COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE - - - Tuesday, February 14, 2006 10:35 a.m. - - - Room 400, City Hall Philadelphia, Pennsylvania - - - RESOLUTION NO. 060019 - Providing for the approval by Council of a Revised Five-Year Financial Plan for the City of Philadelphia covering Fiscal Years 2007 through 2011. - - - PRESENT: ANNA C. VERNA, President BLONDELL REYNOLDS BROWN W. WILSON GOODE, JR. JACK KELLY JAMES F. KENNEY JUAN F. RAMOS FRANK RIZZO FRANK DiCICCO JANNIE L. BLACKWELL MICHAEL A. NUTTER DARRELL L. CLARKE DONNA REED MILLER MARIAN B. TASCO - - - V A R A L L O Incorporated Litigation Support Services 1835 Market Street, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 RESOLUTION NO. 060019 - 2/14/06
Good morning, everyone. We regret the delay, but I guess a couple of my colleagues were a little late because of the weather. This is the Public Hearing of the Committee of the Whole. And I would ask Mr. McPherson to please read the title of Resolution No. 060019. MR. McPHERSON: Resolution providing for the approval by the Council of the City of Philadelphia of a revised Five Year Financial Plan for the City of Philadelphia covering Fiscal Years 2007 through 2011 and incorporating proposed changes with respect to Fiscal Year 2006.
Good morning. My name is Joyce Wilkerson, I am chief of staff to Mayor John Street. With me here today with Dianne Reed, Budget Director for the city; Sean McNeeley, who is in my office; and we also have many of the department heads, commissioners, and other 3 RESOLUTION NO. 060019 - 2/14/06 managers within city government in the room 3 today. Thank you for this opportunity to present testimony in support of the Administration's proposed FY '07 to '11 Five-Year Financial Plan. We have circulated copies of the Plan and this testimony, so I will try to be brief. The FY '07 to '11 plan, the city's fifteenth, describes in detail the city's continuing commitments to the following areas: Maintaining fiscal health, implementing neighborhood transformation and blight elimination, promoting economic development, providing high-quality public education and comprehensive coordinated social services, and enhancing public safety and quality of life. Over the last six years, the Administration has striven to create a Philadelphia that will thrive in the 21st Century, supported by a city government that can live within its means: A smaller government that still provides needed services and safe streets and fosters educational 4 RESOLUTION NO. 060019 - 2/14/06 opportunity and an improved quality of life. The priority of this Administration has and will be tackling core city citizen needs, revitalizing neighborhoods in decline, improving public schools, strengthening families, attracting businesses to foster economic growth, ensuring public safety and high quality of life standards in every community, and, to the extent possible, reducing the local tax burden. I would like to share with you some of the successes that we have had. Despite the recent upsurge in homicides, improvements in public safety have resulted in significant reduction in Part One offenses, the most serious crimes as defined by the Federal Bureau of Investigation. These crimes have declined by 17 percent from 2000 to 2005. By the end of 2006, investments in NTI will have resulted in the demolition of more than 6,000 dangerous commercial/residential buildings and the removal of more than 237,000 abandoned 5 RESOLUTION NO. 060019 - 2/14/06 vehicles from city streets. By '07, investments made in social services will provide youth development programs to almost 47,000 more children than at the beginning of this Administration, funded primarily with federal and state dollars. As of December 2005, more than 20,000 vacant lots are receiving some form of stabilization or maintenance, an increase of more than 19,000 since the Mayor took office. Community groups working with the Pennsylvania Horticultural Society have cleaned approximately 2,500 lots each year for the last two fiscal years, and another 3,000 vacant lots have been given high-level treatment with the installation of grass, trees, and fencing. Investments made in cleaning and greening vacant lots are having an impact not just on neighborhood aesthetics, but on property values, as well. This is good news for property owners throughout the city. A study by Professor Susan Wachter 6 RESOLUTION NO. 060019 - 2/14/06 of the University of Pennsylvania indicated that a percent increase in property value 4 for homes occur within 12 feet -- that occurs 5 where the tree is located within 12 feet of 6 the home; a 13 percent increase occurs for 7 properties adjacent to improved green lots. 8 Since 2000, the average home in 9 Philadelphia has appreciated in value by 10 approximately 30 percent, when adjusted for 11 inflation. 12 The vibrancy throughout the city is reflected in our Real Estate Transfer Tax revenues, as well, which has skyrocketed over the last several years, with a 36 percent increase in FY '04 and a 37 percent increase in '05.
Finally, the FY '05 citizen satisfaction survey contained the highest satisfaction levels for many city services in nine years, since the survey was first conducted; including trash collection, library services, police protection, and recreation programs. The city also continues to 7 RESOLUTION NO. 060019 - 2/14/06 experience improved financial health. Philadelphia has taken major steps to addressing the financial challenges it faced in the easterly 1990s. We have reduced taxes to spur economic development. And the strategic investments made in neighborhoods, cultural institutions, the tourism sector and the waterfronts are paying off. 2 million. It is estimated the fund balance will increase to approximately $168 million at the end of the current fiscal year. The attainment of these positive fund balances are the result of record-level tax revenue collections, particularly in the BPT and the Realty Transfer Tax. Continued improvement and economic profit in corporate profits helped Business Privilege revenues in '05 grow by $70 million above the '04 amount. Due to the continued strength in the 8 RESOLUTION NO. 060019 - 2/14/06 local real estate market, with rising home values, a higher volume of real estate sales, real estate transfer tax reached a record high level of $192 million in FY '05, surpassing the FY '04 amount by $51 million. The FY '06 figure is projected to surpass $200 million. In FY '05, sales revenue grew by 9 percent after three previous years of negative 10 or no growth, and this plan projects positive 11 growth in sales tax throughout the life of the plan. While the plan projects positive fund balances at the end of each year, the balances are generally decreasing and are small in comparison to the large surpluses achieved during the economic boom of the '90s. 2 million in '09, $52 million in '10, and $55 million in '11. The modest fund balance increases are contingent upon PGW's repaying $45 9 RESOLUTION NO. 060019 - 2/14/06 million -- its $45 million loan in FY '09. Despite the positive developments mentioned, some basic fiscal challenges remain; the size of the fund balance, strengthening the tax base, lowering the tax burden, and paying for escalating pension, labor, energy, and health costs, with decreasing federal and state support. In order to address its significant financial challenges, the city has made and will continue to make strategic choices about tax reform, strategic investments, raising revenues, spending, and service delivery. These decisions include shifting costs, eliminating programs, selling city-owned assets, seeking legislation to increase revenues from other government to more appropriate levels, and right-sizing owned facilities. The fund balance in '07 to '11 plan remain at less than preferred levels. Many rating agencies cite fund balances in the range of percent to percent of revenues as evidence of fiscal health and stability for 10 RESOLUTION NO. 060019 - 2/14/06 Philadelphia. This means carrying a fund balance of at least $100 million. The Governmental Finance Officers Association is even more cautious, recommending the governments maintain an unreserved fund balance of 5 to 15 percent of revenues. Achieving a healthy fund balance will require the city to continue to eliminate the "business as usual" model and identify even more strategies to significantly increase revenues and reduce costs. We remain committed to reducing burdensome taxes that hamper our city's ability to grow. The city believes that, as financial circumstances permit, it is prudent to continue to make adjustments to business taxes that will improve Philadelphia's economic outlook. The city, however, cannot continue business tax reductions, make strategic investments in cultural institutions and neighborhood commercial corridors and balance the current Five-Year Plan or, for that 11 RESOLUTION NO. 060019 - 2/14/06 matter, subsequent plans, with all the currently enacted tax reductions.
