COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE - BUDGET - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, February 27, 2008 10:25 a.m. - - - PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN COUNCILMAN WILLIAM GREENLEE COUNCILMAN CURTIS JONES, JR. COUNCILMAN JACK KELLY COUNCILMAN JAMES F. KENNEY COUNCILMAN BRIAN J. O'NEILL COUNCILWOMAN MARIA QUINONES-SANCHEZ COUNCILWOMAN DONNA REED MILLER COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILWOMAN MARIAN B. TASCO BILLS 080022, 080157, 080160, 080161, 080162, 080163, 080164, 080165 and 080168 - - - 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 2
Good morning, everyone. This is a public hearing of the Committee of the Whole regarding Bill Nos. 080022, 080157, 080160, 080161, 080162, 080163, 080164, 080165 and 080168. I would ask Mr. McPherson to please read the title of the bills. MR. McPHERSON: Bill No. 11 080022, an ordinance amending Section 12 19-2604 of The Philadelphia Code, relating to tax rates, credits and alternative tax computation for the business privilege tax, by reducing certain taxes, all under certain terms and conditions. Bill No. 080157, an ordinance 19 amending Section 19-2604 of The Philadelphia Code, relating to tax rates, credits, alternative tax computation for the business privilege tax, by reducing certain tax rates, under certain terms and conditions. Bill No. 080160, an ordinance 3 2/27/08 - WHOLE - BILL 080022, etc. amending Chapter 19-1200 of The Philadelphia Code, entitled "Parking Tax," by establishing a rate of taxation on parking transactions for Fiscal Year 2009 and thereafter. Bill No. 080161, an ordinance 8 amending Chapter 19-1500 of The Philadelphia Code, entitled "Wage and Net Profits Tax," by revising certain tax rates and making technical changes, all under certain terms and conditions. Bill No. 080162, an ordinance 14 amending Chapter 11-200 of The Philadelphia Code, entitled "Openings and Excavations in the Streets," to revise the operative period of permits to break streets and footways for the installation and repair of underground conduits, all under certain terms and conditions. Bill No. 080163, an ordinance 22 amending Title 9 of The Philadelphia Code, entitled "Regulation of Businesses, Trades and Professions," and Title 11 of The Philadelphia Code, entitled 4 2/27/08 - WHOLE - BILL 080022, etc. "Streets," to provide authorization to the Streets Department to adopt regulations. Bill No. 080164, an ordinance 6 amending Chapter 11-600 of The Philadelphia Code, entitled "Construction, Encroachments and Projections Over, On and Under Streets." Bill No. 080165, an ordinance 11 amending Subcode A, the Philadelphia Administrative Code, of Title 4 of The Philadelphia Code, entitled "The Philadelphia Building Construction and Occupancy Code." Bill No. 080168, an ordinance 17 amending Chapter 19-2600 of The Philadelphia Code, entitled "Business Privilege Taxes," by revising certain types of business privilege licenses, under certain terms and conditions.
Thank you. The Chair recognizes Councilman Goode. 5 2/27/08 - WHOLE - BILL 080022, etc.
Thank you, Madam President. We've been working on business tax reform for about four or five years, but today is in fact a new day. On January 24th, I introduced a bill, along with Councilman Green, Councilwoman Reynolds Brown and Councilman Jones. On February the 14th, the Administration also introduced a bill. In discussion with the Administration, I don't think that our goals are that far apart. There were amendments, technical amendments, that needed to be made to my bill. There were amendments that needed to be made to the Administration bill in terms of creating a longer schedule. We decided to amend both bills to make them identical. At the end of the day, what we're trying to achieve is what would have been achieved through my bill, which is the elimination of the gross receipts portion of the business privilege tax by the year 2015, and it would take the net 6 2/27/08 - WHOLE - BILL 080022, etc. income portion down to 5.7 percent. We're hopeful that the majority of Council and those people who have been pursuing business tax reform for several years will see it as a massive step forward. We believe this is an aggressive approach that will actually achieve what we've been trying to achieve all along, which is economic growth and job creation. So I'll be offering amendments to both bills to make them identical and achieve that goal, and hope for the support for those amendments. Thank you.
Thank you. May I suggest that the amendments be circulated to the members of Council, please. Thank you. We will now hear from the Administration. (Witnesses approached witness table.) 7 2/27/08 - WHOLE - BILL 080022, etc.
Good morning. Please identify yourself for the record and proceed with your testimony. COMMISSIONER RICHARDSON: Good morning. Keith Richardson, Revenue Commissioner.
Good morning. COMMISSIONER RICHARDSON: Good morning, President Verna and members of City Council. I am Keith Richardson, the Revenue Commissioner for the City of Philadelphia. Thank you for this opportunity to present testimony in support of the Administration's proposed Fiscal Year 2009 Strategic Plan and Fiscal Year 2009 through '13 Five-Year Financial Plan. I know that you have all received copies of the Plan, so my testimony today will summarize the Administration's projections for the City's General Fund taxes for Fiscal Year 2009 and for the subsequent years of 8 2/27/08 - WHOLE - BILL 080022, etc. Fiscal Year 2009 through '13 Five-Year Plan, and address some specific changes and issues in the wage tax and the parking tax included in the Fiscal Year 2009 to '13 Five-Year Plan. 9 billion. 7 percent. The next largest portion comes from state and federal government transfers, and smaller shares come from local non-tax sources such as fines and fees and inter-fund transfers. S. Congressional Budget Office's forecasts for inflation for the calendar years 2008 and 2009. 2 in 2009. Philadelphia's tax base relies 9 2/27/08 - WHOLE - BILL 080022, etc. heavily on wage and income taxes. The wage tax represents nearly 50 percent of the City tax revenues in Fiscal Year 2009, and the business privilege tax, a tax on business net income and gross receipts, is the next highest portion at nearly percent. 9 While the City has lost jobs 10 and population over the past decades, the 11 local economy remains remarkably 12 resilient. 3 percent growth in calendar 17 2008 and four percent to four and a half 18 percent growth in the remaining years of the Plan. S. economy are correct. 6 percent in calendar 10 2/27/08 - WHOLE - BILL 080022, etc. 7 in 2009. S. GDP growth, suggest that the national economy is indeed experiencing slower growth. The City's own tax receipts for December 2007 and January 2008 suggest that the local economy is still growing in some areas, such as retail activity and overall wages, but displaying signs of weakness in residential real estate. While it is still too early to tell if a national recession is likely, it is worth remembering that any contraction in national economic activity in 2008 or later will place many of the City's revenue estimates for the Fiscal 2009-2013 period at risk. The local tax portion of the General Fund comes from seven sources: Wage tax, business privilege tax, real 11 2/27/08 - WHOLE - BILL 080022, etc. estate or property tax, real estate transfer tax, sales tax, parking tax and amusement tax. 7 percent, of the total revenue in Fiscal Year '09. The wage tax is collected from all employees working within City limits and from all City residents regardless of their employment location. 5 percent that is reserved for the Pennsylvania Intergovernmental Cooperation Authority to service debt that PICA issued on behalf of the City. The remaining portion of revenues goes into the City's General Fund. Since 1995, the City has committed to annual reductions in the wage tax to make Philadelphia more competitive for jobs. The Nutter Administration intends to continue these reductions. In Fiscal Year 2009, the 12 2/27/08 - WHOLE - BILL 080022, etc. 685 for non-residents. The rate will be further reduced for residents and non-residents by Fiscal Year 2013. 995 percent, the first time that the resident wage tax rate will be below four percent in 30 years. 3994 for non-residents. These changes are in Bill 14 No. 080161, an ordinance amending Chapter 15 19-1500 of The Philadelphia Code, entitled "Wage and Net Profits Tax," by revising certain tax rates and making technical changes, all under certain terms and conditions. Additional reductions in the wage tax are anticipated due to the Commonwealth of Pennsylvania's receipt of gaming-related revenues, as seen in the two graphs on of the Budget in Brief for Fiscal Year 2009. Based on 13 2/27/08 - WHOLE - BILL 080022, etc.
