COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON APPROPRIATIONS - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, February 24, 2010 2:40 p.m. - - - PRESENT: COUNCILWOMAN JOAN L. KRAJEWSKI, CHAIR COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN COUNCILMAN CURTIS JONES, JR. COUNCILMAN JACK KELLY COUNCILMAN JAMES F. KENNEY COUNCILMAN BRIAN J. O'NEILL BILLS 090878, 090879, 100001 and 100002 - - - 2
Good afternoon. The Committee on Appropriations is now in session. Will the Clerk please read the title of the bills.
Bill No. 090878, an ordinance authorizing transfers in appropriations for Fiscal Year 2010 within the General Fund from the Department of Public Property and the Department of Public Property - Telecommunications to the Managing Director - Division of Technology and within the Water Fund from the Department of Public Property to the Managing Director - Division of Technology and within the Grants Revenue Fund from the Department of Public Property to the Managing Director - Division of Technology and within the Aviation Fund from the Department of Public Property - Utilities to the Managing Director - Division of Technology; and Bill No. 090879, an ordinance 3 2/24/10 - APPROPRIATIONS - BILL 090878, etc. authorizing transfers in appropriations for Fiscal Year 2010 from the General Fund, certain or all City offices, departments, boards and commissions and from the Grants Revenue Fund, the Director of Finance - Provision for Other Grants to the General Fund, certain or all City offices, departments, boards and commissions and to the Grants Revenue Fund, the Managing Director - Division of Technology; and Bill No. 100001, an ordinance 14 authorizing transfers in appropriations for Fiscal Year 2010 within the Grants Revenue Fund from the Department of Finance - Federal Stimulus Funding to certain or all City offices, departments, boards and commissions; and Bill No. 100002, an ordinance 21 authorizing transfers in appropriations for Fiscal Year 2010 from the General Fund, certain or all City offices, departments, boards and commissions and from the Grants Revenue Fund, the 4 2/24/10 - APPROPRIATIONS - BILL 090878, etc. Director of Finance - Provision for Other Grants to the General Fund, certain or all City offices, departments, boards and commissions.
Thank you. Is there someone from the Administration? (Witness approached witness table.)
Councilmember, Steve Agostini, Budget Director for the City of Philadelphia. I'll go through this quickly. I understand the lateness of the hour and Council has much business before it. Bill No. 090878 is a request to begin the process of consolidation to reflect an Executive Order that was issued to have all of the technology operations in the City under one roof. The largest component of that is the transfer of the telecommunications piece that used to be in what was previously 5 2/24/10 - APPROPRIATIONS - BILL 090878, etc. known as MOIS, Mayor's Office of Information Services, back from Public Property back into the Division of Technology. Bill No. 090879 requests funding in order to address a number of shortfalls associated with the operations in the Division of Technology, including 9-1-1 funds, the transfer of 9-1-1 to the General Fund, as well as appropriation authority to complete purchase of a number of items for the network infrastructure for the City. In addition, Bill No. 090879 has two small internal transfer requests for the Free Library of Philadelphia for security guards and the Offices of Arts and Culture for support of a cultural organization. Bill No. 100001 is the request for the appropriation of funds in order to implement the American Recovery and Reinvestment Act funds that we have received to date. A number of different 6 2/24/10 - APPROPRIATIONS - BILL 090878, etc. grants have been awarded. The largest of those is approximately 7.9 million for five grants to the Department of Public Health for tobacco policy and control, nutritional and physical activity promotion and clean diesel, along with just over a million dollars for the Streets Department for the design and paving and inspection of streets, 434,000 to the District Attorney and 240,000 to the First Judicial District. Bill No. 100002 has a number of transfer requests. The transfers total 40 million point 5. Among those transfers is a request to move money into the fringe benefits for 17.9 million to fully fund our pension fund payment. This would reflect the number that was provided to us by the actuary to the system and is indeed reflective of what the expense will be, plus 4.5 million for unemployment compensation expenses that have run higher than budgeted over the course of the year. The 4.5 million 7 2/24/10 - APPROPRIATIONS - BILL 090878, etc. represents our estimate for the year. Ten million dollars needed for the indemnities fund in order to cover our projected expenses associated with indemnities for the balance of the year; 5.6 million for the First Judicial District to appropriate additional revenue granted so that they can cover their ongoing expenses; and then 878,000 for the Fire Department to pay for EMS transport fees collected under contract with the provider for that service. We have a number of internal transfers totalling 742,000. They are small. It represents the Office of Behavioral Health, auditing the Board of Revision of Taxes, Clerk of Quarter Sessions and the Zoning Code Commission. If you'd like, I can go through those. I would respectfully request that you report these bills out of Committee with a favorable recommendation and further request that the rules of Council be suspended so as to permit 8 2/24/10 - APPROPRIATIONS - BILL 090878, etc. first reading at the next session of Council this week. I appreciate the opportunity to testify before the Committee and would be happy to answer questions you may have. I also have representatives of the departments here, along with the testimony that has been included with the packet.
