Safe and Sound is a contractor of the Department of Human Services. And it does many services, one of which is, manages the contracts for some of the after-school programs around the city.
The coordination 85 RESOLUTION NO. 060019 - 2/14/06 comes out of the Department of Human Services.
DHS Commissioner, myself, responsible for that contract.
Quite all right. So with regard to the quality and standards running of those programs, that, too, is the responsibility of DHS?
Yes. The contracts do have standards for -- after-school programs have standards, in terms of how they are to operate. The youth development programs have standards, as well.
All right. Then I would like to thank you, Commissioner. I would like to shift my questioning to behavioral health services for children, if I may. 86 RESOLUTION NO. 060019 - 2/14/06
The City saved $45 million in FY '06 by changing how children receive behavioral health treatment services. Share with us how that happened and what kind of assurances are in place to ensure that quality continues in spite of that savings.
I am Dr. Arthur Evans, Director of the Department of Behavioral Health and Mental Retardation Services. That's referring to the process that we went through with our sister agency, DHS, called MA Realignment. 87 RESOLUTION NO. 060019 - 2/14/06 Essentially what happened was, the state, the Department of Human Services, has traditionally paid for residential services. 100 percent of those dollars have been state dollars. In an agreement with the Department of Public Welfare, we, the state, wanted to change the funding streams to a funding stream that would provide federal match. And so, essentially what we did was to convert those services from services that were 100 percent funded through DHS, to services that were Medicaid-eligible services, which would allow the state to draw down federal revenue. And so, essentially, the state was able to cost shift and potentially save dollars in that.
The services remain intact. And, in fact, the services were enhanced. Because once we made those services Medicaid eligible, we have higher standards 88 RESOLUTION NO. 060019 - 2/14/06 for those services, higher standards in terms of the amount of treatment that children receive in those facilities; as well as higher standards in terms of the number or the type of qualifications that people have to provide those services.
And, again, what is the tie-in with the school district?
Well, it doesn't tie in directly. I mean, one of the challenges we have in doing this, and in putting children in residential care, is what happens with them once they come out of that care. And, so, we are in the process. As you know, the Mayor recently appointed a Blue Ribbon commission to look at children's behavioral health. And one of the issues that we will be looking at is a whole issue of what is the continuum of services that children have to have to be successful in the community once they leave these kind of facilities.
Okay. The bell 89 RESOLUTION NO. 060019 - 2/14/06 has rung. Thank you for your testimony.
Thank you. Let me just stay on that, Dr. Evans. So now the services are -- you work in collaboration with DHS on providing -- or, you provide the services through your department?
We fund the services. So we have contractors that we fund the services.
Okay. But if the child is under the supervision of DHS and needs those services, you provide the services? There is a relationship?
Pretty much. Because of the complexity in the funding streams, there are cases where we fund totally those services, there are cases where we have to joint fund those services because of the nature of supports that children need. But we work very closely with DHS. We actually have staff that are co-located at 90 RESOLUTION NO. 060019 - 2/14/06 DHS to facilitate that process.
Thank you. Ms. Wilkerson, let me just go back to this whole issue of your assumptions relative to the strategies from Harrisburg. You talked about the reimbursement for salaries and benefit of social workers from 80 percent to 100 percent. And do you know if any of that was in the Governor's budget?
I don't believe it was. We have not -- I don't believe it was. We have not gotten the analysis of the Governor's budget yet. That's going to be, I think, a huge issue for the city; you know, taking a look at that, figuring out what it means. Last year that ended up being a big issue for DHS and all the social service agencies in the city, but it is still too early for us to be able to comment on that. I do not believe the social worker subsidy was in there.
So what are we 91 RESOLUTION NO. 060019 - 2/14/06 doing to kind of assure that this assumption will be a real assumption? What is our strategy from the city side?
Last year George Burrell testified. We have a number of lobbyists, both at the state and the federal level, that work with the city on various initiatives. We managed to get the adoption subsidy through the House. We will continue to work on that. The DHS, or the social service people, can talk about how they work collaboratively with others. I forget what the name of the organization is, but they work collaboratively across the state with other jurisdictions that have similar issues. So we will continue to work around the adoption subsidy issue. We will continue to lobby around the social worker issue in order to try to increase the amount of reimbursement we get from the state around these issues.
Excuse me, Councilwoman. Councilman Rizzo, did you want to be recognized?
I just have a point of information. For a long time I have asked the question, who are our lobbyists at the state and federal level. And I have asked Joe Grace, I have asked numerous times for that information. We have no clue who our lobbyists are. Because there are issues that sometimes we need some assistance with, like the State Police issue, et cetera, and we have no clue who the lobbyists are. So could you submit to the Chair who lobbies for the state and who lobbies at the federal level, so we know who we are dealing with here?
Yes, we will do that. It is also, I think, identified in the budget detail. But we will pull it 93 RESOLUTION NO. 060019 - 2/14/06 together, so you can find it easily.
So how long have we been in negotiations to get this reimbursement to the 100 percent level?
I think we have carried this initiative at least two years. I would have to check. At least about two years, I think.
What would be the impediment to the state agreeing to this, and at what point do you drop the assumption?