7 million in revenues from gaming to reduce the wage tax rates in Philadelphia, as well as property taxes in the rest of the Commonwealth. 7 million in funding, the wage tax rate would drop below four percent residents in Fiscal Year '09 if that funding is received. Recent conversations with the Commonwealth's Secretary of the Budget have given us greater confidence that these fundings will be realized by the City. Implementation of the low-income tax credit bill was originally anticipated to begin in Fiscal Year 2013, the last year of this planning period. This legislation would have lowered receipts in the first year of implementation and significantly in subsequent years. Revenue has been 14 2/27/08 - WHOLE - BILL 080022, etc. 8 million in Fiscal Year 2016 as a result of this legislation. The Five-Year Plan assumes the elimination of the income tax credit bill, since the significant tax reductions in several other areas in conjunction with recent expansions to the Federal Earned Income Tax Credit Program will substantially benefit low-income residents and employees of Philadelphia firms. The General Fund's second largest tax revenue source is the business privilege tax. Businesses pay the BPT, the combination of an enterprise's net income and gross receipts. 4 percent on the net income, although there are modified rates for financial institutions, public utilities, some 15 2/27/08 - WHOLE - BILL 080022, etc. manufacturers, wholesalers and retailers. In order to improve the City's competitiveness, the Nutter Administration is committed to eliminating the gross receipts portion of the tax and reducing the net income portion. Under the reductions proposed in this Plan and included in the bill 10 introduced by Councilman W. , the gross receipts portion of the tax will be eliminated in eight years. 5 percent for Fiscal Year '08 rate to six percent by Fiscal Year 2013. The net income portion of the tax has never been reduced before, and the gross receipts portion has been in place for decades. These historic changes to the City's tax structure will make it easier for businesses to open, expand and thrive in Philadelphia. These changes are in proposed Bill No. 080157, an ordinance amending Section 19-2604 of 16 2/27/08 - WHOLE - BILL 080022, etc. The Philadelphia Code, relating to tax rates, credits and alternative tax computation for the business privilege tax, by reducing certain tax rates, under certain terms and conditions. 3 percent over Fiscal Year 2008 budget. This tax is levied on the assessed value of residential and commercial property in the City. 264 in Fiscal 2008, with revenues divided between the City at 40 percent and the School District of Philadelphia at 60 percent. In recent years, the City has shifted increasing proportions of its property tax revenues to the District to help it avoid budget shortfalls. Philadelphia charges a three percent tax, known as the real estate transfer tax, on every sale of real 17 2/27/08 - WHOLE - BILL 080022, etc. property in the City. An additional one percent is levied by the Commonwealth of Pennsylvania, for a total of four percent tax on real property sales. 9 percent of General Fund tax revenue, or $199 million. Year-to-date receipts through January 2008 from the real estate transfer tax have shown a marked decline, suggesting that the dramatic slowdown in the national housing market may begin affecting the Philadelphia residential real estate market. 5 thereafter. 5 percent of the local revenues in Fiscal Year 2009. The State Legislature authorized imposition of a local one percent sales tax under the PICA Act of 18 2/27/08 - WHOLE - BILL 080022, etc. 1991, and the tax was first collected in October of 1991. The local sales tax is collected by the state and remitted to the City monthly. 5 percent annually from Fiscal Year 2008 to Fiscal Year 2013, the regional inflation rate. The parking tax is levied on the gross receipts from all parking transactions.
The City began collecting the tax in 1952. The City made valet parking subject to the tax in Fiscal Year 2009, which brings an additional one million in parking tax proceeds. The Nutter Administration plans to increase the rate to percent, consistent with 18 the recommendations of the Tax Reform 19 Commission, which will increase revenue 20 by 16 million in Fiscal Year 2009. The rate increase will not only raise much-needed revenue and encourage residents to use public transit, but fund badly needed improvements to Philadelphia's streets and green spaces. 19 2/27/08 - WHOLE - BILL 080022, etc. Of the $16 million in additional revenue generated by the increase in Fiscal Year 2009, million will be used to improve 5 the condition of Philadelphia's streets, 6 two million will be used to fund 7 operations of the Fairmount Park 8 Commission and $1 million will be used to 9 plant new trees throughout the City. 10 This change is in Bill No. 080160, an ordinance amending Chapter 19-1200 of The Philadelphia Code, entitled "Parking Tax," by establishing a rate of taxation on parking transactions for Fiscal Year 2009 and thereafter. 5 percent. There are fee bills with separate testimony by the Streets and L&I Departments. That concludes my testimony.
The 20 2/27/08 - WHOLE - BILL 080022, etc. Chair recognizes Councilwoman Tasco for a point of information.
Thank you. So that the record will reflect what the testimony is, as the testimony is written, Mr. Richardson, in your Parking Tax section of your testimony, you state that the City has been collecting the tax blah, blah, since '09. It should be '05. You want to make sure that's correct. That's the second line in the first paragraph under Parking Tax. It should say '05 rather than '09.
Thank you. Council President, would you like to hear the testimony on the fee bills before we go into questions or do you want to do questions on the tax bills first?
I think we would want to go through questions first. At this time, the Chair recognizes Councilwoman Brown. 21 2/27/08 - WHOLE - BILL 080022, etc.
