COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING - COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, February 14, 2005, 10:15 a.m. - - - 050078 - Resolution reappointing Howard Wurzak to the Board of Directors of the City Avenue Special Services District of Philadelphia & Lower Merion. 050079 - Resolution reappointing Michael Woodward to the Board of Directors of the City Ave. Special Services District of Philadelphia & Lower Merion. 050080 - Resolution reappointing H. James Tollett to the Board of Directors of the City Ave. Special Services District of Philadelphia & Lower Merion. 050081 - Resolution reappointing Rev. Timothy R. Lannon, S. J. to the Board of Directors of the City Avenue Special Services District of Philadelphia and Lower Merion. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE L. BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS-BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK DI CICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILMAN MICHAEL A. NUTTER COUNCILMAN JUAN F. RAMOS COUNCILWOMAN DONNA REED-MILLER COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - V A R A L L O Incorporated Litigation Support Services 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2 Whole - 2/14/05 - - - P R O C E E D I N G S - - -
050078, 050079, 050080 and 050081. I would ask Mr. McPherson to please read the title of the resolutions.
Resolutions reappointing Howard Wurzak to the Board of Directors of the City Avenue Special Services District of Philadelphia and Lower Merion. Resolution appointing Michael Woodward to the Board of Directors of the City Avenue Special Services District of Philadelphia and Lower Merion. Resolution appointing H. James Tollett, III, to the Board of Directors of the City Avenue Special Services District of Philadelphia and Lower Merion. Resolution appointing Reverend Timothy R. Lannon, S. J., to the Board of Directors of the City Avenue Special Services District of Philadelphia and Lower Merion.
Thank you. 3 Whole - 2/14/05 Do we have anyone to testify on the resolutions? Good morning, sir. Please identify yourself for the record and proceed with your testimony.
By way of brief introduction, I'm David Cohen, the Executive Director of the City Avenue Special Services District. And I want to thank you for this opportunity today. With us today we have Rob Scammarucca, who is here on behalf of Father Tim Ryan of St. Joseph's University, Michael Woodward on my left. On my far left we have James Tollett. And I'll be representing Howard Wurzak, who's out of town today on business. Thank you.
Good morning, President Verna. Thank you for this opportunity; and thank you, Councilman Nutter, for your support for St. Joseph's University and for this resolution. 4 Whole - 2/14/05 My name is Rob Scammarucca. I am the assistant vice president for government and community relations at St. Joseph's University, and I stand as proxy for Father today who had to be in New York on business. By way of brief bio for Father Lannan, he's an accomplished leader in Jesuit education in his second year as President of St. Joseph's University. He began his term at St. Joseph's as the 26th President in July of 2003. He previously was vice president for university advancement and associate executive vice president at Marquette University, and served presidential internships at the College of Holy Cross in Boston College, while completing a doctorate in teaching fellowship in graduate school of education at Harvard University. He serves on the Board of Trustees at Fairfield University, Marquette University and St. Joseph's Preparatory School. He has studied and written on Catholic identity at Jesuit Universities. 5 Whole - 2/14/05 He's a native of Mason City, Iowa. He attended Creighton University as an undergraduate and later was President of Creighton Preparatory School. We appreciate this opportunity to have him considered as a board member for the City Avenue Special Services District. We are a large institution on City Avenue in both Montgomery and Philadelphia County. We are deeply committed to the quality of life for the corridor and our residents on each side. It's a measure of our respect and commitment that we would introduce our President of a Division I college to serve as an active member of the Board on the City Avenue Special Services District. Thank you.
Thank you. Kindly identify yourself for the record.
My name's Mike Woodward. I've been married to the same woman for 27 years, and we have three teenage children. My wife Kathy and I are principals of Woodward Properties, a real estate management firm, based in Philadelphia for a little over years. 10 We own and operate numerous 11 multi-family apartment communities in 12 Philadelphia and the surrounding counties. 13 Our main office is situated on City 14 Avenue in one of our communities, the Bala 15 Apartments, located within the Special 16 Service District. 17 Five other communities are 18 positioned within a few short blocks of City 19 Avenue. 20 I am an active member of the 21 Apartment Owners Association of Greater 22 Philadelphia and a member of its board of 23 directors. 24 As a Philadelphia property and 25 business owner, I am a strong supporter of 7 Whole - 2/14/05 living and working in the City, particularly of the City Avenue area. If confirmed as a board member of the City Avenue Special Service District, I will devote my attention to and use my firsthand knowledge of local resident issues to assist the agency in promoting activity that will reduce crime, improve the image of and the responsible development of the City Avenue area. Thank you.
My name is James Tollette. I am a vice president of Winther Investment. We are a multi-family development company. We have interests in East Falls and in the -- within the district itself. My family and I relocated here from Houston, Texas about two years ago. I've 8 Whole - 2/14/05 been working in the city for about four years. And my interest in serving the board is very similar to the mission of the board, and that is to maintain and enhance the City Avenue corridor, make it a friendly place to live and work. And I have prior experiences with other boards and volunteer organizations, and I'm excited about serving the district.
Thank you very much. Are there any questions from members of the committee? Councilman Nutter.
Thank you, Madam President. Just a comment. First, thank you for making arrangements to have these nominees considered. The City Avenue Special Services District is seeking to maintain continuity of leadership. And it's critically important that they have a full complement of board 9 Whole - 2/14/05 members. It's an excellent group that's been nominated. I would only make one comment which is with regard to Mr. Woodward. He should understand that the primary reason that he was nominated was actually because of his wife Kathy. And he should be mindful of that in all of his service with the City Avenue Special Services District. Thank you, Madam President.