The plan, therefore, repeals the low-income wage tax credits scheduled to begin in FY '10, restoring $46 million to the plan and preventing annual losses exceeding $100 million a year in the plan's out years. The Administration does support, however, affordable, manageable, responsible tax cuts that promote fiscal stability. Thus, the plan includes $15 million in FY '07 in BPT cuts, $5 million more than previously projected. And then I state the millage. The acceleration in cuts capitalizes on business development momentum witnessed by significant growth in BPT base over the last two years. The city's budget can simultaneously absorb the scale of this reduction and still provide the quality of services that the 2005 citizen survey shows are priorities for residents. The Administration supports this reduction schedule because it maintains fiscal 12 RESOLUTION NO. 060019 - 2/14/06 stability, enables continued flexibility, and addresses the need to improve Philadelphia's tax structure. Since 1999, the real estate market has seen dramatic increases in many locations throughout Philadelphia. Lower mortgage increase rates increase investor confidence, have contributed to increased property demand and value. The city's NTI initiative has also contributed to citywide increase in property values through its strategically targeted investments. Property assessments have not kept pace with this trend. BRT plans to assess properties at 100 percent in the near future. This will make our system more transparent and will closely track trends in the real estate market. The Administration supports the eventual move towards full valuation. It represents a new element in the city's overall tax policy. Just to, you know, skim ahead, I 13 RESOLUTION NO. 060019 - 2/14/06 think Mr. Glancey has testified on previous occasions that the CAMA System will not be ready for the planned implementation that was initially scheduled for the spring. We look forward to working with BRT and Council in the coming months to create the kinds of buffers and protections that our residents need, but that will also enable us to capture revenue that we don't currently capture as a result of stalled assessments. The city's economic development blueprint, however, not only underscored the need for tax reform; it also proposes other areas that must be addressed if our economy is to thrive. Therefore, we will continue to make strategic investments to field this momentum and ensure that we live up to our billing as the next great city without compromising the General Fund. The FY '07 budget and Five-Year Financial Plan provides for debt service support for borrowing to finance the Administration's investment to preserve our 14 RESOLUTION NO. 060019 - 2/14/06 arts and cultural institutions and revive commercial corridors. The arts and culture are major economic development engines in the city and the region. Recent aunts museum exhibits that have drawn visitors from across the country have only served to reinforce this point. And, yet, if you take the Art Museum as just one example, it is unable to make basic infrastructure investments. For example, unless it creates a second loading dock, so priceless works of art are no longer loaded alongside garbage being disposed of, the city will no longer be able to host the magnificent events and will wonder how all of that happened. We have other organizations, like the Freedom Theater, that's long been recognized as one of the premiere regional theaters in the nation, yet its lights too are becoming dim as a result of inadequate support. We can't allow this to happen. To this end, the Administration 15 RESOLUTION NO. 060019 - 2/14/06 proposes approximately $61 million of funding to be targeted to the arts, cultural institutions, and the park As valuable as arts and cultural institutions are to the city's future, so too is the viability of its neighborhoods.
Consistent with the Mayor's economic development blueprint, approximately $65 million will be devoted to the development of neighborhood commercial corridors to assure that the neighborhoods whose property values have improved so greatly over the last few years remain vibrant and healthy into the future. 5 million is proposed for investment in '07 and '08 for tourism campaign Promote Philadelphia. We know that for every dollar spent on promotion, Philadelphia will see approximately $185 in new visitor spending; not to mention new tax revenue, new jobs for city residents. 16 RESOLUTION NO. 060019 - 2/14/06 It is a moment we must seize, a moment we must invest in, a moment when Philadelphia can take advantage of its success and move up to the next level. While we celebrate our success, we must at the same time be vigilant in addressing other ills that threaten the fabric and quality of life in the city. While serious crime may have declined, the recent surge in homicides and gun violence in our city and the fear it has created are unacceptable As part of Operation Safer Streets, the city will make available $10 million for police overtime to ensure that we provide a level of police protection that people deserve. Increasingly, the city's youth are becoming the victims of perpetrators of violent crimes. The city will continue its involvement and support the successful Youth Violence Reduction Partnership and a similar program focused on adolescents at risk of 17 RESOLUTION NO. 060019 - 2/14/06 involvement in victimization and delinquent activity, the Adolescent Violence Reduction Partnership. The police and the city agencies, however, cannot do this alone, and they will encourage neighborhoods to become more involved in violence-reduction efforts. More focused policing, more engaged communities, better coordinated delivery of city services, and reduced availability of handguns are key to the success of these violence-reduction initiatives. In addition to increasing violence, there has been an increase in the number of homeless people on the streets of our city. The Mayor's Ten-Year Plan to end homelessness has made a commitment, with the assistance of city department leadership, to provide $10 million towards the first two years of the plan; including, behavioral health services and shelter, prevention, housing subsidies, and assistance from private funding to support the plan's implementation. The condition of the city's streets, 18 RESOLUTION NO. 060019 - 2/14/06 the city's infrastructure overall, is a major concern to citizens of Philadelphia. In April '06, the Streets Department will, therefore, launch Operation Smooth Streets to eliminate the 10,000 potholes and 3,200 ditches that are expected to form during the winter season. The focus of Operation Smooth Streets will be to aggressively repair potholes and ditches and to establish repair and preventive maintenance standards. In addition to pothole repair and ditch restoration, employees will be assigned to other preventive maintenance functions; such as, expanding the Crack Sealing Program, which will reduce the number of potholes in future years. 15 million equipment cost in FY '06. The FY '07 Operating Budget and the Five-Year Financial Plan also proposes addressing problems with the city's pension 19 RESOLUTION NO. 060019 - 2/14/06 program. During the 2000 to 2003 economic slowdown, there was a significant loss in equity value that caused the city's pension fund to fall well below its expected annual average earnings, thereby increasing the city's unfunded pension. In order to continue to support the pension program within the City's financial capacity, the city shifted its funding policy for '04 to '08 plan to the minimum municipal obligation required by state law to meet future unfunded pension liabilities.