Thank you. Before we begin, I'd like to acknowledge the presence of Councilman Kelly, Councilman O'Neill, Councilman Goode, myself and Councilman DiCicco and Councilman Clarke. Regarding Bill 090978, would you tell me which City agencies and how many employees will be transferred into the Department of Technology?
The transfer is the transfer of the existing telecommunications function that is currently in Public Property that would 9 2/24/10 - APPROPRIATIONS - BILL 090878, etc. move over into the Division of Technology. I'll get that for you momentarily, the number of employees, as well as the dollars. That's really the most significant component there.
Okay. Let me jump a little bit onto Bill 13 090879. Regarding the bill, can you tell me or someone tell this Committee whether or not some of the funds will be used to bring any outstanding outside technology payments up to date?
There will be a number of -- Madam Chair, there will be a number of payments that we have to make. We have a contractual relationship with the provider, Verizon, where we have some outstanding payments that are due, and so we need to bring a number of those up to date. The exact amount, I think it's 10 2/24/10 - APPROPRIATIONS - BILL 090878, etc. about $2.8 million, $2.9 million for that.
If the Committee and the full Council then approves, we will then be able to cure those outstanding bills, and I'd be happy, once those are cured, to bring those back to the Committee and full Council so you can see that.
The other bills that are outstanding currently are some phone-related bills that we're still waiting for a closer estimate towards the end of the year so we have a full scope of what we anticipate. There are a couple of other purchases that we're trying to address similarly with Verizon, and we anticipate getting those done as well, and when we're -- those will require probably additional transfers and 11 2/24/10 - APPROPRIATIONS - BILL 090878, etc. will come forward to you. The number of people moving over is 34 people from the telecoms.
Again, referring to 090879, could you explain the $200,000 transfer for Arts and Culture. What culture organizations is receiving these funds? I'd like to know if Arts and Culture has funding for any other cultural organization in the pipeline.
The Arts and Culture budget is sort of a glomeration of a number of funding items in the budget. We did that in the '10 budget in order to reflect where we were providing support to a number of arts organizations. One of those arts organizations is the African American Art Museum. The 238,000, I believe, that's included here is to cover an advance, if you will, to the African American Art Museum. At the beginning of the fiscal year, they looked to be in some financial 12 2/24/10 - APPROPRIATIONS - BILL 090878, etc. trouble and had asked us for an advance of a payment due to them, and we did that, and this would allow us to cover that for that expense.
Thank you. Are there any other questions from members of the Committee? Councilman Goode.
Mr. Dow and Mr. Gregory, approach the witness table. (Witnesses approached witness table.)
Good afternoon. This question is for Mr. Agostini, Mr. Dow or Mr. Gregory, whoever wants to answer it. Bill No. 19 090672-A was introduced by Councilman Clarke to create opportunities within the stimulus funding that might be coming to the City. I'm sure all three of you are very familiar with that. It created a separate category for stimulus projects. Under Definitions, it created a 13 2/24/10 - APPROPRIATIONS - BILL 090878, etc. definition under Subsection (f) of No. 1, a development project or contract bid pursuant to funds allocated to the City pursuant to the American Recovery and Reinvestment Act and which is reasonably anticipated to cost the City more than $250,000. Does any of this funding apply to that ordinance?