I think the impediment is a cost impediment. And, you know, we will have to make a decision at some point. We got some movement on the adoption subsidy. If we don't get any movement at all, you know, on the social worker reimbursement, we will at some point drop it. 94 RESOLUTION NO. 060019 - 2/14/06 I think that there is a lot changing with a lot of these issues. You know, when you look between what the President is doing with the federal budget, what's happening with the state budget, I think there is going to be a lot of change in the social service arena. So we are going to have to spend time looking at the state analysis. We have already begun conversations with the federal lobbyists about what's happening with TANF dollars, what's happening with all the programs that impact the families that we assist. And, you know, we will get back to Council when we have that information, so we can figure out what to do and what's realistic, what's not likely to happen.
You say the plan assumes a hundred percent reimbursement beginning in '07, generating $22 million in revenue over the life of the plan. I guess I ask the same question, because I have in my notes underlined here, if that is so tenuous, why would we make that 95 RESOLUTION NO. 060019 - 2/14/06 part of our assumptions, when, I mean, we have to rely on the federal and the state? I mean, that is really speculative.
I think the social worker begins in '09 and the adoption, I think, we have as an '07. I think that was in part because we had been successful in moving it through the House and are working actively on trying to get that passed through the Senate.
Then we will have to make adjustments in the Five-Year Plan to reflect that that revenue did not materialize. There would be reductions proposed in the budget for '07 in the Five-Year Plan for the out years.
We will take a look at -- I mean, there are always changes that we don't anticipate. Sometimes revenue will have come in 96 RESOLUTION NO. 060019 - 2/14/06 more strongly, you know, either because the taxes are up or because we have sold more properties, or, you know, there are any number of things that can enhance revenues. Sometimes expenditures don't materialize. You know, things that we thought we were going to have to pay out, don't occur. And, so, when the time comes, we will look at the Five-Year Plan and make a judgment call about, you know, what to do.
Good afternoon. COMMISSIONER KELLY: I just have a quick question here, and I apologize if you have already answered it. But I was a little concerned that your fund balance that you are projecting for Years '07 through '11 is contingent upon PGW's repaying $45 million. What assurances do you have from PGW 97 RESOLUTION NO. 060019 - 2/14/06 that you are going to ever receive any of this $45 million?
I think PGW continues to be an enormous challenge and risk for the city. The company has collections up in excess of 93, I think it is probably much closer to 94, percent. The company -- or, the state for the first time has appropriated over $20 million for LIHEAP money. We will get a part of that in Philadelphia. We are lobbying hard for additional LIHEAP funds at the state level, together with a lot of other jurisdictions. But PGW is an enormous risk for the city. As the cost of natural gas escalates, you know, that's a real problem. You know, when you ask the people at PGW, they think they probably have the capacity to repay it. What it means is, they will have to borrow off their line of credit. And, you know, then their costs go up. And that gets passed on to, you know, to 98 RESOLUTION NO. 060019 - 2/14/06 the customers.
So this would definitely have an impact, then, on the Years '10 and '11?
If that money doesn't come in -- I mean, that's one reason we have to carry balances of at least that amount, at least the 45; so that, if PGW doesn't repay, we will be able to address that. The other -- you know, PGW has strategies, you know. I know it is not popular, but the L & G facility would offer PGW some, you know, some relief. You know, we are looking at a number of things that might be of assistance to the company.
What would you say that -- or what the Administration would be favorable to eventually selling PGW at one point?
Yes. 99 RESOLUTION NO. 060019 - 2/14/06 You know, the Mayor has long advocated disposing of PGW. The challenge is finding a buyer that will compensate us fairly for it. But we are always out there looking. We are in conversations with the Commonwealth and various other members of the state legislature about the possibility of a state authority. So we are leaving no stone unturned with respect to PGW. It is a huge challenge for --
It certainly is, with the deficit that they are showing, that they have to do something about that.
It is a huge challenge that, unless something changes fundamentally, it is going to be just an ongoing and untenable risk for the city.
I have another question here, Ms. Wilkerson. On , you said that the city has been successful in shifting hundreds of millions of dollars in costs to state and federal sources over the past decade. You also assume that further such shifts are 100 RESOLUTION NO. 060019 - 2/14/06 contemplated. Could you be more specific of where you are going to ask the federal and state government to --
John, do you want to talk about programs that have shifted? Do you want to talk about some of the social service programs that the city historically has funded?
And you also say that the negative outcomes in any of these, I guess, support from the federal and state level, that you would have to pursue alternate contingencies. I would like to address that, also.
If you want to talk about some of the shifting, and then we can talk about what we will do, if we don't get some of it. John.
John Zanier, Finance Director with DHS. Over the last several years we have taken the opportunity to fund most of our prevention, $80 million of that, by the TANF 101 RESOLUTION NO. 060019 - 2/14/06 surplus, the federal TANF surplus, that we built up over the state. We have also sought funding through the medical assistance realignment, where we have used Medicaid dollars to offset children and youth costs which the city would have had to bear.
I think one of the challenges that we face going forward is this TANF. And Pedro has become a student of the DHS budget. But one of the challenges -- and I will ask him to come forward -- one of the challenges we face is that, you know, the TANF dollars that had been available, that had built up over time from the federal government, are being reduced. And those are the dollars that the city has used very creatively to support prevention programs, like our parenting programs, and they go on and on. If those dollars aren't forthcoming, those aren't mandated services, and we would be forced to look at some of those programs 102 RESOLUTION NO. 060019 - 2/14/06 for cut. And Pedro can go into those in more detail.