At that time, the shift to MMO policy reduced the amount of the city's actuary projected that the General Fund would have to contribute to the pension fund by approximately $245 million from '04 through '08. Nevertheless, the poor earnings of the past have caused the city's General Fund pension contribution to escalate dramatically. And then I go through the numbers. To mitigate these issues moving 20 RESOLUTION NO. 75 to better reflect current fund earning 5 experience. This has a $20 million annual 6 cost impact on the plan. 7 Assumptions of a lower rate of 8 return means larger city contributions to the 9 plan, which has the benefit of ultimately reducing the rate of increase in unfunded liability in later years. The city is also continuing to improve revenue enhancements. For example, the city is working with a consultant team to develop and further refine its proposal for strategic marketing to maximize the value of private partnerships and increase revenue for city programs. Partnerships have the potential to take a variety of forms, including sponsorships, exclusivity agreements, and leasing of city assets. Our preliminary estimates by our consulting team project increased revenues of about $22 million from FY '07 to '11. 21 RESOLUTION NO. 060019 - 2/14/06 The city also expects to generate $6 million in property sales in '06 and an additional $18 million in property sales throughout FY '08. The completion of the Unified Land Record System will enable the city to be even more strategic in its approach to surplus property sales in the future. We continue to work with our state delegation and are strongly advocating two pieces of legislation that can have significant revenue impacts for the city. The first bill would require both state and federal legislation, would increase reimbursement for social worker salaries from 80 percent to 100 percent. This initiative proposes a risk for the plan. We also have a second bill that would increase reimbursement for adoption subsidies and legal custodial services from 80 to 100 percent. We have made some headway on this initiative. It has been approved by the House, the State General Assembly, and we will 22 RESOLUTION NO. 060019 - 2/14/06 work this year to get it through the state Senate. Concurrent with our efforts to raise revenue, we will continue many of the cost-saving initiatives discussed in previous years' plans. 6 million annually. The state highways in Philadelphia are currently the only highways in the state not patrolled by State Troopers. The plan also assumes receipt of $75 million in gaming revenue from '09 to '11. In addition to revenue enhancements, the city continues to pursue cost-saving initiatives; such as, reduced payroll costs through ongoing work force reductions, targeted position reductions, and overtime control. The continued strategical use of DROP, allowing most departments to fill only 23 RESOLUTION NO. 060019 - 2/14/06 one position for every two, has led to reorganized management structures and eliminated duplicative functions and underutilization of staff. The targeted reduction brought the July 1, 2005, work force number to 22,914, reducing the General Fund position level by over 2,000 positions since FY 2000. In order to manage with significantly fewer and less experienced staff, the city's embarked upon several initiatives designed to cut costs, simplify administrative processes, and improve service productivity. In FY '07, the personnel department will begin a process to replace antiquated forms-processing systems with the new citywide human resource information system. 9 million will be invested in this streamline initiative in '07 through a productivity bank loan. The Records Department is improving services by offering E-recording, E-notarization, resulting in faster and more 24 RESOLUTION NO. 060019 - 2/14/06 efficient document processing for the public.
In addition, the Records Department will continue to enhance the parcel map in a GIS system in FY '07, producing a seamless electronic map of city parcels to which a variety of information can now be attached. This will improve the way entities such as NTI, RDA, OHCD assemble/manage land-related information, resulting in more informed decision making By FY '07, L & I will have completed the major implementation parts of the License & Inspection Concerted Automation Project, and will be completing the final projects of automating the administrative tasks for Appeal Board staff. In addition, Code Enforcement, Building Permits, and all Inspection activity will have been automated to complement the FY '07 automation achievements in L & I and dangerous building inspections. As stated earlier, we expect positive but precariously low fund balance throughout the life of the plan. At such low 25 RESOLUTION NO. 060019 - 2/14/06 fund balance levels, we really cannot afford to increase the size of city government to inefficient levels and cannot afford any additional tax cuts beyond the current cuts in the plan without providing for offsetting revenues. And the challenges are growing. We are currently analyzing the potential impact to the city of the proposed federal and state budgets, which would have significant direct and indirect negative effects on the General Fund based on changes to Medicaid, CDBG, TANF, and other programs that Philadelphia depends on. The city has been successful in shifting hundreds of millions of dollars in costs to state and federal sources over the past decade, and the proposed plan assumes further such shifts. The city expects that critical children and youth prevention programs will receive the necessary state funding in each year of the plan. Negative outcomes at the federal and state levels would require us to pursue RESOLUTION NO. 060019 - 2/14/06 alternate contingencies in order to remain a balanced plan. Other threats to the budget include future health and medical costs. In our most recent arbitration panel award to the FOP, health benefit costs were determined only in the first year of a four-year contract, with future costs to be determined by a reopening bargaining in '06 to '08 period. Similar contracts were struck with DC 33 and 47. They have reopeners in '07 and '08 respectively. We also have lingering on the horizon questions about SEPTA funding. I want to thank you for this opportunity to present this testimony in support of the proposed Five-Year Financial Plan. I would be happy to answer any questions you might have.
Thank you very much. I think we ought to agree that, for the first go-around, each Council member will have five minutes to ask questions, and then 27 RESOLUTION NO. 060019 - 2/14/06 we will have a second go-around. Ms. Wilkerson, on of the plan, you talk about new cultural attractions on the Benjamin Franklin Parkway. Can you tell us what the status of the move of the Barnes Museum is?
We are in conversations with the Barnes, actually trying to negotiate the agreement that would convey the parcel. We are looking for a long-term lease. They want, you know, to buy. We're talking with them about the schedule for the move. We are also actively working with Councilwoman Blackwell on, you know, trying to pass the final hurdles over approval of the new youth studies facility that is currently planned for West Philadelphia. And, so, we are negotiating with the Barnes. We look to be off the Parkway by October of 2007. I think that's when the Barnes is interested in taking possession.
Well, what, if 28 RESOLUTION NO. 060019 - 2/14/06 any, funding is included in the plan for their relocation?
Okay. And we all know that parking is going to certainly be a major obstacle on the Parkway for the central library and the Barnes. How does the Five-Year Plan address the parking requirements for the Parkway, and what city funding is included in the plan?
I can have Stephanie come up, Stephanie Naidoff, the Commerce Director, and talk about the studies. There has been a study undertaken. We don't have dollars in the Five-Year Plan beyond money proposed for the new borrowing, which is for some limited infrastructure work along the Parkway. But Stephanie can talk about the parking study and what's happening.
I am Stephanie Naidoff. I am the City Representative and Director of Commerce. We are in the midst of a study of parking on the Parkway under a grant that was given to the city by the Pew Charitable Trusts, and it has two phases. We have just recently completed the first phase, which was to look at the parking needs of the Barnes and the expanded library. And that first phase was completed with the recommendation that there are four potential sites where parking might be provided. And we will begin to explore those sites now. And then we are going to start a second phase, which will look at parking on the entire Parkway.
Thank you. The Administration has included $2.8 million in revenues for FY '07 and $25.2 million over the life of the plan in reimbursements for patrolling state highways. I know this is one of Councilman Rizzo's 30 RESOLUTION NO. 060019 - 2/14/06 favorite subjects. I thought that the state had agreed to assume the responsibility of patrolling these roads with State Police officers. Why are you including these revenues?