I'd like to first say thank you to the Revenue Department. For the past number of years, I've organized a series of senior citizen forums where we sort of take government to eight different senior locations around the City, and the Revenue Department has always been there to help seniors understand how and what they need to do better or differently when dealing with that department. So I need to acknowledge how much we appreciate the presence of the City Revenue Department. I'd like to first go to a question raised by a constituent, and I'll be quoting here. We recently received, I guess, a concern by a constituent who pays their real estate tax in February, but for the last few 22 2/27/08 - WHOLE - BILL 080022, etc. years, the City has not cashed that check or credited the account until late May. And I our thinking is that this might be viewed as a lost opportunity to earn interest revenue. So can you speak to what the process is and why we don't deposit those monies owed to the City more immediately? COMMISSIONER RICHARDSON: Councilman Brown, I know in the past there may have been some situations with checks being cashed or being picked up for delivery to be deposited to the bank. Going forward while I'm here, we have committed to making sure all deposits that do come in on a daily basis will be sent to the bank in a timely manner and credited. We also will take it upon ourselves to contact the bank. For example, this being the last week in February where a lot of people will be paying to get the discount rate on their real estate tax, we have already 23 2/27/08 - WHOLE - BILL 080022, etc. contacted the bank to let them know we may be a little bit late due to settlement, and they are working with us. And issues like that aren't acceptable for someone getting a deposit in May -- in February and not getting cashed until May, but we are working to resolve those issues and be more customer focused and friendly.
Okay. So what in-house practices are you changing to make the difference? COMMISSIONER RICHARDSON: Well, for one, it's the line of communication with the banks and letting them know that we need a truck delivery at this time, to be better practices on settlement. So we're doing those right now as we're trying to implement some more customer-focused things in the department.
Okay. The wage tax, many of us view the anticipated gaming revenues as the lone saviour, if 24 2/27/08 - WHOLE - BILL 080022, etc. you will, that will control the shifting of the wage tax, and as I understand it, there will be an increase in the tax for non-residents, but it will be lowered for current City residents. So what might be the impact and what message does it send to those who live here but work elsewhere?
There are decreases on both the resident and non-resident side.
There are decreases on both sides, the resident and non-resident side. Without state money, the resident side would go from the 4.219 percent it is down to 3.8 percent.
For the 25 2/27/08 - WHOLE - BILL 080022, etc. non-resident portion, it would go from a little over 3.7 percent down to just under 3.4 percent. If, however, we get the state money, by 2013 that resident portion will be down to 3.54 percent and the non-resident portion will be down to 3.11 percent.
Okay, then. I clearly misread that. Okay, then. That's it on the wage tax. Back to the parking tax, the Administration intends to increase the parking tax. Have you all been able to project what those anticipated fees and fines might be? Because that then drives how the Fairmount Park will best benefit from the yield of those dollars.
We're assuming that that generates about $16 million annually.
The $16 million? By looking at what the tax generates now 2/27/08 - WHOLE - BILL 080022, etc. and seeing what that percentage increase would translate into into an increase in revenue.
Okay. The sales tax, there appears to be not a lot of concern around that, and currently will this tax stay at the one percent imposed by the state or does the Administration foresee an increase, or is this something that's only in the control of the State Legislature?
How 27 2/27/08 - WHOLE - BILL 080022, etc. did you decide regarding the amount of the recommended increase in the parking tax from the current level of percent 5 to a proposed level of 20 percent? As 6 you know, this amounts to an increase of 7 33 and a third percent over the current 8 level. Is the proposed new tax rate 9 comparable to rates imposed by other 10 comparable municipalities? 11
Madam President, 12 Steve Agostini, Budget Director. 13 We were looking at a couple of 14 things. One, we were looking at what 15 other communities were doing, and we know that San Francisco, for example, has a rate of 25 percent. We believe that Pittsburgh's rate is approximately 44 percent. So we thought that there was some room for us to move in those areas. In addition, we were looking at those places where we could generate some revenue while at the same time trying to create incentives for folks to take advantage of public transit or take 28 2/27/08 - WHOLE - BILL 080022, etc. advantage of other things that were sort of public goods, and this seemed to present itself as the most readily available source of revenue that we could then also allocate dollars to improve some of the green initiatives that we had in the budget, as well as the street improvements that we've mentioned earlier.
Thank you. Regarding Bill No. 080161, although that bill does continue to cut the wage tax, I understand that the pace of those cuts have been decelerated as compared to what is currently the law. For the record, could you explain why you are proposing this change in the pace of reducing the wage tax?
There were a couple of reasons. One, with the anticipation of the state funding, we assumed that the wage tax rates would be going down fairly quickly even if we slowed our rate down, 29 2/27/08 - WHOLE - BILL 080022, etc. and then given the fact that we saw those rates going down, we thought we could take some of the money that had been dedicated towards wage tax reduction and use it to accelerate our business privilege tax reductions.
In deciding how to allocate reductions as between the BPT and the wage tax, what factors did the Administration take into consideration?
Well, on the business side, there were a couple of things we wanted to be able to do. We wanted to be able to set a schedule that showed the gross receipts portion of the tax going away, and as we were developing our plan, Councilman Goode introduced his bill, so we thought that was a good -- looked at his schedule and we thought that that was something that we could adopt, because it did give us a schedule for getting rid of the gross receipts portion. And we also wanted to be able 30 2/27/08 - WHOLE - BILL 080022, etc. to start making reductions in the net income side to send a signal that we thought that was important. I mean, the cuts on the net income side were probably about as small as we thought they could be and have some meaning. So then we looked at how much those tax cuts cost us and looked at then what we could do on the wage tax side that would still give meaningful reductions there, but help us have a relative balance between what we were proposing before for tax cuts and what we were proposing after this shift, and the net impact, I think, is about a $30 million increase in the value of the revenues foregone by the cuts.
Thank you. The Chair recognizes Councilman Greenlee.
Thank you, Madam President. Good morning. I just have a 31 2/27/08 - WHOLE - BILL 080022, etc. couple of quick questions about collection of the tax, and I'm kind of coming at it from two different angles. One, yesterday when we talked about the Five-Year Plan, I said is there much of an increase anticipated in collection of taxes, and, Mr. Dubow, you can tell me if I'm saying this wrong. You kind of described a moderate increase. Commissioner, I know you haven't been at this too long, so maybe this is an unfair question, but have you looked at the collection of all the taxes and do you think are there any ways you've thought about improving that collection yet? Again, I know you haven't been at this that long. COMMISSIONER RICHARDSON: I currently haven't been at this position long. However, I have looked at the outstanding delinquencies that were within the City. I'm looking and examining the contracts that we have 32 2/27/08 - WHOLE - BILL 080022, etc. right now with the collection agencies, who they are, can we bring some more on board. I believe in a collective approach to do things with enforcement and set an aggressive target for the Revenue Department. As you know, the projections are kind of modest, but, again, my charge will probably be to be more aggressive at doing things. Again, with tax collections, we have to reeducate the taxpayers and the citizens of the City. With the staffing we have, we have to use techniques to think that people know that we're out there and about enforcement. And I want people to voluntarily comply. Again, my mind-set coming from the state, I don't want to use the whack-a-mole approach, but if we have to, we will going down the road, too.