Councilmember, are you referring to the bill before you, 100001?
Councilmember, we're going to treat every single stimulus dollar that comes through as if it is affected by Councilman Clarke's resolution. We understand the concern that you have. It is a topic at every one of our working group meetings. We have transitioned from outreach to trying to get everybody to understand the outreach is insufficient.
14 2/24/10 - APPROPRIATIONS - BILL 090878, etc. Mr. Agostini, your last working group meeting was when?
I watched the hearing. At the end of the hearing, at the end of the meeting, it was disclosed that you weren't even tracking minority and women participation on stimulus projects; is that correct?
Councilmember, the reporting requirements from the federal government do not --
I watched the meeting, so I understand that the federal government does not require it.
Right, but we 15 2/24/10 - APPROPRIATIONS - BILL 090878, etc. will --
It was suggested as of January 26th, you were not even tracking minority and women business participation on stimulus projects; is that correct?
As of that date, we had not set in place a tracking process. Subsequent to that date, what we have said to everyone is that on a moving-forward basis, particularly for the quarterly report due in April, we will begin to track our success and the dollars being spent on contracts with minority, DBE and WBE, as well as employees.
This is sort of a trick question, Mr. Agostini, because if I say you weren't tracking it as of January 26th and you say you now are, then the obvious question is, what's the level of participation by minority and women-owned businesses in terms of stimulus dollars? Because if you were 16 2/24/10 - APPROPRIATIONS - BILL 090878, etc. tracking it, then you have that information.
No. As I said, we're not tracking it currently. Of the dollars that we have spent --
That was my original statement. As of January 26th, you were not tracking it; is that correct?
Okay. Councilman Clarke's ordinance requires that each contract bid that's over $250,000 to have an Economic Opportunity Plan.
We're assuming 17 2/24/10 - APPROPRIATIONS - BILL 090878, etc. it applies to all of the stimulus funding, and we are approaching it that all of the stimulus funding has to demonstrate certainly to the Recovery Office that there is efforts and performance that will try to meet the expectations of the ordinance.
If there is a $1.2 million contract coming out of the Health Department for a campaign to market against obesity, would that fall under Councilman Clarke's ordinance?
So how is it possible that an RFP is released after Councilman Clarke's ordinance is enacted that has a $250,000 threshold, there's an RFP for a $1.2 million contract and the participation level was set at zero percent? How is that possible? And how is it possible that there's no 23 opportunity for subcontracts or joint ventures if there's an Economic Opportunity Plan? That completely defies 18 2/24/10 - APPROPRIATIONS - BILL 090878, etc. logic and goes against Councilman Clarke's ordinance. And he can speak for himself in terms of legislative intent, but it goes against the intent of all of what we're talking about, is that not only should there be economic opportunity on all contracts and not only should there be Economic Opportunity Plans for certain contracts, there was even a separate threshold set for stimulus projects, which is $250,000. We have a $1.2 million contract. Now, a couple weeks ago, several Councilmembers brought this to the attention of the Administration. What was done?
We were definitely aware of it. I would have to tell you I agree with your assessment of this.
What has been done subsequent to that is, we've been 19 2/24/10 - APPROPRIATIONS - BILL 090878, etc. having meetings internally about how to correct the situation.
So nothing was done. You've had conversations about it, but nothing was done?
Thank you, Councilman Goode. I want to actually talk to you unrelated, but it's referenced in one of the transfer ordinances, the arrangement with Verizon, and it's along the same lines as Councilman Goode's. During the course of the Verizon agreement, we made what we 20 2/24/10 - APPROPRIATIONS - BILL 090878, etc. believed to be a substantive agreement as it relates to participation, in addition to which we talked about a very aggressive plan to recruit new businesses, start-up businesses. Where are we at with that? I'm only asking that because I have you here and it's referenced in the transfer testimony. And who is actually monitoring that activity? Because I've heard that some of the things that were committed to in that agreement, the franchise agreement, are not being adhered to, and I'm a little concerned about that.