We don't know which form it will take ultimately. We are proceeding along both tracks. And Pedro Ramos, Managing Director, can talk in more detail about them.
Good morning, President Verna. Pedro Ramos, Managing Director. Following the adoption of the state's budget last year, the State Budget Director called with the commitment that the state intended to change its commitment from providing dollars for patrolling state highways, to providing state troopers to patrol state highways in the city. He also said that he would like to establish an implementation committee headed by the Colonel in charge of State Police, the 31 RESOLUTION NO. 060019 - 2/14/06 Police Commissioner, somebody from the Governor's office, and me. We have proceeded along with implementation. The state reports in those meetings are that they believe that implementation before January 2007 will be difficult. So we have renewed the discussions on simply receiving the revenue for patrolling state highways, which has some advantages to the state, financially for the state; although, in terms of what's been appropriated at the state, a little bit more difficult. The commitment that the city got last year was also one that members of the Philadelphia delegation had been very involved in. And in particular, I think Senator Fumo had been very helpful to us. So we all believe that the commitment, that the state has made a commitment for this fiscal year, and going forward, that it should keep. And we think ultimately it is more likely that it gets resolved as dollars, instead of state troopers. And that's why it 32 RESOLUTION NO. 060019 - 2/14/06 is shown as revenue.
The Chair recognizes Councilman Rizzo for a point of information.
Maybe I didn't understand. Are we going to get any revenue before January of 2007?
Whether we would get any revenue before January 2007? We believe that the state's commitment is due and owing. It had changed that commitment to be in kind, instead of in cash. There are now questions about whether the in-kind commitment can be delivered in the time consistent with their commitment, so we are continuing to engage the state in seeking the cash in the interim.
In the Five-Year Plan, we are only showing it for a part of the year in FY '07.
As you know, I 33 RESOLUTION NO. 060019 - 2/14/06 have been talking about this for a lot of years, and hopefully some day this will happen. And I thought that the agreement was that we were going to get the cash, instead of displacing our police officers. Now I am learning that we are back at having the State Police come into the city to do this work. Have we expressed a preference? What do we prefer?
Thank you very much. The Chair recognizes Councilman Goode.
Two areas of questioning. First around BPT revenue. To what do you attribute the $70 million in unanticipated BPT revenue?
Let me ask. Is the Revenue Commissioner here? Dianne can speak 34 RESOLUTION NO. 060019 - 2/14/06 to that. The Revenue Commissioner can also give more detail.
Good morning. I am Nancy Kammerdeiner, Revenue Commissioner. Most of the increase in the BPT came from the net income portion of the tax. And we believe that comes from increased revenues of the various companies that file the BPT.
So you don't intend those corporate profits or that trend, you don't expect that trend will continue in corporate profits over the Five-Year Plan?
I would expect that we would see some volatility there. And as more and more of the emphasis on the BPT is on the net income portion of the tax, we will be dependent upon what happens in the economy, particularly the economy here in Philadelphia. And, to be conservative, we can't always expect it to be at the high level. 35 RESOLUTION NO. 060019 - 2/14/06
I just find it strange that there was $70 million in unanticipated revenue in one year, but over the Five-Year Plan there is only $10 million total in BPT revenue growth over a five-year period.
Again, we do our revenue forecasts on a conservative basis, not expecting that the highs continue over a longer period of time. If businesses are successful and have a higher net income, then we would see the benefit of that over and above what's in the plan.
So it might not be $70 million a year for five years, which would be $350 million; but it conceivably could be 100, 200 million dollars, rather than just $10 million?
Yes. I mean, one thing that we can provide Council with is a set of graphs that look at how the taxes have performed historically. And you can see fairly dramatic swings. 36 RESOLUTION NO. 060019 - 2/14/06 The BPT is one of those taxes, the real estate transfer tax is one of those taxes. I know during the Rendell years, I think they had a 79 percent drop-off in the real estate transfer tax in just one year. So you don't want to get too far out there with your revenue assumptions, because a lot of the taxes are volatile. We will make sure that people get those graphs. We did that because we were also concerned that we were missing opportunities, that we were being too conservative in some of our assumptions. And, so, we will make sure that people get those. This plan shows substantial additional revenue. And perhaps Dianne can talk about that
I want to focus more specifically on BPT. And just the fact that, over five years, you would only expect the revenue to grow from $379 million to $389 million. I mean, that's highly conservative. 37 RESOLUTION NO. 060019 - 2/14/06
This is Dianne Reed, Budget Director. One of the things that happened last year is that we got more revenue in May and June than we ever have before, and that was quite unexpected. And that helped to accelerate the returns substantially. And we don't know that that's something we can count on. So, as the Revenue Commissioner stated, you know, we are trying to be conservative in our approach.
Okay. Second of all. MR. SEAN McNEELEY: Good morning. Sean McNeeley, Director of Policy. I also wanted to add, we can get you a comparison of the approved '06 plan to this projection. But I just wanted to make sure that you noted that the BPT projection also reflects an additional proposed gross receipts cut. So the increase in revenue that you are seeing is net of that effect. So that the increase in the base 38 RESOLUTION NO. 060019 - 2/14/06 over the life of the plan may be a little bit more than $10 million. But, we will get you something that does that comparison.
Second question is about the SEPTA subsidy. Whatever is worked out at the state level, it is thought that it will increase the city's portion. But aren't we still paying a disproportionate amount of subsidy related to the number of seats we have on the Board?
We are following those negotiations. You know, our position has been that, you know, it has always been, that the city absorbs more than its fair share of the cost of SEPTA; that the entire region benefits from the city's portion; and that we can't afford any substantial cuts in service in the city. So, you know, we are following those 39 RESOLUTION NO. 060019 - 2/14/06 negotiations, but I can't give you a fuller report right now on what we're doing.
You are welcome. The Chair recognizes Councilman Kenney.
Thank you, Madam President. Good morning. On Page III, small I, of the plan, the Administration states, quote, The city managers, municipal union leaders, local elected officials, and members of the media and the public should be skeptical of proposals to make recurring multi-year spending commitments or tax reductions that are not coupled with funding strategies or rely on speculative future revenues or savings." I believe that's correct. That's a correct statement, as far as the quote is concerned. Based on that statement, can you explain why you have included the following items in the budget and/or the plan. And the 40 RESOLUTION NO. 060019 - 2/14/06 first is DHS. The Administration is strongly advocating for two pieces of legislation that would result in substantial revenue increases for the city. The first bill, which we requires both federal and state legislation, would increase reimbursements for salaries and benefits of social workers from 80 percent to 100 percent, as you testified. The plan assumes full reimbursement will begin to FY '09, generating $57.9 million through FY '11. How does this initiative, which requires both federal and state legislation, which is speculative, in my opinion, at best, get included in the plan, number one. And, number two, on Page XI, the second bill would increase reimbursements for adoption subsidies and legal custodian services from 80 to 100 percent, as you testified. The plan assumes 100 percent reimbursement beginning in FY '07, generating 41 RESOLUTION NO. 060019 - 2/14/06 $22 million in revenues over the life of the plan. Has the Governor included this in his FY '07 budget? Again I ask, how can you propose this revenue in the budget and plan, which is speculative dollars, and the combination of these two DHS initiatives is approximately $80 million over the life of the plan? If you are not successful, the plan will not be balanced in the out years. What will we do? I guess my comment is, is that on one hand, when we talk about tax reductions that should not be recurring over the years because they are speculative, why can we speculate on revenues that are a result of legislation that's not even passed?