And the alternate contingencies would be cutting some of those programs?
Pedro Ramos, Managing Director. Councilman Kelly, the background here is that, it starts with the whole Welfare Reform, Welfare To Work efforts at the federal government, where states and local governments, through the states, were getting their dollars bundled. The city over the last many years really became a leader in using those funds for prevention programs, meaning more than just the mandated services to provide sort of, you know, remedial or reactive assistance to kids; but provide for programs that kept kids from getting into higher levels of need or court supervision. Those federal dollars, now called TANF dollars, are now drying up. Last year 103 RESOLUTION NO. 060019 - 2/14/06 the state in its budget provided for the elimination of TANF dollars with some transition. We talked a lot in here last year about those transition dollars. And last year, although it wouldn't have been our preferred way of dealing with part of that transition, we ended up conceding with the state that, for last year, some of the city's match would come from behavioral health reinvestment dollars. The city has been very committed to these prevention programs, and sort of the funding for them continues to go away.
While it is interesting to know that a lot of these are mandated programs, but not necessarily funded programs by the federal or state governments.
And one of the things that's happened, Philadelphia was affected a little differently than the other counties. What the other counties were using TANF dollars for was juvenile justice. One of the reasons we don't feel completely alone in this statewide is that other counties were 104 RESOLUTION NO. 060019 - 2/14/06 using TANF dollars for their juvenile justice needs, so those counties are also feeling this pretty hard. And although they tend to be on a calendar year fiscal year, on January-December fiscal years, rather than our July-June fiscal years --
I guess I will try to wrap it up by saying, one of the things that makes this a little different than where Philadelphia usually finds itself in these battles statewide is that, other counties had become equally dependent or very dependent on this source of funding.
Madam President, I just have one quick question, that's all. It is just a followup. On the current Governor's budget --
Councilman, 105 RESOLUTION NO. 060019 - 2/14/06 everybody has been abiding by the five-minute rule, so I am not going to break it now. Thank you.
Thank you, Madam President. I apologize. I knew I was coming up soon, but I got a call that I had an emergency, my wife was waiting for me upstairs. When I went upstairs, there were four guys were singing a cappella wishing me, on behalf of my wife -- I am not going to say anything. But, nevertheless, my heart is still around my knees, but I thank her so much. I feel the same way about her. Anyway... I agree that we are entering into a new era in Philadelphia. Or at least particularly in the last few weeks, where I have had the opportunity to travel throughout the city, I have run into many of my colleagues in doing so and many people in the Administration. 106 RESOLUTION NO. 060019 - 2/14/06 It is good signs of good times to come in Philadelphia. And we have seen 30 percent of the average home -- or the appreciation of the average home up by 30 percent, up 37 percent in FY '05. 2 million and beyond. But with all these things -- and I am part of selling the City of Philadelphia to all who wants to move into Philadelphia; whether it is a person looking for a new life or a businessperson trying to do business in this city. I see my role as an at-large member of this Council to help open up doors. Nevertheless, last night I took a look and see where our homicide rate was at. I believe it was at 39. I sure hope it stops 107 RESOLUTION NO. 060019 - 2/14/06 there at 39. When people still come and are looking for a new destination point and hear all the very positive things about Philadelphia, still this 39 number, and this homicide number, is scary. And I know that this Administration and the members of Council, we are all involved directly in some facet of addressing this problem. Just yesterday Councilwoman Donna Reed Miller and Marian Tasco held hearings on something called Blueprint For A Safer Philadelphia. It was very, very impressive. The people involved, the experts that came together, the members of the House, particularly Dwight Evans, and others have come together, the city unveiling its program just a couple of weeks ago, and the new initiative of the police department and the call for citizen involvement. And in this whole thing we see in the budget that the Administration wants to appropriate $10 million for more police 108 RESOLUTION NO. 060019 - 2/14/06 activities, but it is in the area of overtime. I wanted, I would like the Chief of Staff to -- I know that you have addressed this before, and the Mayor has explained it, and I have heard it. I would like you to do it again, though. Why are you doing million in 9 overtime, versus $10 million worth of new, of 10 additional police officers? As a person that worked out in the street as a construction worker, after -- we are always looking for overtime. And it was like an adrenaline rush when your boss would tell you there was OT, you know. But I do know that, after a while, overtime weighs on your mind and your body. And what I realize is that, over a period of time, I had to reconsider taking all this overtime because physically it was just draining, it was hurting. And then after a couple of hours, I'm not as good, you know. And I am not comparing myself to police officers. Their job is -- the strain and the life-and-death 109 RESOLUTION NO. 060019 - 2/14/06 situations that they live every second that they are out there protecting us is a different environment. Nevertheless, I think that you might get, in some instances, people that are working overtime that are not at their best. You know, people are at their best at the start of their shift versus the end or the added time or the additional time that they have to work. Although most, you know, overwhelming cases people will definitely take the OT any time. But if you can just explain to me, you know, your rationale in doing overtime, $10 million worth of overtime, versus maybe $10 million of additional police officers.
I would like to draw on the wisdom of our Managing Director, Pedro Ramos, to address that.