I agree, and I understand. Now, to come at it from the completely other angle. You and I spoke 33 2/27/08 - WHOLE - BILL 080022, etc. briefly. You were very helpful to my office in one particular case where a person -- and this had to do with business taxes -- was being brought into court even though it was clear that she paid taxes a couple years ago. She paid on time, and I understand there was some, I guess it's, computer problem with the E-gov system that -- there's a portion of time where payments aren't getting on record. Because I understand from other offices they've had that problem, too. Have you had a chance to look into that yet? Do you have any ideas about how to fix that? Because, again, we want people to pay their taxes, but if they paid already, we don't want to drag them into court. It doesn't seem fair. COMMISSIONER RICHARDSON: I agree with you. I haven't spent a whole lot of time yet with looking at the tax systems and the processes of things for payments. That is something that is on my agenda to move forward, start doing in 34 2/27/08 - WHOLE - BILL 080022, etc. the next to 30 days as well. But, again, if you have an issue with one of your constituencies, you also know to call my office directly, that we can try to take care of your situation for them in an expedited way.
I 9 appreciate that, and, again, you are very 10 helpful. Just for the record, much more 11 helpful than the Law Department, but I'll 12 leave that for another time. 13 Thank you. 14 COMMISSIONER RICHARDSON: No 15 problem.
You're welcome. The Chair recognizes Councilman Kenney.
Thank you, Madam President. I just want to go to the parking tax quickly. First of all, I 35 2/27/08 - WHOLE - BILL 080022, etc. support the concept of a parking tax raised to percent. I agree with the 4 concepts of forcing or guiding people 5 into public transportation, and also 6 since it's the cars that are driving into 7 the City that are tearing up the streets, 8 it makes a lot of sense. I also think it 9 makes a lot of sense from a taxpayer 10 standpoint that this money is going 11 directly to fix something that they can 12 see, that their vehicles are causing or 13 helping to contribute to. 14 The one thing, though, that you 15 really could try to do is maximize your 16 collections on that tax, and I'll tell 17 you the one area that really just drives 18 me crazy. A few years ago we passed a 19 bill in this Council requiring a printed 20 cash register printed receipt for all parking, including valet. Now, most structured garages when you leave a structured garage and you pay either by credit card or cash, they'll offer you a receipt. I don't know anyone who has 36 2/27/08 - WHOLE - BILL 080022, etc. ever gotten a receipt from a valet parking operation. So what you have is an unreceipted business, totally cash, and other times, other than weekends -- I'm sorry. On the valet parking bill also, we required a specific length deal with a structured or surface garage for a valet parking operation. So when the valet parker takes the car, theoretically -- not theoretically. By law, they're required to take that vehicle to a structured or surface-level parking lot. Well, as you see sometimes when you valet park, your valet parker takes your car and drives it across the street and parks it in a legal spot on the street and charges you $20 for the privilege, and does not pay the tax on it to boot. So I think heftier enforcement and the requirement of a printed cash register-generated receipt will get you numbers beyond your 16 million that you're projecting. The structured 37 2/27/08 - WHOLE - BILL 080022, etc. parking people need to pay it. The surface parking operators pay it. There's no reason why the valet operators shouldn't pay it. And that's my only suggestion, in addition to telling you I support the increase in the tax. Thank you.
Councilman, I totally agree with you on that valet parking issue. And I know that issue has come up year after year, and nothing is ever done about it. It's just so infuriating to pay $17 for valet parking, go into a restaurant, you come out and your car is parked directly across the street from the restaurant. That has to be corrected. That is absolutely absurd. And, as I said, if I were coming from out of town and being treated in that fashion, I find it infuriating. I just can't imagine how the average person finds it.
I mean, an issue relative to people, sometimes when 38 2/27/08 - WHOLE - BILL 080022, etc. they park the car in the street, it's in a legal spot, they get a ticket on top of it, because you know the Parking Authority is very efficient in their -- COUNCILMAN DiCICCO: The customer doesn't receive the ticket until they get a notice of being delinquent weeks later.
Yeah, the valet parker pulls it. COUNCILMAN DiCICCO: Because the attendant takes it off.
They pull the ticket off and destroy it. COUNCILMAN DiCICCO: And you lose that customer forever.
That is a disgrace. But that's an issue we talk about every year, and nothing is ever done about it --
-- which I think is ridiculous. 39 2/27/08 - WHOLE - BILL 080022, etc. COMMISSIONER RICHARDSON: Council President Verna, I will sit with my enforcement staff and we will look at that to try to manage and police that for the City.
Thank you. I'm sorry. Did you want to be recognized? The Chair recognizes Councilman Green.
Thank you, Madam President. Thanks for coming in today. I have a question for the Revenue Commissioner. Do you consider the growth projections to be aggressive, the growth of the local economy?
I'm sorry. Do you consider the revenue projections for the growth of the local 40 2/27/08 - WHOLE - BILL 080022, etc. economy projections to be aggressive? COMMISSIONER RICHARDSON: I consider them to be kind of accurate with what the economy is saying right now. I don't think they're aggressive. I don't think they're aggressive right now.
Yet, you highlight the potential risk of a recession. Have we built any safeguards into the budget or the revenue assumptions for a rainy day for a potential recession?
There are a couple of things that we did in the projections to show what we thought the economy -- the impact of the slowdown in the economy. One was taking our wage tax projections down from the four percent they had been to three and a half percent. We took down the transfer tax, and we only assumed that the net income side of the business privilege tax will grow two percent next year. So we did take a few steps to 41 2/27/08 - WHOLE - BILL 080022, etc. reflect the slowdown in the growth. And as the Budget Director said yesterday, while we were mindful of the potential that if there's a recession it will have a negative impact on our revenues, we didn't do a direct analysis of what that would mean.
I just have one question for the Revenue Commissioner, and, that is, do you not deposit checks every day? If you receive a check, at the end of the day is it not taken to the bank? COMMISSIONER RICHARDSON: Councilman Green, all deposits, money that comes in during the course of a day, is taken to the bank for deposit.
The way you were saying we're doing extra new things to get checks deposited on time. So it is our policy every day if the City of Philadelphia Department of Revenue gets a check, it's deposited that day? COMMISSIONER RICHARDSON: All 42 2/27/08 - WHOLE - BILL 080022, etc. cash and checks are deposited that day, sir.
Okay. COMMISSIONER RICHARDSON: Again, what Councilwoman Brown discussed was in the past. So I can't speak about in the past, but going forward, that's how things are.
Okay. I just wondered if you looked at other cities or other -- one of the goals that Councilman Goode discussed with respect to the business privilege tax was progressivity, only taxing people based on the income that they have, so eliminating the gross receipts portion, for example, as a step in that direction. Have we looked at all at an income tax versus a wage tax in the City of Philadelphia? Was that part of the analysis you've done? I understand that that would now be legal.
We didn't look at that as part of this process. I know in 43 2/27/08 - WHOLE - BILL 080022, etc. the Street Administration we had looked at that a couple of times. You know, there's a school income tax that's already in place, but we did not look at it for the City.
Okay. Is that something that you plan to look at this year before you come back next year?
We haven't had discussions about it, but we can talk about it.
Are there other -- and maybe this is best directed to Steve, but any of you feel free to answer. Are there other taxes other than parking taxes or other things that other cities have or look at that don't exist in Philadelphia, other revenue measures that we could be looking at as ways to, say, offset wage taxes or to provide additional services to citizens?