What we have -- I think part of what distinguishes this is that we have discrete strategies, and we also discount the proposals to reflect the fact that there are elements of risk. I think that with respect to the adoption subsidies, we have been successful in 42 RESOLUTION NO. 060019 - 2/14/06 moving that through part of -- you know, one House of the General Assembly. I think there is risk associated with the other. And that's the kind of thing that we take into account as we put together the budget and the Five-Year Plan. There are other elements of risk that we have carried traditionally. For example, I think from the very beginning we have carried assumed savings of $12 million annually from government efficiencies
If you look at the plan, those assumptions aren't there any longer for the first three years of the Five-Year Plan. PICA's position was that we had carried them too long, we can't assume automatically that we will be able to continue finding those. So we are always looking at the risk; we are always trying to figure out, you know, are we too far out on a limb with the 43 RESOLUTION NO. 060019 - 2/14/06 revenues, are we too conservative with the revenues, do we think we have a solid basis for proposing something like the adoption reimbursement subsidies. Is it Philadelphia only? Is it something that the rest of the Commonwealth will likely benefit from? So we take all that into account. But, you know, those are elements of risk. And, so, we try to limit, you know, how much of that we have in the plan.
Let me move into another area of speculation, and that's gaming revenues. The Administration has included $25 million a year starting in FY '09 as locally generated, nontax revenue. What is the basis of the inclusion of the $75 million in the plan, and why don't you consider this to be speculative? What expenditures have you included in the plan that has increased city costs associated with gaming? I don't think there is any in the plan that assume that. 44 RESOLUTION NO. 060019 - 2/14/06 And how can we take a position that the city will experience a net benefit of $25 million per year from gaming? Then ask at Page B-23 of the plan, the Administration states, quote, Due to uncertainties surrounding the timing of state tax reform made, the plan's revenue projections do not assume any additional wage tax reductions due to state tax reform aid or the corresponding state aid that will make these reductions possible. If you are uncomfortable in including state gaming funds in the plan, how can you include -- if you are uncomfortable in including the tax cut benefits in the plan, how can you include the $75 million?
The gaming, we are carefully -- well, two things. One, we had the Gaming Task Force, and based some of our projections on work done by the Gaming Task Force. The gaming revenue is something that in this plan is moved back to more carefully coincide with when we think that gaming is 45 RESOLUTION NO. 060019 - 2/14/06 actually going to come online. You are right, we don't include any costs in the Five-Year Plan associated with gaming. Part of the reason for that is, we don't know the sites. If, for example, the sanitation site were to be included, the law department, under Romi Diaz, has negotiated with the developers so that the developer would pick up the costs that one might ordinarily assume, you know, the city would have to bear. So until we have a better sense of what the sites are, what the costs are likely to be associated with the various sites, we haven't included those costs. We have moved the revenue back to '09. The dollar value of the revenue we think is a conservative projection on -- you know, based on work done by the Gaming Task Force.
I don't understand how the Gaming Task Force's work would give you a number that you could rely on, the $25 million.
I think that the 46 RESOLUTION NO. 060019 - 2/14/06 number is a projection number. We worry a lot more about the exact dollar figure the closer in the dollar figure is. That number is still three years out. You know, as we get closer, as we know where the sites are going to be, as we, you know, know what the city's costs are, we will begin to fold those into the Five-Year Plan. But we think that they are good working numbers at this point in time.
Thank you, Madam President. There is discussion in the operating budget of a number of youth-related initiatives; namely, the Youth Violence Reduction Program, the new Adolescent Violence Reduction Program, and Operation Safe Schools. Please speak or discuss what types of internal mechanisms are in place for close 47 RESOLUTION NO. 060019 - 2/14/06 coordination of those programs, as well as coordination of case referrals.
Pedro Ramos, Managing Director. Councilwoman, as you know, YVRP to this point, the Youth Violence Reduction Partnership, has operated through, really, a collaboration without a formal structure. This year for the first time, with support from the Pennsylvania General Assembly, as well as from the federal government, we have been able to expand the Youth Violence Reduction Program. We started the implementation of an additional police district at the end of last calendar year and are now in the middle of a second expansion. And that had to this point been through parole, probation, the police, the D.A., U.S. Attorney, and other partners just getting together on a regular basis. With the new support, for the first 48 RESOLUTION NO. 060019 - 2/14/06 time we have put some structure in place and have provided for funding out of my office for the coordination of those efforts, and including an executive director. And then the executive director's job is to formalize and institutionalize the coordination that had really been happening by people's whose first job, you know, John Delaney and Naomi Post, and the leadership team of YVRP, who really had just sort of owned it all along and really kept it going. Now we have an executive director that will continue to work with the YVRP steering and keep it going. With AVRP, we are now at the stage of bringing online two pilot police districts. AVRP is different than YVRP, in that it has less formal role for the courts. Because in YVRP, you have probation and parole. And that's really, you know, the control, the -- you know, the stick in the carrot-and-the-stick approach. With AVRP, children will not necessarily be under anyone's jurisdiction, 49 RESOLUTION NO. 060019 - 2/14/06 under DHS' or the courts', although kids would be identified through other risk factors. So, at this stage, AVRP will be managed and coordinated out of the Department of Human Services, and there will undoubtedly be a whole lot of coordination with YVRP. You won't be surprised that we will probably have families where the younger siblings of kids in YVRP are in AVRP; YVRP being a program targeting kids to and 12 AVRP, 10 to 15. 13 In July we plan to role out AVRP at 14 a greater scale. There is no plan yet to do 15 what we have just did this year with YVRP for 16 AVRP. Right now, it will be coordinated 17 through DHS. 18
So the 19 executive director reports to the DHS 20 commissioner, and no longer the managing 21 director? 22
No. Under YVRP, the 23 Youth Violence Reduction Partnership, the 24 director reports to me. But in my office is the director of 50 RESOLUTION NO. 060019 - 2/14/06 social services, Julia Danzy, who is, obviously, integral to all of this and who is doing a whole lot of work to integrate social services, as you know. And I believe that AVRP will have day-to-day contact with YVRP, because it is a lot of the same partners around the table. And YVRP was what -- it was the lessons from YVRP that led us to create this program for younger children.
Okay. Two related questions. The role of the school district in any of what you just mentioned.
The truancy is a big risk factor and is a trigger in both of these arenas. So there has to be coordination with the school and regular communication with the school district.
That happens by way of an individual or department, or how?