Yeah. We've lost -- just quite candidly, lost a little momentum with the Verizon project, which we are now regaining. There was some turnover. I believe his name was Tabb Bishop was my point of contact with Verizon. He has now left and gone on to other things. I believe Mr. Doug Smith from Verizon -- he was actually in the audience, at least he was earlier -- he 21 2/24/10 - APPROPRIATIONS - BILL 090878, etc. has stepped up to the plate. I think he's the Vice-President of External Affairs for Verizon. Don't quote me on his actual title. But we've had conversations about revamping the EOP. One of the things that wasn't in the original Economic Opportunity Plan was an oversight committee. Historically speaking, we have found oversight committees to be a very strong tactic in terms of hitting their participation numbers. So we're in conversations right now to initiate an oversight committee for the Verizon project.
You were not around during the course of those discussions, so I'm going to cut you a little slack.
No. That doesn't mean I'm not going to continue to question you.
With 22 2/24/10 - APPROPRIATIONS - BILL 090878, etc. respect to a formalized oversight committee, you may be correct in that there was not such an entity in name, but there was a process that, frankly speaking, had not only internal monitoring entities, being the government, we also had the various chambers, African American, Latino, I believe the Asian Chamber of Commerce, were a part of the process. Are you saying that because Tabb left, then that process broke down?
Excuse me one moment. Councilman Jones has a point of information.
No, no, don't. I was going to wait patiently after the Committee gets their -- no, ma'am. It was --
We're okay. 23 2/24/10 - APPROPRIATIONS - BILL 090878, etc.
Verizon has expressed some concerns with the confidentiality of the information that they are to give to the Office of Economic Opportunity. We have not received any information as it pertains to their participation numbers as a result of that. So without having that information, it's very difficult to strategize and discuss ways to move forward.
Okay. That's totally inconsistent with the conversation that we had that led to the agreement. So what I will do, because we are here for an unrelated matter, I will probably introduce a resolution so we can hold hearings on the Verizon contract, not just the issue with respect to participation, but just the whole status of their contract, to give you time to talk to the people that were involved in 24 2/24/10 - APPROPRIATIONS - BILL 090878, etc. that process and be prepared, because what you're telling me here today is totally inconsistent with what actually happened.
And as I said, you're new, I'm not going to hold you to it. I don't know who gave you that briefing. I guess I kind of caught you off-guard today, because that wasn't a part of this particular subject matter. So I guess I'm telling you now, be prepared in the very short future, be prepared to talk about the Verizon contract.
Thank you. I believe Councilman Goode has a point of information this time.
Thank you, Madam Chair. 25 2/24/10 - APPROPRIATIONS - BILL 090878, etc. Mr. Gregory, is Verizon out of compliance with the Economic Opportunity Plan?
Thank you, 2/24/10 - APPROPRIATIONS - BILL 090878, etc. Madam Chair. This is usually the part where I let y'all take a butt whipping and go back afterwards and snicker with my colleagues about it, but this is too serious a subject to let you flounder like this, so I'm going to help you out with some yes or no questions, and this will allow you to at least give this body a sense that you are earnestly trying to fulfill the mandate that was set by Councilman Clarke. Now, since the time of that bill, have you made outreach with minority companies, at least a couple hundred of them, at Della Clark's outreach efforts and put them in touch with departments that have had stimulus opportunities? Yes or --
Yes or no, have you begun meeting with departments 27 2/24/10 - APPROPRIATIONS - BILL 090878, etc. that also get stimulus dollars to talk about year to date and year coming contracts and issuing them a goal by which this Administration is comfortable within ranges of opportunities that present themselves? Yes or no. 8
In that have you received, in that outreach effort, have you received more bids that are responding to opportunities to these economic stimulus opportunities? Yes or no. 16
In so doing, in this particular contract, how many, if you can tell that within the confines of the procurement regs, how many of the respondents were minority and female?
How many were minority? 28 2/24/10 - APPROPRIATIONS - BILL 090878, etc.
Thank you. I have some specific questions about the expenditures within the Division of Technology with respect to this, and so I might wait until Allan Frank's testimony to get to some of that, but I just -- with respect to the transfer ordinances in Bill 100002, I'd just like to understand for the record whether or not these are money that's already been spent that we are now appropriating or whether or not you're looking towards the year end and you're appropriating money based on the estimation that that's what you're going to need.