Pedro Ramos, Managing Director. Councilman, I think there are -- foremost, if you are going to spend an 110 RESOLUTION NO. 060019 - 2/14/06 additional $10 million on a specific effort, and try to prioritize how -- the impact of that $10 million, let's take, for example, our continuing efforts to prevent and reduce the amount of violence, then simply doing it as overtime gives you a lot more flexibility in using the limited resources you have towards the specific objective that you have laid out; in this case, violence reduction and prevention. It gives the Commissioner a lot of flexibility in doing that, as opposed to having to spread the $10 million systemwide. The other is, quite candidly, that if you were to try to scale up every time you -- if you tried to scale up your police department now in huge numbers -- as you know, we are budgeting on a five-year basis, and the impact of that has sort of an exponential effect. This is a way that we have been able to provide the Commissioner, at least for the fiscal year, a fair amount of support and flexibility. 111 RESOLUTION NO. 060019 - 2/14/06 And this is something that we monitor not just, you know, annually or quarterly; the Commissioner, the Mayor, and I get together on a scheduled basis every week. And the Part One crime numbers and other kind of high-level data of the police department is something that I look at first thing every morning after I have looked at the weather forecast. I know you really like my long answers, and have for many years. The short version of the answer is, it provides greatest flexibility and impact for the fiscal year.
It is, essentially, a matter of costs. And you think that doing it this way, you do not have to then increase the budget of the police department for new hire of police officers, but you also are saying that you can do this effectively with officers working overtime; is that correct?
It is the most effective use of that resource. It is immediate, because it is 112 RESOLUTION NO. 060019 - 2/14/06 officers now; and it is where you want them and need them and how you need them. The Commissioner, you know, during the police department's budget, can talk more about it. But it greatly enhances his ability in this safer streets initiative to put resources where he wants them.
Thank you, Madam Chair. I would just like to finish the one question with -- I don't know if Ms. Naidoff is still here -- where I left off, and then I can move into another area.
This is not 113 RESOLUTION NO. 060019 - 2/14/06 charged to my time, is it?
Council will stand in recess for ten minutes. (Short recess.)
Council is now back in session. Ms. Wilkerson, please approach the witness table. The Chair recognizes Councilman Nutter.
Thank you, Madam Chair. I just wanted to finish this particular area. Ms. Naidoff, you mentioned that there were numerous other interests that businesspeople may have outside of the tax area. And I would certainly agree that the business community is not a monolithic place or that there is only one factor that affects what business does. On the other hand, I think you participated in more than a couple of hearings 114 RESOLUTION NO. 060019 - 2/14/06 here. So why is it that you think that the leading small, medium, and large businesses in Philadelphia keep talking about the need to reduce the tax burden in Philadelphia, if, in your opinion, it is not that high up on the list?
Councilman, I can't really address that other than to say that, there are people who are talking about it. But I think that, in our conversations on the issues of business attraction and business retention, as we have discussed with those businesses the reasons they want to stay here, the reasons they want to grow here, they mention many other things, other than the taxes.
So, therefore, why did the Administration put forward another reduction in business taxes?
The Mayor is committed to reducing taxes on a reasonable, fiscally responsible basis over the years as the revenues and the financial picture of the city permit. And I think that's a good strategy. 115 RESOLUTION NO. 060019 - 2/14/06 And I think all of the businesses would appreciate that, but I don't think they make their business decisions about location on that basis.
Right. Which, of course, would beg the question, if you don't think that that's an important factor, then why would you put forward additional cuts? I mean, your argument doesn't make any sense.
Well, I think what I am saying is that, it is not at the top of the list. It is not the one that they find drives their business decisions. I think everybody would like taxes reduced, when that's possible and when it doesn't impede the delivery of good quality services.
How did you decide on the $5 million figure? 116 RESOLUTION NO. 060019 - 2/14/06
We thought that's what the city could afford; that, on top of what was already scheduled. You know, the Mayor's approach has been one of tax reductions, strategic investments, you know, quality city services. And we were able to craft together a Five-Year Financial Plan that we think allowed us to do more in terms of, you know, this one-time acceleration of the tax reduction. In part because of the fund balance, you know, what's happening with the real estate transfer tax.
So you do think it is important. Well, the fund balance is not only up because of the real estate transfer tax; right?
One of which would be increased Business Privilege Tax receipts?
That, the real 117 RESOLUTION NO. 060019 - 2/14/06 estate transfer tax, expenses that are less than projected. I mean, there are a whole host of reasons for the fund balance.
So lastly in this area, it continues to be true -- and we went through this last budget cycle -- that even with continued cuts in Business Privilege Tax, part of the reason that the fund balance is up is because we have had increased receipts from the Business Privilege Tax; is that correct?
Probably that, the real estate transfer tax. Most of our tax revenues I think are up; it is not just one tax.
I am reading from Page II. "Continued improvements in economic growth in corporate profits helped FY '05 Business Privilege Tax revenue grow by $70 million above the FY '04 amount."
So we have been cutting Business Privilege Taxes, but one of the reasons we have so much money is because Business Privilege Tax receipts have grown.
So it has not created, as has been characterized in the past, that somehow reducing these taxes will cause a cataclysmic demise of the government?