Right now, AVRP isn't up and running yet. So one of the things that 51 RESOLUTION NO. 060019 - 2/14/06 our Secretary of Education, Jackie Barnett, her role in this is bringing social services and the school district to the table on how they can efficiently coordinate their efforts. But truancy is -- you know, it is kids to 15. A lot of the initial issues 8 you are going to see are going to pop up in 9 school attendance or in other school-related 10 activities. So the school district will be a partner there. And with YVRP, I am less intimately familiar with what the day-to-day contact has been, although truancy has been a big issue. And, again, YVRP are the hundred young people in that category most likely to kill or be killed. It is not sort of the folks at risk; it is the folks at the very high end of the risk spectrum.
Thank you for your testimony. Thank you, Madam President.
You are welcome. The Chair recognizes Councilwoman Tasco. 52 RESOLUTION NO. 060019 - 2/14/06
Good morning. Ms. Wilkerson, in your testimony on , you state that the fund balance is projected to drop by percent in 2007, but then 6 increase -- and then drop in 2008 to 4.3 7 million, but by 2009 go to 47.2. 8 What causes the increase? 9
Let me ask Dianne 10 Reed to step you through the various changes. 11
Good morning, 12 Councilwoman. 13 There are several kinds of costs 14 that are restored in '08. We are restoring 15 about $11 million of the $50 million justification requests from the departments in '07, which, of course, carries through to '08. In addition, there are a number of one-time expenditures that are included in the budget in '07 and '08, which include additional economic stimulus money, the money for Promoting Philadelphia. We also have new debt service for the borrowing. So these add costs, at the same time that our revenues are growing. 53 RESOLUTION NO. 060019 - 2/14/06 But one of the profoundest impacts on the '08 budget is the percent wage 4 increase that was put in place. And it goes back up in '09 and in the following years because some of those one-timers drop out. And we also are not assuming wage increases in the out years. I should also say, our fixed obligations are growing dramatically, which includes pension, health benefits, debt service, that kind of thing.
When you said something about the $11 million, would you go back over the first comment about justification.
Councilwoman, I am sorry. You are going to have to speak into the microphone, because we can't hear you.
I am sorry. I asked her to explain the justification piece to me. 54 RESOLUTION NO. 060019 - 2/14/06
For '07, we received $50 million in requests from departments for position restorations and new programs. The Administration reviewed all these requests and has approved $11 million in increased costs, you know, which includes Operation Smooth Streets. It also includes additional positions required for maintaining the prison census, including the return of the prisoners; for mandated services in our prevention programs in Department of Human Service. And in some cases, because we cut so many positions in order to make our budget for '06, we granted restorations beyond what we had assumed because of DROP cuts that are in place as a guideline.
We will see that reflected in the budget, where those positions are and those departments?
Yes. We can give you a table that shows that in detail, if you would like. 55 RESOLUTION NO. 060019 - 2/14/06
Okay. I want to go to the question that Councilman Kenney asked around some of the assumptions that you have. On Page XI in the Five-Year Plan, you talk about generating revenue from surplus city properties. I remember having this discussion before. Have we sold any properties to date that might have generated revenue for the city? If so, do you know those property sales? And what are the future property sales, and can you identify them?
Councilwoman, we have sold $2.8 million of properties this year. We have about $52 million worth of properties that we have identified for sale. We have Agreements of Sale for some of these. They are all proceeding along. We do assume that we will sell $6 million of properties in this fiscal year, $10 million in '07, and $6 million in '08. We can share the lists with you. 56 RESOLUTION NO. 060019 - 2/14/06
We would like to see that. And, also, the sale price, is that based on a fair market value or appraisal?
Yes. The city has all the properties that are identified for sale appraised, so that we have a fair market value for them.
This is an ongoing tension. We have dollar figures that we put in the Five-Year Plan. You know, frequently, though, there will be demands from CDCs or nonprofit organizations, for example. I know of one situation where we sold for less than fair market value in order to support affordable housing, you know. So our starting point is everything gets sold for fair market value. Sometimes we do discount, if it is to support affordable housing. There have been, I think, schools, you know, that have wanted sites; and, so, we have discounted. But our presumption is fair 57 RESOLUTION NO. 060019 - 2/14/06 market value. Sometimes, you know, we get what the appraisal says. Sometimes we've put it out for RFP and actually done substantially -- or think we will do substantially better than what we thought the appraised value was. But we are trying to get fair market value. We need these revenues in order to fund the government's operations.
Make the answers short, please, so I can get more questions.
Thank you, Madam President. Good morning, Ms. Wilkerson. Did we happen to get a copy of the citizen satisfaction survey?
Yes. Those should have 58 RESOLUTION NO. 060019 - 2/14/06 been circulated to you in the form of the Mayor's report on city services for 2005.
It is on the website. Okay. Thank you. On of your testimony, in the second paragraph down, the second full paragraph down. And when you talk about it, "In order to address its significant fiscal challenges, the city has made and will continue to make strategic choices." And I guess it is the second sentence in, "These decisions include shifting costs and eliminating programs." And I had a particular question regarding eliminating programs and right-sizing the number of facilities. What does that exactly mean, and what programs are in jeopardy of being eliminated?
One of the areas where we have done, you know -- as I said 59 RESOLUTION NO. 060019 - 2/14/06 elsewhere in the testimony, we have a lot of our programs currently supported out of federal and state dollars. You know, if those dollars don't come through as we project, we will be faced with having to eliminate some of the social service preventive programs. For example, there are other activities, you know, twice-a-day trash pickup, for example, comes to mind. We have standardized the practice. We only pick up trash once across the city. You know, we are always looking for opportunities to do business differently, do it more efficiently. You know, it could be something as -- you know, people probably don't know that we used to have full-time staff operating drawbridges. You know, the drawbridges in the city would go up and down on demand. We have changed how we do that. So now we have to get notice in advance that, you know, somebody wants to bring a boat up the river, and we only staff the drawbridge 60 RESOLUTION NO. 060019 - 2/14/06 operation as needed. So we are always looking at refining how we do business. We have, you know, proposed in the past things like changes to rec facilities. We don't have any of those currently on the table for this Five-Year Plan. But I think the city is going to have to, you know, continue to look at what it does, where its resources are needed, and be more flexible moving forward than we have been in the past with the buildings we operate, the services we provide.
And that's, basically -- your last part of your question was talking about the facilities, right-sizing the number of facilities. I didn't hear you because someone was talking to me. I am sorry.
We don't have any proposal we are advancing for closing rec facilities, for example, in this current budget.
Well, you know, certainly in reading the testimony, it 61 RESOLUTION NO. 060019 - 2/14/06 was very clear that if federal or state funds are cut, that a program would have to be eliminated. I wasn't clear on what this "eliminating programs" actually meant, other than those types of programs impacted by funding sources. So that's why I wanted to be clear on what you actually meant in this particular paragraph. And I have a question. I think the Operation Smooth Street is a really good idea. I think what helps customer satisfaction, or citizen satisfaction, is that potholes are filled in a timely fashion. It is good to have the project. But if it is going to still take a month or more to fill a pothole, then that continues to be a problem.