It's the estimate of where we will be towards the 29 2/24/10 - APPROPRIATIONS - BILL 090878, etc. end of the year.
That's great. I appreciate you doing that so early in the year this year as opposed to waiting until it's already spent.
Where we have very little choice but to appropriate it. With respect to the Provision for Other Grants, Director of Finance transfer in Bill No. 090879, the $10,850,166, can you describe what this was in there for, what grants this money comes from?
Some of those funds, Councilmember, are from the 9-1-1 funding source, but let me try to get you the detail on that. It's the equivalent of a placeholder for grants that we anticipate to get over the course of the year. I think the number is a hundred million that we have. It allows the flexibility 30 2/24/10 - APPROPRIATIONS - BILL 090878, etc. to move dollars around.
Well, some of it is grants, but some of it is also just being able to move funds around. Typically when we do the appropriation transfers, we look to the grants funds as a way to give us the flexibility to move funds where we don't have the appropriation authority in order to cover costs, like the unemployment compensation figure for four and a half million here, the pension-related figure of 17 and a half million. So it allows us some flexibility. There are instances when there are grants that are coming in, but that's not really what's going on here.
I'm confused. There was cash in the Grants 31 2/24/10 - APPROPRIATIONS - BILL 090878, etc. Fund that was unrelated to grants?
It's appropriation power really is what it is. So it's not cash. It's the ability to spend.
I'm sorry. So there is no grant related to this transfer?
No. There are no dollars, no grant. It's appropriation power. The appropriation power will allow us to cover the expense. Again, the four and a half million for the unemployment compensation is the best example of that. At the end of the year when we will realize a deficit associated with that four and a half million, we'll have to cure that either within the existing fiscal year or in the subsequent fiscal year.
So you are asking us to appropriate from a fund where there is actually no extra dollars. So essentially if we approve this 32 2/24/10 - APPROPRIATIONS - BILL 090878, etc. appropriation, we are increasing the City's deficit by $10 million.
In the case of the four and a half million dollars, we're going to spend -- based on our estimates, we are anticipating spending that anyway. The appropriation power allows us to recognize that the estimate is in excess of what we had in the budget. It allows us to then generate, depending on the action of the Council, allows us to have the appropriation power necessary to cover those expenses during the course of the year, but what we will have at the end of the year is indeed a deficit. Four and a half million of that deficit will be associated with the unemployment compensation costs.
Okay. So instead of raising the revenue through making cuts somewhere in the City, we are making a decision to deficit spend to cover expenses that -- I'm not saying I'm for or against this. I just want this -- 33 2/24/10 - APPROPRIATIONS - BILL 090878, etc. we're making a decision to deficit spend rather than cut costs elsewhere to cover the budget deficit?
It allows us to have the appropriation power associated so that we can spend. You're right, we're going to have a deficit associated with a number of items over the course of the year that we will then have to cover in the FY11 balancing process.
So I guess the provision in the Charter that sort of says we have to have a balanced budget every year is not really relevant to the way we operate City government?
As I understand it, if you anticipate carrying a deficit, you have the subsequent fiscal year to cure that deficit.
But only if 34 2/24/10 - APPROPRIATIONS - BILL 090878, etc. money is appropriated -- essentially, we create a slush fund every year in the Grants Revenue Fund, is what you're telling me, of a hundred million dollars, even though we didn't have the money coming in in terms of revenue, and then we just kind of can spread it around during the year to cover deficits.
Councilmember, I think there needs to be a very distinct line drawn between appropriation power and actual cash. What we're asking for is appropriation power. There's no cash.
So the appropriation power allows us -- because the Charter clearly states that absent the appropriation power granted by Council, we cannot spend in addition to what's in the budget. Once that appropriation power is available, we then have the ability to say, yes, indeed we're going to cover the costs associated -- again, the UC is the best 35 2/24/10 - APPROPRIATIONS - BILL 090878, etc. example -- up to that additional four and a half million dollars. It will indeed show up as part of the explanation of why we have ended or anticipate ending Fiscal Year '10 with a shortfall, a deficit.