I think that, you know, you reduce taxes, I don't know that we have a correlation between reducing the taxes and growing the -- let me have Sean track this. MR. McNEELEY: Councilman, good afternoon. Sean McNeeley, Director of Policy in the Mayor's Office. Councilman, there are several factors involved in your question. One is that, you are talking about the rate of growth in the tax base and you are talking about the magnitude of the tax reduction. To date, the size of the tax 119 RESOLUTION NO. 060019 - 2/14/06 reductions has been fairly modest, compared to some of the reductions that are scheduled for future years. And economic growth has been such in most years that the BPT has grown. It declined in '03. It declined in '98. So it is not true that, in an absolute sense, tax reductions have never impeded revenues.
Well, I think, one, I didn't necessarily say that. But, two, I think your own revenue figures show that, with the exception of a couple of anomalies, you have not had this proportionate decrease in revenues, even though the rates were going down. But I am sure we will have more fun with that one during the Operating Budget process. I will come back, Madam Chair. Thank you. But, I am finished for now.
Thank you, Madam 120 RESOLUTION NO. 060019 - 2/14/06 President. Let me go back to prison for a minute. On Page XI of the Five-Year Plan, it says, "Obtaining medical reimbursements for hospitalization of inmates. One of the fastest-growing areas in the city's budget is the cost of medical care for inmates in the Philadelphia Prison System. The prison system's health contract has increased from less than $24 million in FY 2000, to more than $50 million in FY '06, a percent annual 13 increase over the six-year period. "One of the costs in the contract that is the most difficult to control is that for hospitalization of inmates. The U.S. Department of Health and Human Services issued a letter indicating hospitalization costs for inmates may be eligible for MA reimbursement, as long as it is not precluded by state law. "In order to pursue getting these costs reimbursed through MA, the city has requested an opinion from the Commonwealth to confirm its understanding of state law and is working with the Commonwealth to implement 121 RESOLUTION NO. 060019 - 2/14/06 this initiative; however, the plan assumes no 3 revenue from this initiative at this time." Could you give us an update as to what we're doing to try to get reimbursed for medical assistance. And, also, as the Commonwealth of Pennsylvania has, and as the State of New Jersey does, have we considered any type of modest co-payment for services in the system? I know that, like I said, Commonwealth of Pennsylvania does it, New Jersey does it, and everybody in the general population does it. And I recognize the inability to get a large co-pay from people who are incarcerated. But I understand that the co-pays in both Pennsylvania and New Jersey are modest, 1, 2, 3 dollars for doctor's visits and prescriptions. And they have found, my understanding is they have found, that it reduces the number of inmate calls daily to the doctor's office in the facility. Is that a way to manage costs? And 122 RESOLUTION NO. 060019 - 2/14/06 can we look at those other states and see what they have done, and try to mirror what they have done?
Romi Diaz will talk about where we are in negotiating with the state for reimbursement, and then the Managing Director will talk about what we are doing in the prisons.
I can answer that question very quickly. It is something we are actually examining right now. So we don't have an answer about whether we will recommend going forward with co-pay, but we are looking at it.
What are you crunching at this point? Because I would make a formal request. I made a request through the system. 123 RESOLUTION NO. 060019 - 2/14/06 And I am waiting. I assume I am going to get an affirmative response to my request. But I would like to make a formal budget request now relative to the number of inmate sick calls or visits monthly, the number of prescriptions prescribed on a monthly basis, the number of inmates taking prescription medication, and the cost of sick-call visits monthly, and the cost of prescriptions monthly. Now, I recognize that HIPAA is an issue here. But I am not looking for names. I am not looking for what he is prescribed. I just need raw numbers on what is --
I am hoping that somebody captured the list or I can get it from you.
You can respond to me as a result of the normal budget request, information request. And, Mr. Diaz, if you can give me an update on the MA reimbursement issues.
Actually, I would like to address two points in connection with your 124 RESOLUTION NO. 060019 - 2/14/06 question. The first is that, there was a recent court decision by Commonwealth Court which, I think, is a potential basis for reducing costs to the city with regard to detainees and others who might receive emergency services. The court decision basically determined that there is a responsibility inherent in emergency service providers, such as hospitals, that is independent of any responsibility of the city. So we want to take a closer look at that and the implications for the budget. With regard to the MA realignment and the other related social services budget issues, we have got three budget years currently in negotiation with regard to the state; that's FY '05, '06, and '07. We have administrative appeals pending with regard to the first two years, and we have then the process underway in connection with '07. We don't have a clear answer yet, 125 RESOLUTION NO. 060019 - 2/14/06 but I would be pleased to provide a response for the record giving a clearer picture of when we will have expectations of determinations on that.