I would like to have the managing director talk about that more. Because they are not just making a commitment to fill them, but they have a whole program associated with that. 62 RESOLUTION NO. 060019 - 2/14/06
Pedro Ramos, Managing Director. Councilwoman, we announced Operation Smooth Streets, which has a couple of different components. Let me first start by answering your question directly. The new service standard for the Streets Department will be to fill potholes, on average, in one day, instead of two or three, and in some cases five now; and ditches, which are caused usually by utility companies, within 30 days, instead of the average time now, which is about 90. So the way we are implementing this is starting, in fact, this spring, in Fiscal '06, targeted for some time in April, we would first attack the backlog of potholes and ditches over a 100-day period, and try to eliminate as much of the backlog as possible. Then keep that new higher service standard of repairing potholes on average in about a day and ditches in about 30 days. So this is about catching up and keeping a higher standard starting this 63 RESOLUTION NO. 060019 - 2/14/06 spring.
That's really good. Are you going to hire additional employees or do it with the same work force?
Yes, the budget includes additional staff to do this. In fact, yes, it does. The impact, I believe, is 2.3 annually.
You are welcome. The Chair recognizes Councilman Nutter.
Thank you, Madam Chair. Good morning, Ms. Wilkerson and Ms. Reed. I want to go to Page small I in the Five-Year Plan. There is a statement in the overview which indicates that the priority of this 64 RESOLUTION NO. 060019 - 2/14/06 Administration has been and will remain tackling core citizen needs, revitalizing neighborhoods in decline, improving public schools, strengthening families, attracting businesses to foster economic growth, ensuring public safety and high quality of life standards in every community, and, to the extent possible, reducing the local tax burden. Can you lay out for us what the overall strategy is for retaining existing businesses, attracting new businesses, and the various incentives that are offered?
Good morning, Councilman. Stephanie Naidoff, I am the City Representative and Director of Commerce. Your question was, what are our strategies with regard to business attraction and retention?
We have multiple 65 RESOLUTION NO. 060019 - 2/14/06 approaches to that. In business retention, we have a committee that, as you know, has been meeting for several years now and has been extremely successful in retaining -- I think the number at this moment is about -- 97 out of 98 businesses. We approach each --
These are companies of varying sizes. We tend to concentrate on the medium and larger size companies. As their leases are coming due in the next year or two, we begin to work with them and help them identify locations in the city, either in their current building or in other buildings, where they might retain their offices. In some cases they need space to grow, and we work with them. We work in that capacity with PIDC, the Chamber of Commerce, and Innovation Philadelphia, and the Governor's Business 66 RESOLUTION NO. 060019 - 2/14/06 Action Team. And we have been very successful so far in that effort. We continue to do that today. There are not as many companies. There was a bulge for a while, and there are not as many companies right now whose leases are coming due. But, we are continuing that effort.
And what's the strategy on the small business side, the people who don't usually get that kind of attention?
Well, the small businesses get a fair amount of attention, as well. Much of that work comes through our Mayor's Business Action Team, which is in our department, and works with the small businesses throughout the city on a geographic basis. We have people assigned by geography. And they go out and they try to relate to the businesses the fact that we have the services within the department that can assist them in working through whatever issues they have with the city. 67 RESOLUTION NO. 060019 - 2/14/06 So we provide a fair amount of effort in that regard, as well.
And what was that number you indicated, 80 out of 90 or --
I think the current number is 97 out of 98. I would have to get the number from the chart.
And what incentives, if any, were offered to the 97 or the 98?
Well, the interesting thing about it is that, in most cases, we have not had to offer incentives. What many of these companies are looking for is just the assistance and the expression of interest by the city in retaining them, in keeping them here, and helping them grow.
We have. We have offered incentives. But my point is that, in most cases, we have not had to offer incentives. 68 RESOLUTION NO. 060019 - 2/14/06
Well, let's talk about the ones where you have. How many were offered, and what were they?
I would have to get the numbers. I don't have that information with me.
We can generate a report identifying the business and the exact dollar amount or other incentive provided. I know that sometimes the incentive is simply letting people know that we have a job tax credit program. Sometimes the incentive is something that comes out of the renewal community. But, we will gather all of that together.
You will be able to list each business and what the incentive 69 RESOLUTION NO. 060019 - 2/14/06 was?
I guess still, probably, for Ms. Naidoff. Do you believe that the city's tax burden is in any way an impediment to this city's ability to retain or attract businesses?
What we are finding as we talk to businesses is that there are many other factors that they consider to be more important to them than the tax structure. And high on the list is the quality of life that they believe Philadelphia offers to their employees.
The fact that it is an attractive place for them to -- for hiring 70 RESOLUTION NO. 060019 - 2/14/06 purposes and recruitment purposes; and they are able to find an adequate supply of workers for their businesses. So they find the city a very attractive place to be.
For some of the companies, they talk about issues of the access to the colleges and universities; they talk about the size of the knowledge worker pool that they can draw on; they talk about issues of disruption; as well as other kinds of things that might not be as positive, but are certainly not related to the tax structure. And all of those seem to be higher on their list than the tax structure.
And, I mean, this is from interviews or anecdotal reports? I mean, have they issued a statement saying that they don't care about the tax 71 RESOLUTION NO. 060019 - 2/14/06 burden anymore?
No, I don't think they would say that they don't care about it. But I say that there are other issues they find more important in making their decisions about staying in Philadelphia.
Councilman, your time is up. Thank you. Councilman Kenney.
Thank you, Madam President. Based on that last conversation, I would really like to see something in writing that would quantify what these interviews or polls have been with these businesses. We don't even need the names of the businesses. I would just like to see something that's been quantified that taxes aren't the major issue in whether they stay or not. Let me move for a minute to the prison population. On Page XIII, the Administration states that, quote, Based on current trends, the growth rate for the prison 72 RESOLUTION NO. 060019 - 2/14/06 census is estimated to be about percent a year from FY '07 to FY '11. A study conducted by Temple University's Crime and Justice Research Center is currently underway to determine strategies for managing the population for early release and other alternatives to incarceration, as appropriate. Recommendations are expected in early FY '07. But on Page B-6 of the plan, the Administration states, quote, The city is projecting no annual growth in the prison population over the life of the plan. How is this a realistic assumption? And what funding has been included in the budget and plan for these alternatives to incarceration programs?
Councilman, we are assuming that the city will be able to manage the prison population through alternatives, which will help keep recidivism down --
To a 4 percent level? 4 percent coming in and a zero gain?
We are actually assuming that we can keep it level. However -- 73 RESOLUTION NO. 060019 - 2/14/06
I am sorry. I just want to make sure the record is clear. In one part of the plan it says it is estimated to be a 4 percent a year growth rate. But on the other section of the plan, it says the city is projecting no annual growth in the prison population. So what that means to me is, if we are having a 4 percent growth rate coming in, we are having a 4 percent exit rate coming out into alternative programs; is that another way of saying it?