I think we're fairly aggressive in the number of things 44 2/27/08 - WHOLE - BILL 080022, etc. that we go after given the constraints of the -- there are state limits on what we can go after under the Sterling Act. So I think given what we're allowed to do, we're fairly aggressive, but the Budget Director can say whether he's seen things in other cities. (Bell rung.)
Councilmember, I think probably the city that I worked in that had the largest range of taxes was San Francisco where they also had the ability to levy a motor vehicle in lieu tax, a property tax, in the late '80s through the '90s. That's the one that sort of sticks out, but I think here you would need legislative action from Harrisburg to do something similar.
The one tax that sticks out that the City of Philadelphia does not have access to that I've seen in other cities, most notably in San 45 2/27/08 - WHOLE - BILL 080022, etc. Francisco, is a property tax, a motor vehicle tax. So it's a tax on vehicles. But that would, I suspect, take action in Harrisburg to allow the City to do it. Most states are very jealous about guarding their ability to tax fees on automobiles as part of the registration. That's the one that comes to mind immediately. With respect to the others, I think, as the Finance Director said, we do cover quite a few of the taxes you typically see in other communities.
Thank you. The Chair recognizes Councilman Jones.
Good morning. COMMISSIONER RICHARDSON: Good morning. 46 2/27/08 - WHOLE - BILL 080022, etc.
I promised you I wasn't going to ask you a question, Commissioner, but I am. First let me say congratulations. I saw you on your way to work at 7:20 in the morning, and I was very impressed. You didn't look back. You didn't wave. You were on your way to work. That's my kind of work ethic, so I appreciate that. I had a couple of questions as it related to revenue collection and to say generally, how many staff do you have that are dedicated to revenue collection? COMMISSIONER RICHARDSON: Under the revenue side, about 245 people right now.
And what would be some of the general areas that they collect revenues on behalf of the City of Philadelphia? COMMISSIONER RICHARDSON: My staff deals with all the taxes for the City. Our Compliance Bureau does a lot 47 2/27/08 - WHOLE - BILL 080022, etc. with Discovery, dealing with non-filed entities and residents in the City as well.
Does the Revenue Commissioner for Water Revenue report to you, give you information? Are you separately -- you just don't deal with it? COMMISSIONER RICHARDSON: The Deputy for the Water Department does report to me as well.
They give those reports to you? COMMISSIONER RICHARDSON: Yes.
Do you subcontract out any of those activities? COMMISSIONER RICHARDSON: We currently work with several collection agencies within the City. So we contract out for collections right now.
And who are they? COMMISSIONER RICHARDSON: NCO is one. 48 2/27/08 - WHOLE - BILL 080022, etc.
NCO? COMMISSIONER RICHARDSON: Yes. They're out in the Horsham area. And Revenue Collection Bureau is in the Northeast Philadelphia area right now.
Any others? COMMISSIONER RICHARDSON: Off the top of my head, Councilman Jones, I don't recall the others that we may be using.
Will you at a future point provide us a list of who you're dealing with. And what percentage of collections do they handle for the department? COMMISSIONER RICHARDSON: They deal with cases anything in the parameter of 5,000 and below for us. Anything above goes to the Law Department and their collection agencies they use.
How do you define and segregate out the cases that they get? Is that like a cold case, uncollectible? What criteria do you 49 2/27/08 - WHOLE - BILL 080022, etc. determine that these agencies as opposed to internal staff should get those cases? COMMISSIONER RICHARDSON: Currently, any cases that go past 90 days delinquency go out to the agencies. Again, we don't currently have the staffing in place to work outbound calls. We do more of inbound calls right now from taxpayers, as with the Water Revenue Bureau as well.
Has this department ever done it internally? COMMISSIONER RICHARDSON: Years ago the staff was about 1,200 people, going back about 12, 14 years ago. That's when it was done internally. Today with technology, we've got a reduction in staff, and that's why we are not doing it currently internally. But, again, that's something we will look at, because, again, with my mind-set coming from Harrisburg is that with a predictive dollar system, you can have outbound calls made to various taxpayers or those 50 2/27/08 - WHOLE - BILL 080022, etc. who may owe water bills. The good part is, that can be done at o'clock in the 4 evening or 7 o'clock. It's an automatic 5 phone call. But the other concern is 6 that the next morning we have to receive those calls. So if we get 6,000 people with calls, then we have to get that one percent coming in.
Has there been an evaluation as to the effectiveness of these collection agencies as opposed to in the days when we did them internally? Is there an ongoing evaluation as to their effectiveness in collection rates? COMMISSIONER RICHARDSON: I'm waiting for a report back on their effectiveness, and as you speak, I'm trying to set up a meeting with the various agencies we deal with. And we're also trying to sit down with Law to get our hands around this, too, because we're trying to work one on one in unison together with the agencies and move our 51 2/27/08 - WHOLE - BILL 080022, etc. aggressive agenda forward of collection of delinquent taxes.
Are these subcontracted agencies using call centers in Philadelphia, in the United States or outside of the United States? COMMISSIONER RICHARDSON: I can't give you that answer right now. I would presume they are. I know NCO, dealing with them, is in the Hatboro-Horsham area and other call centers throughout the implant of Pennsylvania. The one revenue bureau office we use up in Northeast Philadelphia, but I will confirm and get that information back to you.
I would be very interested in that component, because, again, if we're trying to reach that percent of folk who are under the 22 poverty guidelines, this is the type of 23 job opportunity that I'd like to see 24 Philadelphians take advantage of, number one. 52 2/27/08 - WHOLE - BILL 080022, etc. The next question is, is there a surcharge or do we... (Bell rung.) COMMISSIONER RICHARDSON: Is there a surcharge for what, sir?
When we batch these accounts, do we tack on a surcharge to the customer or do they get a percentage of the collectible? COMMISSIONER RICHARDSON: Currently, how things are done, the collection agency gets a commission. So we pay them currently in today's world.
How much of a commission do they receive, Commissioner? COMMISSIONER RICHARDSON: Right now we say 19 percent is the rate they're getting.
Thank you. The Chair recognizes Councilwoman Tasco. 53 2/27/08 - WHOLE - BILL 080022, etc.
Thank you very much. In your testimony on , you talk about that the Five-Year Plan does not include the 94.7 million in funding, but if it comes -- and which you feel confident that it might come, that it will come -- that the wage tax for '09 will drop below four percent?
Correct. Yes. It would go to 3.9 something, but it would be -- hold on. I can actually tell you. It would be 3.908. 3.908 percent in '09.
And then does that accelerate because each year you would assume you would get that amount?
Thank you. Now, could you explain to me the difference between your bill, the Administration bill, and the amendment 54 2/27/08 - WHOLE - BILL 080022, etc. from Councilman Goode?
I think they have now been amended to be exactly the same. So we support Councilman Goode's bill.