Councilman, I can supplement the answer, at least to the part of your question with inpatient -- reimbursement for inpatient hospitalization in the prison. Spring of 2004 or 2005? Spring of 2004, we met with the Secretary of DPW and Governor's senior policy and government officials, and had a discussion about a new idea for -- that Philadelphia -- that hadn't been explored in this area; which was whether our inmates, when they received inpatient care at a hospital, are eligible for MA. The law department had researched the issue before that meeting. When we met with the Secretary of DPW, it was her impression that any impediment to that would be an issue of federal law, but that the state plan would permit it. We went back and we believed that inpatient hospitalization is eligible for MA 126 RESOLUTION NO. 060019 - 2/14/06 reimbursement, and that the state plan permits it. We have been looking with the state at what proportion of our population that would affect and what the dollars would be. For the state, it is sort of just a matter of, you know, one pocket -- for the state it has implications, because they are the payor for those non-federally eligible. We are finding that there may be more federally-eligible people than we had done in our initial sample. This discussion has been going on a very long time with the state. And what I think that language is referring to that you quoted is that, we think it is time for the state to give us a definitive answer. They have not said no. The law department -- nobody has disputed our law department's conclusions about the law and what's eligible for MA reimbursement, so we are hoping to at least bring that issue to closure. We think that, with the law 127 RESOLUTION NO. 060019 - 2/14/06 department's advice, that there is some opportunity there. Along the way, we have also seen some financial benefit, which is one of the things that's come out of the discussions with DPW; is, we now have more information through DPW on hospital rates. And, so, we are at a little bit less of a disadvantage in negotiating hospital rates when we are negotiating on behalf of the prisons. The issue has been out there for a long time. We are, actually, seeking to bring it to a head.
Thank you, Madam President. I only have two questions. My first one is, we notice on B-7, about the impact of tax cuts, that there is reference on the last line to repeal the 128 RESOLUTION NO. 060019 - 2/14/06 low-income tax wage credits. And our question is, we're trying to reconcile how we cut the taxes for the working poor, and yet we accelerate business of reductions at the other end for businesses. So we wonder if you will respond to that.
I think there are a couple of reasons. One, we simply can't afford the low-income tax credits. It has a $46 million impact on this Five-Year Plan. I believe next year the one-year impact will be -- in FY '12, the single-year impact will be another $46 million. You Know, the year after that, I think it is up to $62 million, and then an additional $78 million. These are annual costs, additional costs, to the Five-Year Plan that we can't afford. The second is, I think, the Administration believes there are more effective -- that the business tax cuts will 129 RESOLUTION NO. 060019 - 2/14/06 have a more positive impact on job creation. The other thing that we have in the offering are additional wage tax cuts that are going to come as a result of what happens at the state level. So there will be some additional relief for wage earners as a result of the state budget. Not as a result of the state budget, but as a result of gaming revenue that will be applied to wage tax reductions.
As my colleague just said, people who receive this credit reinvest it in the economy. So it is not that we feel -- since this is generally those at the lower end of the scale, it is not that they use it and go to overseas or something; but, they really invest in our local economy. And we are concerned about this versus tax reductions in other areas. My second question is --
Please, 130 RESOLUTION NO. 060019 - 2/14/06 Madam President.
What adjustments to the plan will the Administration be offering, if this ordinance is not repealed?
I would have to get back to you on that. I don't know exactly what we would end up proposing for -- what change we would propose.
Thank you. Also on Page B-26, there is a statement, quote, BRT expects to have full valuation estimates developed in late summer '06. And I read further in the statement that the Administration supports full valuation. You know, how are people supposed to -- this even connects with the issue of wage tax reductions. And then full valuation the entire Council has not supported because there is no 23 way people can afford it, nor do we want our constituents to think that we want it. We realize that on paper it looks 131 RESOLUTION NO. 060019 - 2/14/06 like we are establishing some fair system. But as long as there is a criteria that's created outside of this body, we don't understand how full valuation is going to create anything but additional taxes for the majority of the people, those at the bottom rung of the ladder we represent. Can you respond to the Administration's position on this whole issue of full tax valuation?
Yes. The Administration believes that we need simplification in the area of property taxes; that we need to get rid of all the ratios, you know, the predetermined ratio, and then the 70 percent of actual value; that we need to create a system that is clearer. And we think that the full valuation project does that. We also think that over the years people have not been assessed equally. Some people are paying more than they should be paying, while some people are paying less than they ought to be paying. We think that full valuation, 132 RESOLUTION NO. 060019 - 2/14/06 actually going out and assessing every property at its full value, gives us the opportunity to get rid of the unfairness. At the same time, I think what we have to do is make sure we put protections in. The growth in our real estate market, if we were simply to go to full valuation and not put any protections in, too many people would be hurt. We have senior citizens on fixed income, we have neighborhoods that were depressed that are now thriving. People will be faced with increased property taxes. But we think we have the capacity, in going to full valuation and capturing more value in the neighborhoods, we think it will throw off enough revenue so that we can create the kind of protections that we need. You know, we need to have something for gentrifying neighborhoods. We need to have something for senior citizens that are on a fixed income. We need to have some kind of buffering mechanism so people who have the capacity to pay step up to the higher tax 133 RESOLUTION NO. 060019 - 2/14/06 rates. I think what we would like to do is wait. Let's wait and see, get the numbers from Glancey, so we can all sit down and figure out what makes sense. Figure out, you know, who is really having to pay a lot more. You know, we have opinions about that, but we ought to wait and actually see the numbers. Because nobody really knows for sure who is paying too much, who is paying less than they ought to pay. And once we get that information, we can all sit down and make a considered judgment about how to proceed. But I think -- I mean, we will wait and see.
Will you make a commitment to us that nothing will happen in this regard until we have a discussion? I remember a few months ago I talked about SEPTA. And I have had businesses 24 close for the Market Street Elevated Program, 25 and how those people are barely surviving now. 134 RESOLUTION NO. 060019 - 2/14/06 And we are asking -- you know, we have talked to the City Solicitor about what we can do for those people. Can we expect that you will not do anything until we have had a full discussion?