I think the right way of saying it is that we do not assume that there is growth in the prison population.
It says an annual 4 percent a year growth rate. And now it says we are projecting no annual growth in the prison population. So all I can assume is, of the 4 percent you are expecting to come into the 74 RESOLUTION NO. 060019 - 2/14/06 system, you are expecting to be able to deal with percent of them exiting the system 4 based on different types of incarceration methods.
We have some growth for '07. After that, we are not assuming growth. The city can't continue simply assuming that the population is going to grow. We don't project building more prisons. One of the reasons why we have put so much energy into the work of the task force -- and Pedro can talk more about that -- is because we think that there are diversional alternatives; for example, looking at the population and making sure that we are not housing scofflaws.
Absolutely. All I want to understand in my mind is, on the part of the plan that says an estimated -- prison census is estimated to grow 4 percent a year from FY '07 to FY '11, but the city is projecting no annual grow in the prison population in the life of the plan. 75 RESOLUTION NO. 060019 - 2/14/06 I mean, they are two mutually incongruous statements, unless you are willing to say that 4 percent of the in-comers are exiting, and an equal number to the 4 percent exiting as a result of different types of monitoring. And we have no money. What funding has been included in the budget for these alternative incarceration services, which I assume have some costs associated with them.
Pedro Ramos, Managing Director. Councilman, if I could address your question, which may be reading this in a very literal way. Growth is projected in '07. The other part of what you read alluded to a prison population study that's being conducted now not by the prisons, but collectively by the prisons, the courts, including probation, parole, the District Attorney's Office; in essence, the organization -- the group that gets together chaired by the City Solicitor called the Criminal Justice Coordinating 76 RESOLUTION NO. 060019 - 2/14/06 Committee has commissioned this. Everybody being on the same page to address whether there are things we can do to better manage the prison population, better meet the needs, other than growing prisons, building prison space at a rate of 4 to 5 percent a year in perpetuity; which, if taken also to its literal and mathematical extreme, means we all end up in prison.
So the types of things -- and I don't want to speak for any of the partners around the table. Because you can imagine the achievement of getting all these disparate partners around the table on the common goal of looking at prison population management. But it may involve that we as a city have to come back and look at what we do differently on our side. It may be presentencing guidelines, and things like that.
I agree with all 77 RESOLUTION NO. 060019 - 2/14/06 of those methods.
So beyond '07, what we have said here is, there is this process going on now. We projected for '07. There are classes scheduled within the prisons. And we are not committing that the only solution is to just expand in perpetuity.
No one is even talking about that. I think those alternative programs and pursuing them are critical to managing this whole problem that we have. But how can you realistically assume that over the life of the plan, with the exception of '07, the prison population has no 17 growth? I mean, that's not realistic, is it?
What's been stated in this financial document, I think, or at least intended, is that, in the out years, we have not conceded that we have to grow the budget in a proportionate way to the population. It may just be, you know, articulated in a way that's not sufficiently nuanced. 78 RESOLUTION NO. 060019 - 2/14/06
I think this is one of those areas where the plan has inherent in it risk. That as we get closer, you know, as we start putting together the next plan, you know, we will have a better opportunity to say, you know, did the study yield anything for us; you know, do we need to go on and begin growing it. You know, it is one of those areas where you have to be mindful of the risk, but you don't necessarily need to put an exact dollar figure in for it.
Thank you. Ms. Wilkerson, on Page C-4 of the plan, you talk about the FOP contract award for its health and welfare. What is the status of your appeal?
For the FOP, that was filed yesterday. The Administration --
It was filed 79 RESOLUTION NO. 060019 - 2/14/06 yesterday. The City Solicitor can talk about it.
I am just curious to know. MR. ROMULO L. DIAZ, JR.: Romulo L. Diaz, Junior, City Solicitor. President Verna, as the Chief of Staff indicated, we did file that appeal yesterday from the arbitration panel ruling, and we will pursue that. Obviously, we don't have further information about the results.
Well, I am just wondering what the impact to the proposed Five-Year Plan would be if you lost the appeal.
The award that the FOP got was approximately $45 million over and above what was budgeted in the '06 to '10 Five-Year Plan. You know, these arbitration awards are an area of enormous risk for the city, enormous risk and exposure. We are currently in arbitration with the firefighters. And, you know, we will be 80 RESOLUTION NO. 060019 - 2/14/06 fighting hard not to have the same magnitude of benefit increase that we saw from the arbitrators in the FOP. But, you know, they are a source of risk for the plan.
That's a sizable amount of money. And my question is, how would you propose to bring the plan into balance, if you lose this appeal?
We will have to get back to you with exactly how we would accomplish that. You know, as Ms. Reed testified, it is not only the arbitration awards, but it is the reopeners for 33 and 47. And then, you know, it's two years out, I guess, we will be back at it with some of the unions. And this is an area of concern. The health and welfare components are particularly difficult for the city. The FOP, I guess, got a 15 percent increase in its health and welfare benefits in just one year. You know, so we are working hard 81 RESOLUTION NO. 060019 - 2/14/06 trying to better manage those costs and are being aggressive in our arbitration, and have also decided to pursue the awards in the courts.
Okay. I have several other questions, but there are a number of Council Members that would like to be recognized. So at this time the Chair recognizes Councilwoman Brown.
Thank you, Madam President. Two additional followups with regards to the youth-related programs. Where, if any, is all of the after-school programs happening in the city? Is there a clearinghouse for the location ID of all the after-school programs between DHS, the rec department, and the school district?
Cheryl Ranson, the DHS Commissioner, will talk about that.
Good morning. I am Cheryl Ranson-Garner, 82 RESOLUTION NO. 060019 - 2/14/06 Commissioner for DHS.
Good morning. The managing director spoke in some detail about the number of youth-related programs. And I am curious to know now where is the linkage is with after-school programs? How are they tied into the Youth Violence Reduction Program, the Adolescent Reduction Violence Program and Operation Safe Schools?
With regard to the AVRP, the adolescent project, we will be using various DHS youth-development programs for the children that don't meet the level of warranting that type of service. AVRP will be for children 10 to 15 years old. There will be an operations committee, an intake process and an operations committee, to approve those children for that service. Those children that are not approved means they are not at as high a risk, and they will use the other DHS programs; such as, after-school beacon programs. 83 RESOLUTION NO. 060019 - 2/14/06
So it would be DHS who principally is responsible for referring those young people to the beacon and after-school programs?
Is DHS the clearinghouse for all after-school programming?
DHS manages and pays for all the after-school programs. Safe and Sound does some of the managing of those programs for us, the after-school programs.
When you say DHS manages our after-school programming, that includes those run by the rec department, as well, or housed in recreation centers?
We have also programs that run in school district buildings.
That means we pay the provider to operate the after-school program in a school district building.
Explain to me the relationship between DHS and Safe and Sound.