we also do, like procurement and items like that to further cut their costs. But again, those are items that become subjects for negotiation.
Well, I don't think those things that you just described are subject to negotiation. I honestly believe 326 04/07/04 - FISCAL STABILITY - RES. 040276 that if we're not doing or at least talking about those things that you just described by now, that the wreck that that place is in, that it's a real disgrace. Somebody's not got their eye on the ball when we're doing and talking about some of the things -- and they're not buying smart. They're not consolidating with our procurement. Like we pushed for the School District, and Mr. Vallas says that they're doing that now. The gas company comes in here, yeses us to death, shake their heads, great idea; and in my opinion, continue on the same track that they're on. And I think that's a terrible, terrible track that they're on. I don't see any guidance to try to fix that place.
What we're looking at is eliminating appliance repair, eliminating some of the parts and labor plan. Those are areas of the company that no other gas utility provides that we provide, in part, because of the perception that it has something to do with safety in our 327 04/07/04 - FISCAL STABILITY - RES. 040276 neighborhoods. We have older neighborhoods, old appliances, and there's a risk associated with PGW getting rid of appliance repair or the parts and labor program. We're completing the close-out of our neighborhood offices. The company is looking at a number of things that it has done historically. We'll probably end up proposing that we get rid of the heater repair program. The company spends about $2 million annually on heater repair. Those are the kinds of discretionary services that the company provides that we will be taking a look at if, in fact, the company is going to be the lean, mean company that you refer to.
I certainly hope so. You heard -- maybe you didn't -- that they have a medical dispensary over there, which I'm not saying we should do away with the medical dispensary, but you heard the chief executive say that they can't figure out an alternative when every other cooperation that had medical facilities, at least that I know of, have figured out another way to 328 04/07/04 - FISCAL STABILITY - RES. 040276 contract it out to a hospital, to do it a different way. It saddened me when I heard the chief executive say, "Well, we really can't figure out how to do this better." And that's sad. Thank you, Madam Chair.
Mr. Vignola, thank you for coming over today. In light of your responses to Councilman O'Neill's series of questions and the context of the letter that you sent in, the question is: The Five-Year Plan as it is currently constructed, if there were no 17 changes to the plan at all and if it were approved by this Council and in front of PICA today, would it be approved?
Councilman, I think you know I do not like to answer hypothetical questions.
I'd consider those less than hypothetical. They are real, live scenarios. I could even venture to say 329 04/07/04 - FISCAL STABILITY - RES. 040276 potentially likely. There's a time frame by which we have to approve the Five-Year Plan, but the Committee could decide today, if it wanted, to approve a Five-Year Plan, could send it on to the Council at our next session. More than likely the Council could possibly approve it. I'm not asking you about a whole series of assumptions. I mean, it is quite possible that this Committee could approve this Five-Year Plan the way it's currently constructed. It is quite possible that the City Council could then by resolution approve the Five-Year Plan. All very likely. I mean, we will do something. You know that. What I want to know is, the present plan in front of us, if nothing else happens to it and it ends up on your desk, whether it's next week or two months from now, would this particular plan be approved?
In your hypothetical, are you saying that the budget that is associated with the Five-Year Plan is approved as submitted? 330 04/07/04 - FISCAL STABILITY - RES. 040276
We at PICA believe -- or I believe that the revenues are not there to cover the expenditures. And that we would urge Council before it submitted anything by way of a budget to the Mayor for a signature by way of resolution, that expenditures be cut in this budget to reflect the realities of the revenues.
And you make the emphasis on the expenditure side because we're statutorily prevented from doing anything on the revenue side; is that correct?
You're not statutorily prevented from doing things on the revenue side. You will have revenue bills in front of you and you could use the "T" word, but I don't think that, in the long run, helps Philadelphia.