We wouldn't support doing anything until we have had a full discussion. This is something that is controlled out of the BRT. We can't, the Administration can't, do anything unilaterally. But, you know, we wouldn't support moving to full valuation until we are all on, you know -- or until a majority of Council and the Administration are on the same page with this. You know, as we testified previously during the full valuation hearings, we think we ought to be looking at things like the homestead exemption. We think we ought to be looking at buffering strategies. And all of those require, you know, collaboration with City Council; they require legislation out of Harrisburg. You know, 135 RESOLUTION NO. 060019 - 2/14/06 there is no one party that can implement any aspect of this unilaterally.
Thank you, Madam President. I know the bell rang.
Thank you. Ms. Wilkerson, I would like to get a question in here and there, if I may. In FY '09, the Administration is assuming that the city will no longer bear any obligation to fund the Convention Center. What is the basis for this assumption? Have you received correspondence from the Governor's office that they intend to pick up the cost in FY '09?
I will ask the City Solicitor to respond, he has been more directly involved.
Romulo L. Diaz, Junior, City Solicitor. Council President, the budget assumes that the gaming facilities will be licensed and operational by FY '09. And, consistent with the gaming legislation which 136 RESOLUTION NO. 060019 - 2/14/06 provides for a percent economic development fund from the gaming tax, that's received by the state, there are a list of items which are exclusively the purposes for which the economic development fund may be spent in the first years of gaming in Pennsylvania. One of them is in connection with the payment of debt service and the prior year's operating deficits for the Convention Center. The Mayor and the Administration have been in contact directly with the Governor and his staff to continue to emphasize the need for the debt service expenses currently undertaken by the city to be relieved as part not only of the budget process, but also to meet the priorities established in the gaming legislation.
Under the current state law, the state may assume these costs under the gaming legislation, not that they must. They shall, but it doesn't say they must. Am I correct? 137 RESOLUTION NO. 060019 - 2/14/06
I don't have the legislation before me. But my clear recollection is that there is an exclusive list of expenses which may be undertaken through the 5 percent Economic Development Fund. On that list for Philadelphia is the listing of the two items that I mentioned relative to the Pennsylvania Convention Center. So I think there is a need for clarity with regard to the Governor's commitment in this connection. But the Administration has been in close contact with the governor and his staff, making clear our expectation and desire with regard to the FY '09 budget needs going forward. And we have not heard anything to indicate that that expectation would not be met.
I don't quite understand. Under the current state legislation, 138 RESOLUTION NO. 060019 - 2/14/06 isn't the city required to put up a minimum contribution of percent of the cost for the 4 expansion of the Convention Center? 5 And I would ask you, is this match 6 included in the Five-Year Plan? And, if not, 7 why not? 8
My recollection of that 9 particular provision is not that it is a city 10 match, but it is a -- it is to be matched by 11 other sources, which are not enumerated. 12 Again, we have made clear that -- 13
The best of my 16 information, President Verna, is that there 17 are other funding opportunities that the state 18 could use with regard to the remainder that 19 you referenced. 20 That is part of the ongoing 21 discussion with the Governor and his staff. 22 We do not yet have a clear commitment as to 23 how that will be handled. 24 But that is the expectation that the 25 Mayor has put forth in his correspondence to 139 RESOLUTION NO. 060019 - 2/14/06 the Governor and in the conversations that we have had with -- including myself, with the Governor's staff. We are still working on that.
I believe with -- although the question may be somewhat rhetorical, let me respond. That I believe that we are looking forward to working out an important economic interest of the Commonwealth, not just of the City of Philadelphia. It seems only fair that the expectations of the city with regard to the impact on its budget, where so much of the economic opportunities are received throughout the Commonwealth, and certainly by the folks in Harrisburg, that those expectations will receive a favorable response.
Thank you. Councilwoman Miller is next. Is she in the room? No. 25 Councilwoman Tasco. 140 RESOLUTION NO. 060019 - 2/14/06
Thank you. Just a quick question. We will probably get to this later. But on your testimony, Ms. Wilkerson, you talk about the Youth Violence Reduction Partnership and a similar program focused on adolescents at risk called the Adolescent Violent Reduction Partnership. How do you plan to fund that?
Good afternoon. I am Cheryl Ranson-Garner, Commissioner for DHS.
The funding for the Adolescent Violent Reduction Program, where does the funding come from?
We have put that in our needs-based budget with the state. And we have asked the state to fund it, which would be city funded and state funded.
We are looking at -- we have asked the state for $8.2 million for FY '07. We are looking at a $12 million 141 RESOLUTION NO. 060019 - 2/14/06 cost using -- doing some redirecting of other programs for the other $4 million.
The redirecting of other funding from other programs.
We have some delinquency-prevention programs that are currently serving high-risk youth. We want them to redirect some of their programming, or the way they provide services, to adopt the AVRP model.
Okay. Would this program be contracted to one organization, several organizations, or would individual groups apply for the funding? How does it work?
We plan to do an RFP for the AVRP services to begin in July, so we are looking at March to issue the RFP.