You're coming back, aren't you, during the budget portion of the --
Because I have some other operational questions. COMMISSIONER RICHARDSON: We'll be here.
I'll save them for then. Thank you. I'm done. Thank you.
The Chair recognizes Councilman Clarke. 55 2/27/08 - WHOLE - BILL 080022, etc.
Thank you, Madam President. Good morning. COMMISSIONER RICHARDSON: Good morning.
I have a few questions. I'll try to get them all in the first round, if I can. First, briefly, you talk about in your testimony the assumptions that you're using or essentially the Congressional Budget Office's projections on the revenue growth; is that correct?
The Congressional Budget Office, it's my understanding, is a non-partisan? Because it seems that --
-- sometimes the Administration reflections and projections in Washington tend not to 56 2/27/08 - WHOLE - BILL 080022, etc. be the same as the Congressional Budget Office.
-- the CBO is the way to go? In terms of the history of the Congressional Budget Office projections, has it been pretty consistent in terms of the actual outcome as it relates to their projections?
Councilmember, I'd have to go back and look precisely, but my experience in the last ten years, using a combination of projections from the Administration, from private forecasters, from the International Monetary Fund, CBO usually is pretty on target, and they have a collection of forecasters that they use as well. So they try to do an average among a wide 57 2/27/08 - WHOLE - BILL 080022, etc. range of forecasting services.
So that's probably the best indicator in terms of -- okay. The PICA debt, what's our current PICA debt?
I know we've been paying on that debt for quite some time.
Yeah. There's still -- I mean, it's still in the -- I don't want to get -- there's still a substantial amount outstanding, and it stays outstanding until 2023.
Oh, that far? Okay. That's my next question. I want to know when the likelihood of us possibly getting from under that particular debt. But none of us will 58 2/27/08 - WHOLE - BILL 080022, etc. probably be here in our current capacity, so it doesn't matter. Can you do this for me -- and I've seen projections primarily from the sponsors of these developments. Is it possible for you to provide through the Chair for members what the -- and I know you've talked about some of this in earlier testimony -- what the projections are in terms of the two proposed casinos from host fees, from any other fees to the City of Philadelphia, other than the general wage tax that comes from the state as a result of gaming, but just for these two facilities, and based on the numbers that those facilities project as it relates to employees both on the construction side and long term, what the projected best case as it relates to the numbers what we anticipate the job will pay based on their testimony, what the revenue would be associated with those jobs.
We can do that 59 2/27/08 - WHOLE - BILL 080022, etc. analysis and we'll get back to you.
As of the end of June, to go back to your last question, there was $622 million outstanding in PICA.
One last question. We had introduced maybe two or three years ago a non-utilization tax. I don't know. Rob, you may remember.
It was actually a tax that was initially introduced by the late Councilman John Anderson. Actually, I think the current Mayor actually worked for John Anderson at the time, and it was a tax that was important to them. It was actually a court challenge. That tax essentially penalized individuals for speculating or 60 2/27/08 - WHOLE - BILL 080022, etc. allowing vacant properties to sit in communities and become deteriorated and created blight within the community. As I said earlier, there was a court battle, and the original attempt to implement that bill by the late John Anderson and then subsequently we introduced a bill, I think I actually got then Councilman Nutter to co-sponsor the bill, and we attempted to have it implemented, and it essentially had a different percentage after a period of three years, and our ability to determine that that property was vacant and that property was not being utilized and not being adequately marketed, the whole nine yards, and we attempted to do that, and initially the issue about the court battle came up, and we essentially had to opt out of our position in the court to have it implemented. (Bell rung.)
The second part of the last Administration's 61 2/27/08 - WHOLE - BILL 080022, etc. unwillingness to implement the bill was the inability to determine that a property was vacant. Subsequently from that earlier testimony, the MOIS systems put us in a position where we can actually pinpoint that a property was vacant by virtue of utilizing the no 9 utilities. I mean, we just had tracking systems. And I think it really came as a result of the NTI proposal. What I'd like to know, first, if you can do a little research on that and, second, if it's something that we can finally get individuals -- and the former Revenue Commissioner, I used to have battles with her all the time on implementing that particular bill. So it would be very helpful if you can first do your analysis to get up to snuff on it and, second, if it's something that we can possibly implement.
Thank you. 62 2/27/08 - WHOLE - BILL 080022, etc. Thank you, Madam President.
Thank you, Madam President. This question is again tied to a constituent matter, and in the interest, I want to raise it in the context of the improved customer service. Does the department have a policy -- first let me say that in working on this constituent matter for soon to be a year, only after I made the call to both the Revenue Department and the Law Department was there some movement of the needle on this matter. So at the staff level, it was stuck in the mud. And so my question is, is there a policy in the department on how we should move on an issue -- is there a policy in the department around moratoriums -- let me ask that -- when a particular constituent is clearly not in a position to act on their own behalf and 63 2/27/08 - WHOLE - BILL 080022, etc. so they rely on our offices to act on behalf for them? And this was related to property potentially being liened against because they weren't in a position to pay taxes. COMMISSIONER RICHARDSON: Can you restate your question again, please?
Sure. Does the department have a policy on moratoriums around constituents who are not able to pay their taxes because of incarceration? COMMISSIONER RICHARDSON: I don't think we have a policy on that currently. We do and are willing to work with the taxpayers to make deferred payment plans, and we can extend them on various months based upon the needs of the taxpayer. In this situation, the person is incarcerated. If that's brought to our attention, we can probably make some kind of agreement with them.
Okay. COMMISSIONER RICHARDSON: We're 64 2/27/08 - WHOLE - BILL 080022, etc. here to make and help people comply. We're not here to do anything difficult for them. So we can try to work with them and work with your office to resolve this matter.
So there is an option for consideration known as a deferred payment plan? COMMISSIONER RICHARDSON: We do do deferred payment plans.
All right, then. Thank you again. COMMISSIONER RICHARDSON: You're welcome.
Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam Chair. Good morning, gentlemen.
Good morning. COMMISSIONER RICHARDSON: Good morning. COUNCILMAN DiCICCO: Constituent service issue, I just want to 65 2/27/08 - WHOLE - BILL 080022, etc. bring it to your attention. A friend of mine was down to pay his real estate taxes last week. He has multiple properties. Stayed in line for whatever length of time, got up to the counter, began paying for each of his properties. He got to the third one, paid the third property bill, went to go to the fourth one and the person at the counter said, That's it, we're only allowed to take three at a time. You have to go in the back of the line and start over again. This is a guy who can't wait to come and pay his taxes because he just doesn't want to have them hanging out. So something needs to be done. I can understand not wanting to have someone tie up an entire line, so maybe you need to look at another way of handling multiple tax bills. It was ironic, he called me up, he said, You're never going to believe this story, and he told it to me. And he had to go in the back of the line and 66 2/27/08 - WHOLE - BILL 080022, etc. start all over again. He has about a dozen properties that he owns.