Okay. So with respect to the specific dollars, I don't see any money going to employment or whatever the other issue is you just discussed. Four million is going to purchase of services in DOT, I guess to the Managing Director - Division of Technology. Two million is going to material, supplies and equipment. And then you've got another four million also going to Division of Technology, payments to other funds. Is this money we've committed already to spend?
It's money that we had committed as part of the budget or money, in some cases in the DOT world, dollars that were committed and spent without the appropriate appropriation 36 2/24/10 - APPROPRIATIONS - BILL 090878, etc. power or the appropriate authorization to spend in some categories.
Okay. So I guess what I'd like to do with respect to this transfer to DOT and the other transfer to DOT is just for the record find out exactly where this money is going to be spent over the next five months.
We can give you a detailed schedule for all of that. I have one here. I'll just make that available to everybody. It is for very specific delineated items, and we can show you what that is.
Well, I understand. We were hopefully going to have a full Council briefing on this prior to this hearing that got rescheduled to today at 3 o'clock, which is after the Appropriations hearing. So, I mean, I'd like to understand what the $21 million will be spent for for the record today. I mean, do you have a 37 2/24/10 - APPROPRIATIONS - BILL 090878, etc. handout you can give us today, right now?
Let me look at what I have here. If I don't give it to you right now, I'll give it to you shortly after this. I'm sure it reflects --
Councilmember, I wouldn't come over here unless we needed the dollars. I mean, in some cases, there are expenditures that were improperly entered into that we have to cover.
I'm not trying to -- I'm really not trying to be difficult. I just would like to have the details.
And perhaps I misunderstand. I thought the briefing this afternoon was on the Capital Budget.
That is what it was scheduled for. It is not what I requested. 38 2/24/10 - APPROPRIATIONS - BILL 090878, etc.
I understand. So if you'll get us that information, we'll have it prior to final passage?
Thank you. Is there anyone else here to testify? (No response.)
There 39 2/24/10 - APPROPRIATIONS - BILL 090878, etc. being none, Appropriations will now go into its public meeting. The Chair recognizes Councilman Goode on Bill 090878.
Thank you, Madam Chair. I move that Bill No. 090878 be reported out of Committee with a favorable recommendation and the rules of Council be suspended so as to permit first reading at our next Council session. (Duly seconded.)
Suspension of rules. Thank you. Therefore, Bill 090878 will be reported out of this committee, with a suspension of rules so as to permit first reading at our next session of Council. All those in favor? (Aye.)
40 2/24/10 - APPROPRIATIONS - BILL 090878, etc. Opposed? (No response.)
The Chair recognizes Councilman O'Neill for the purpose of Bill 090879.
Madam Chair, I move that Bill No. 090879 be reported out of this committee with a favorable recommendation and also a recommendation the rules of Council be suspended so as to allow first reading at our next session. (Duly seconded.)
Therefore, Bill No. 090879 will be reported out of this committee with a favorable recommendation and the rules of Council be suspended so as to permit 41 2/24/10 - APPROPRIATIONS - BILL 090878, etc. first reading at the next session of Council. The Chair recognizes Councilman DiCicco for Bill 100001. COUNCILMAN DiCICCO: Thank you, Madam Chair. I move that Bill No. 100001 be reported out of this committee with a favorable recommendation and that the rules of Council be suspended so as to permit first reading at our next Council session. (Duly seconded.)
Therefore, Bill No. 100001 will be reported out of this committee with a favorable recommendation and the rules of Council be suspended so as to permit first reading at our next session of 42 2/24/10 - APPROPRIATIONS - BILL 090878, etc. Council. The Chair recognizes Councilman Clarke for Bill No. 100002.
Thank you, Madam Chair. I move that Bill No. 100002 be reported out of Committee with a favorable recommendation and a request for rules suspension as to allow reading at the next session of Council. (Duly seconded.)
Therefore, Bill 100002 will be reported out of this committee with a favorable recommendation and the rules of Council be suspended so as to permit first reading at our next session of Council. This concludes our Committee on Appropriations. 43 2/24/10 - APPROPRIATIONS - BILL 090878, etc. (Committee on Appropriations concluded at 3:15 p.m.) - - - 44 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on February 24, 2010, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)