Okay. So let's just go back to the city's portion of the funding. 142 RESOLUTION NO. 060019 - 2/14/06 Explain to me again how that works.
This service would be 80 percent funded by the state and 5 percent funded by the city. 6
The state has 9 given us numbers. We will meet with them 10 around March 13 to talk about exactly how much 11 funding will be allocated to AVRP. 12 However, the city is committed to 13 doing the program, so we will look at how to 14 redirect current funding, if necessary. 15
That means there 18 may be programs that are not working, that are 19 not as effective as we want them to be, and we 20 may have to utilize funding from those programs for AVRP.
So who makes that assessment and evaluation of the effectiveness of the program? Is there something in place that 143 RESOLUTION NO. 060019 - 2/14/06 allows you to evaluate the performance?
Yes. We do performance evaluations on an annual basis, so we do have evaluation information on the programs. We use the month of February to evaluate many of the programs that are up for reconsideration for the next upcoming fiscal year.
Okay. When you come back in your department, we are going to revisit this.
Let me ask -- thank you. Let me ask you a question, Ms. Wilkerson. In your B-3 of the Five-Year Plan of your revenue projections, it appears that you're foregoing the $18 million from PGW from '09 through '11.
This represents a major change from prior plans that had this payment resuming in '09. 144 RESOLUTION NO. 060019 - 2/14/06 Will the Administration be submitting and amount to the PFMC permit to forego these payments?
We will be following the practice that we got. You know, as those payments become due, we will be seeking --
Well, when do you plan to come back and do that? Because this Administration won't be here anymore. Are you making this assumption -- this is for '09. This Administration leaves in '08. Why are you making that assumption now? Why are you making that decision?
This is a projection. You know, it appeared prudent to us not to -- you know, at a time when customers are having to pay, you know inordinately high gas bills, it did not seem prudent to, you know, resaddle the gas company with this cost. You know, this is a proposal. As we get closer to '09, we would finalize -- you know, make a final decision, a firm decision, about that and seek -- 145 RESOLUTION NO. 060019 - 2/14/06
You all don't have an answer for this, do you? You don't really have an answer, do you?
No. Part of it is that it doesn't make sense to ask the company -- the company was borrowing money to pay the city $18 million. That didn't make any sense. The company already is strapped with enough debt. At a time when, you know, the company has problems covering its capital costs, at a time when the customer rates are already high, it doesn't make a lot of sense to ask the company to begin -- you know, forecast that the company will begin repaying. It is also an issue about which PICA has had concerns. The rating agencies have had concerns about it. It didn't make sense to try to force the issue. We would come back to Council. Didn't have any present plans to come back to Council to seek an amendment. But I understand what we went through last year around this issue, and 146 RESOLUTION NO. 060019 - 2/14/06 understand that the Council expectation is that we will seek an amendment of the plan, if we are going to actually forego the dollars.
I hadn't thought about it. My initial reaction would be closer to the time of actually foregoing the money. When we were looking at a budget year and we didn't intend to collect the money, that we would do it at that time. So it would be in '09. And I understand your point. How can you lock in a future Administration. But because it is simply a proposal, I think it is not inappropriate.
Thank you, Madam Chair. Just a couple of quick items here. Madam Chair, you asked a question 147 RESOLUTION NO. 060019 - 2/14/06 about gaming earlier, and I wanted to have the solicitor back up. Mr. Solicitor, it is my understanding that, subsequent to the various companies or applicants filing their documents with the Pennsylvania Gaming Control Board -- I think is the official name of the entity -- that there are local impact reports; and that the companies were required to file them with both the state and, I guess, the municipality that would be, quote, unquote, the host municipality. Is that correct?
Romulo L. Diaz, Junior, City Solicitor. That is correct, under the Gaming Control Board regulations.
And what will happen to those reports at the local level here?
We are currently having conversations with the Mayor's Office with regard to what will happen next locally. But, in connection with the reports, 148 RESOLUTION NO. 060019 - 2/14/06 we are also talking directly with the Gaming Control Board staff, so that we are coordinating closely with them about their expectations. I will stop there and respond to further questions.
Our conversations with the Gaming Control Board staff have suggested that, when they deem complete the applications that have been filed with the state, it is their intention to publicly make available the documents in each of those dockets. And that would include, it is my understanding, the local impact reports. They have requested at the staff level of the Gaming Control Board that, until that time, the city continue to work closely with them and not make those reports publicly available, and we have accommodated that request. But I would expect, perhaps, within the next month that those reports would be 149 RESOLUTION NO. 060019 - 2/14/06 publicly available, either through the state or through the city or both.
Okay. Well, for the moment, I mean, certainly I think they should be public, but I wasn't necessarily asking about public release. What I was asking was, some of us face the prospect of potential a gaming facility in certain areas of the city. And it would be helpful to have these reports as a part of any education or information in that process. So more narrowly I am asking, will you release them to members of City Council?
I would be pleased to have that conversation directly with you and members of Council. I am not prepared to go beyond that at this point. But I understand the point. I will take the question onboard. I understand that Councilman DiCicco is beginning a series of public sessions on these gaming facilities tomorrow. And we, obviously, intend to support 150 RESOLUTION NO. 060019 - 2/14/06 your office and his and others who may be affected by the need to share this information. So, we will talk directly to you.