He had to go around four different times? COUNCILMAN DiCICCO: I don't know if he went around four times or not, but he was just -- he was actually laughing because he couldn't believe that the City didn't want his money. They wanted his money, but under their terms, under their terms. COMMISSIONER RICHARDSON: First, we apologize to the taxpayer and we apologize to you. COUNCILMAN DiCICCO: No apology necessary. If you had somebody that's willing to pay, which is not always the case, customer service, being customer friendly is certainly -- and I don't know if that was just one teller or that is the policy. That's the purpose for my raising this today. If it is a policy down there at the supervisory level, it certainly needs to be addressed. 67 2/27/08 - WHOLE - BILL 080022, etc. COMMISSIONER RICHARDSON: Well, I don't think that was a policy. Again, we want to accept everyone's money for the City. COUNCILMAN DiCICCO: It was cash, too. It wasn't even a check. It was good money. COMMISSIONER RICHARDSON: Cash goes in direct. COUNCILMAN DiCICCO: $56,000 in real estate taxes he came in to pay that day.
He didn't leave, did he? COUNCILMAN DiCICCO: No. He didn't want to leave with all that cash, obviously. He was fortunate enough he got down there. But in any event, I just wanted to pass that on. COMMISSIONER RICHARDSON: As part of our customer service performance standards, our previous years, our spending banking also, we're looking at possible ways of servicing customers. As 68 2/27/08 - WHOLE - BILL 080022, etc. they come in, can we dedicate a line from o'clock to o'clock for large deposit customers, business customers, things of that nature. So we're putting things up and trying to figure out some best ways and best practices to service our customers in a line. COUNCILMAN DiCICCO: Again, I just wanted to raise that, bring it to your attention, because I'm sure he may not be the only person who has experienced that. COMMISSIONER RICHARDSON: Thank you for that. COUNCILMAN DiCICCO: The other question I have is regarding the parking tax. In your testimony it says that the Administration proposes to increase the rate to percent, and it says that that would increase revenues obviously by $16 million for Fiscal Year '09, and the rate will not only raise much-needed revenue, but may encourage residents to use public transportation. 69 2/27/08 - WHOLE - BILL 080022, etc. Are you factoring in the possibility that it may in fact encourage people to use public transportation, and if that were the case, would there not be less revenue coming in via the parking tax? I mean, I go through this at the DRPA where we encourage people to use PATCO, but we also would rather them use the bridge, because that's where you collect the toll. So it's kind of like this ebb and flow all the time. I was wondering if any of that has been taken into consideration in your projections. (Bell rung.)
Councilmember, we tried to be very conservative in that, and just to -- what we received in collections in '07 was about $50.3 million. The 16 million would suggest that it's on a base of about 48 million. So we were somewhat conservative in projecting forward what we would have. What we have in the budget for '08 is about 51.6, just under $52 million. So 70 2/27/08 - WHOLE - BILL 080022, etc. if indeed that occurs, I think we've got a little bit of a buffer. Experience will tell us if we were right or not on that. COUNCILMAN DiCICCO: And I know my bell rang, but has there been any consideration -- have you taken into consideration the possibility that it may have an impact on attracting people to the City? Because this was kind of an argument before I came here with the ten percent liquor tax. If you start increasing taxes dramatically on parking, will that discourage people from wanting to come into the City? That obviously would translate into less revenues in our entertainment venues, restaurants and the like.
Councilmember, that was something that we talked about. Given the going rates for some of the garages downtown, our expectation is that the demand will not drop off significantly. There is the possibility, 71 2/27/08 - WHOLE - BILL 080022, etc. as with any tax when you're raising the rate, that it will have an effect on economic activity, but today we're of the opinion it's not going to be major. COUNCILMAN DiCICCO: I'll wait for my next round. Thank you, Madam Chair.
Thank you, Madam Chair. Good morning, gentlemen. COMMISSIONER RICHARDSON: Good morning.
I just had a question, and more or less I think it's been covered by most of my colleagues in this Council this morning, and it has to do, of course, with collection. We're trying to, of course, lower taxes. And I agree with my colleague, Councilman Goode, when he says that the gross receipts tax is probably the worst tax in 72 2/27/08 - WHOLE - BILL 080022, etc. the world, and I think the sooner we eliminate it, the better off we're going to be, but in doing so, what I'm concerned about is an editorial today in the Daily News that had -- it was based on an audit from the Controller's Office of not collecting $161 million in water revenue. I don't know how our -- or maybe could you tell me, is that a realistic number that we could look forward to collecting? Because I know a lot of these properties are probably no 14 longer existing, and therein lies the number, that a lot of people when they read that are going to be very, very upset. They're going to look and say, I'm paying my water bills, why do we have this huge amount of uncollected revenue. And one of the things that -- and this is something that's been going on for years now. Now, maybe I think the appropriate time would be when the various commissioners come in here, we're going to be leveling that at them, but I would 73 2/27/08 - WHOLE - BILL 080022, etc. just like to ask you, first of all, what is realistic today? And property taxes are another one. We have vacant buildings around here for eight and ten years, which no 7 one is paying any taxes on. I know it. And what can be done about expediting the collection of those taxes or taking over the property and selling them with the sheriff's sale or whatever. COMMISSIONER RICHARDSON: Currently, the water bill, the $161 million that you saw in the paper today, a lot of that is probably stale accounts that have been around for 15, years. 17 So is it a collectible? I don't really 18 think so. 19 As with regard to real 20 estate --
But do you think anything of that 161 million would be collectible? COMMISSIONER RICHARDSON: Yes. I can't tell you what the dollar amount 74 2/27/08 - WHOLE - BILL 080022, etc. would be, but a lot of that is collectible. Some of the things we're doing differently again with the Water Revenue Bureau, we have the new basis2 system in, so that will help us track and work with compliance and enforcement on the outstanding money that is delinquent. We'll be working with some of the larger accounts that were in the audit to talk to them about making some payment arrangements as well as what the Controller found. So we'll be trying to put in place my comments and move in the right direction to collect the delinquent accounts. As with regards to the real estate side on delinquent accounts that have been around for years, I don't know if you saw the article on Monday or in the paper, Lineberger placed an ad in the paper with all the delinquent real estate properties in the City that they right now are trying to pursue collections for 75 2/27/08 - WHOLE - BILL 080022, etc. us. So we, again, are trying to be aggressive in our collection efforts. The Department of Revenue and the Law Department, in working with our various agencies, assist us with this.
How successful are they in collecting those real estate taxes? COMMISSIONER RICHARDSON: Thus far, since September, they've collected about $11 million on the delinquent real estate taxes.
And how much is outstanding? COMMISSIONER RICHARDSON: I don't recall off the top of my head what's outstanding right now. I forget right now, Councilman, how much is outstanding. I can get that information for you, though.
Okay. I'd be interested in that. Okay. Thank you, Madam Chair. 76 2/27/08 - WHOLE - BILL 080022, etc.
I just want to piggyback on that as a point of information and take the privilege of the Chair. We have similar problems in my district with a couple of businesses that owe the City a lot of real estate taxes, but because there are probably a lot of other liens, maybe federal or state liens that may take precedent over the City, I find it difficult to get the City to move to collect those taxes. Is that one of the problems, or could it be one of the problems? COMMISSIONER RICHARDSON: It's possible that the federal or the state may have a lien in front of us. However, we still need to pursue with collection efforts on delinquent taxes. Again, we need to talk to those various businesses. Not just going for all the money at one time, but, again, setting up some deferred payment plans that may be workable for them within the confines of 77 2/27/08 - WHOLE - BILL 080022, etc. their budget.
Well, a number of them are in that position because of the payment plans and they never honored the payment plan. What we really tried to do is bring a couple of them to sheriff's sale so that we could acquire those for some other use, but it was very difficult to get that process moving. COMMISSIONER RICHARDSON: Well, as we sit down and look at our future enforcement goals, we will try and address and identify what you're bringing up right now.
Yes. Well, you're actually next anyway, so you may go ahead.
Well, don't start my time. This is a point of 78 2/27/08 - WHOLE - BILL 080022, etc. information. (Laughter.)
Thank you, Madam Chair. I believe that there should be no -- a City lien against a property for taxes would take precedence over -- because it's an actual lien against the physical property -- would take precedence over any state or federal tax liens. So there's no reason that we shouldn't be -- absolutely. It's a lien against the property. It's like a mortgage lien. COMMISSIONER RICHARDSON: Councilman Green, unfortunately, if the state or the IRS get a lien ahead of us, they're in position to be ahead of us. We may be a junior lien, so we don't take precedence as a city, unfortunately.
So that's a failure to file a property lien once property taxes are delinquent. In other words, there should be no situation 79 2/27/08 - WHOLE - BILL 080022, etc. where -- if people aren't paying their federal income tax, they're not paying their property tax. There shouldn't be situations where the feds and the state file liens against properties prior to the City having its tax lien filed. If you can get back to me on the process for the City to actually filing tax liens against citizens who don't pay their taxes, I have -- usually it happens immediately. As soon as it's delinquent, we should have a tax lien in. There's no reason not to, so that we're first in line. COMMISSIONER RICHARDSON: We can get back to you in the process how we file liens, but you have to realize also, sir, if you are a sole proprietor of a business and you owe the state for sales tax, they're going to go after you first. You may be compliant with paying your City real estate taxes every year. We cannot know who may be ahead of us.
If you're 80 2/27/08 - WHOLE - BILL 080022, etc. compliant in paying your real estate taxes, we have no reason to lien the property. If you're not, we are. I'm just saying, are we waiting so long to get -- I just want to know what our process is for filing a lien and whether or not we're doing it the instant the property is delinquent that would put us first in line. COMMISSIONER RICHARDSON: We'll get that information to you.
Thank you. Back to my alternatives. Do any of you have a comment about land value taxation versus our current real estate property tax?
Councilmember, upon taking this job, one of my first communications to the Finance Director was to offer a contrast with the City of San Francisco, which levy a one percent plus special taxes on property taxes under Proposition 13, and I think for the fiscal year, I believe it was, '07, they 81 2/27/08 - WHOLE - BILL 080022, etc. collected somewhere in the neighborhood of $900 million in property taxes. In contrast, we collect something about half of that for about the same period of time. San Francisco also has a payroll tax, very equivalent to the wage tax that we levy here, and I think the last percentage, if I remember this correctly, was approximately one and a half percent, and they collect approximately $400 million as opposed to the almost 1.23 billion that we collected in that year. There's an argument there as to sort of where those taxes should fall and maybe a rethinking of how we look at the tax structure generally for the City. But that's just one example. In most of the communities I have been in, the property tax is, by and large, the single largest, if not the dominant, 70, 80 percent, of what is raised by local governments. It's just very 82 2/27/08 - WHOLE - BILL 080022, etc. different here.
I just had a question about -- and it was touched on a bit yesterday by Councilman Greenlee on real estate tax revenue. How is it possible to have a down year in real estate tax revenue collections? In other words, the growth is projected minus 0.8 percent for this fiscal year over the previous year. Even if nothing else changed, is that just a matter of poor collection?
That's because we shifted millage to the Philadelphia School District.
It was worth about, 83 2/27/08 - WHOLE - BILL 080022, etc. I think, $18 million. So if you didn't have that shift, that current portion would go from 367 to 376 and you'd have growth.
Okay. And I'd just like the Revenue Commissioner to respond to the question Councilman Greenlee asked yesterday, which is we're projecting an average of, say, 3.9 percent a year over the next five years' increased collections from property tax. Given the state of the economy, housing prices, the stagnant market, the continued time it takes to sell a property or the increasing time it takes to sell a property, is that realistic?
I know you'd like him to answer the question, but part of what it's based on is the history of what's been happening here with assessments, and he doesn't have that history.
Part of the reason 84 2/27/08 - WHOLE - BILL 080022, etc. that we have that growth is that there was a lull in assessment activity, and the head of the BRT has told us that they're going to go back to kind of a more normal reassessment process, and we think that there will be some catch-up as they do that.
You're welcome. The Chair recognizes Councilman Jones.
We were rudely interrupted. Just a couple of quick questions. In your collection of municipal tax real estate, have you experienced a spike in delinquency at all? COMMISSIONER RICHARDSON: Councilman Jones, I can't tell you that right now. I can get back to you on that one. 85 2/27/08 - WHOLE - BILL 080022, etc.
My rationale for that question is, as you're aware, I'm looking at possibly requesting a moratorium on sheriff's sales. I do not at this time want them necessarily to be municipal-related sales, but if there is a problem, I'd like to be made aware of that. And what I am looking for are whatever indicators, whether there is a spike in delinquency of real tax, and I would imagine that at some point that might be the case, but to make your department aware that we are looking for those types of indicators that may mean that we intercede on behalf of people who are about to lose their homes. So I'd like to gain some access to data that might reflect one way or another what's going on by way of delinquent real estate taxes. COMMISSIONER RICHARDSON: We'll get that information to you.
The 86 2/27/08 - WHOLE - BILL 080022, etc. Chair recognizes Councilman Clarke.
Thank you, Madam President. A couple of quick ones. Last year the Administration announced an aggressive tax collection policy. I think Lineberger was the -- and there was a number. Off the top of my head I can't remember what that number was that they anticipated that they would be able to collect. What is the status of that collection?
So far, the Revenue Commissioner has just told me that there's been $11 million in collections through that program. So that program is ongoing.
Does anyone remember what the projection was of the collections?
There are two different answers to that. One is, there was a press conference and there was a fairly large number announced. 87 2/27/08 - WHOLE - BILL 080022, etc.
About 40-something million. By the time it got to putting numbers in a plan, it was more like a couple of million dollars a year.
Eleven. Is that both City and School District? COMMISSIONER RICHARDSON: Yes.
So that's both City and School District. So 60 percent of that roughly would be School District.