You're welcome. Any other questions or comments from members of the committee? Seeing none, this will conclude our public hearing. (Public hearing concluded at 10:20 a.m.) 10 Whole - 2/14/05 CERTIFICATE I HEREBY CERTIFY that the proceedings and evidence are contained fully and accurately in the stenographic notes taken by me upon the public hearing of The Philadelphia City Council, taken on February 14, 2005, and that this is a true and correct transcript of same. _____________________________ DAVID A. DEIK, RPR and Commissioner of Deeds (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.) 11 COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC MEETING - COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, February 14, 2005, 10:20 a.m. - - - 050078 - Resolution reappointing Howard Wurzak to the Board of Directors of the City Avenue Special Services District of Philadelphia & Lower Merion. 050079 - Resolution reappointing Michael Woodward to the Board of Directors of the City Ave. Special Services District of Philadelphia & Lower Merion. 050080 - Resolution reappointing H. James Tollett to the Board of Directors of the City Ave. Special Services District of Philadelphia & Lower Merion. 050081 - Resolution reappointing Rev. Timothy R. Lannon, S. J. to the Board of Directors of the City Avenue Special Services District of Philadelphia and Lower Merion. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE L. BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS-BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK DI CICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILMAN MICHAEL A. NUTTER COUNCILMAN JUAN F. RAMOS COUNCILWOMAN DONNA REED-MILLER COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - V A R A L L O Incorporated Litigation Support Services 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 12 Whole - 2/14/05 - - - P R O C E E D I N G S - - -
We will now go into our public meeting. And the Chair recognizes Councilman Nutter. Thank you, gentlemen.
Thank you, Madam President. I'd like to move the adoption of Resolution 050078. VOICE: Second.
It has been moved and seconded that Resolution 16 Number 050078 be reported out of committee with a favorable recommendation. All in favor will indicate by saying aye. (Chorus of "ayes.")
The ayes have it, and the motion carries. 13 Whole - 2/14/05 Again, the Chair recognizes Councilman Nutter.
Thank you, Madam Chair. I move Resolution 050079 be reported out of this committee with a favorable recommendation. COUNCILMAN DiCICCO: Second.
It has been moved and properly seconded that Resolution Number 050079 be reported out of committee with a favorable recommendation. All in favor will indicate by saying aye. (Chorus of "ayes.")
The ayes have it, and the Resolution is adopted. The Chair recognizes Councilman Nutter.
Thank you, Madam Chair. 14 Whole - 2/14/05 I move that Resolution Number 050080 be reported out of this committee with a favorable recommendation. VOICES: Second.
It has been moved and seconded that Resolution 8 Number 050080 be reported out of committee with a favorable recommendation. All in favor will indicate by saying aye. (Chorus of "ayes.")
The ayes have it, and the motion carries. The Chair again recognizes Councilman Nutter.
Thank you, Madam Chair. I move that Resolution Number 050081 be reported out of committee with a favorable recommendation. VOICES: Second. 15 Whole - 2/14/05
It has been moved and seconded that Resolution 7 Number 050081 be reported out of committee with a favorable recommendation. All in favor will indicate by saying aye. (Chorus of "ayes.")
The ayes have it, and the motion carries. This concludes our public meeting of the resolutions just considered. (Public meeting concluded at 10:22 a.m.) 16 COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING - COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, February 14, 2005, 10:22 a.m. - - - 050022 - 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 2006 through 2010, and incorporating proposed changes with respect to Fiscal Year 2005, which is to be submitted by the Mayor to the Pennsylvania Intergovernmental Cooperation Authority (the "Authority") pursuant to the Intergovernmental Cooperation Agreement, authorized by an ordinance 11 of this Council approved by the Mayor on January 3, 1992 (Bill No. 1563-A), by and between the City and the Authority. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE L. BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS-BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK DI CICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILMAN MICHAEL A. NUTTER COUNCILMAN JUAN F. RAMOS COUNCILWOMAN DONNA REED-MILLER COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - V A R A L L O Incorporated Litigation Support Services 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 17 Whole - Res. 050022 - 2/14/05 - - - P R O C E E D I N G S - - -
We will again go into a public hearing of the Committee of the Whole, regarding Resolution 8 Number 050022. And I would ask Mr. McPherson to please read the title of the resolution.
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 2006 through 2010, and incorporating proposed changes with respect to Fiscal Year 2005.
Good morning. I'm Joyce Wilkerson, Chief of Staff to Mayor John Street. And with me is Diane Reed, Budget Director for the City of Philadelphia. And behind me is Sean McNeely of my staff. And Vince Jannetti is also 18 Whole - Res. 050022 - 2/14/05 here. Mr. Jannetti is the acting Finance Director. The FY'10 -- FY'06/FY'10 plan, the City's 14th, details 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. It's been four years since Mayor Street first announced his commitments to these areas, and the City has made examples of the successes of these investments. I'd like to share some of these successes. , which have declined by 22 percent from 1999 through 2004. By FY'06 investments made in social services will provide youth development 19 Whole - Res. 050022 - 2/14/05 programs to almost 48,000 more children than at the beginning of the administration, funded primarily through Federal and state dollars. And due to the success in the City's Neighborhood Transformation Initiative in ridding neighborhoods of dilapidated, vacant and eminently dangerous buildings, housing collapses have been reduced from 1,040 in FY'02 to 70 to date in FY'05. Investments made in cleaning and greening vacant lots are having not just an impact on neighborhood esthetics, but on property values as well, as documented in the work of Penn Professor Susan Wachter. As of December 31, 2004, 4,844 units of large-scale developments, 2,900 of them market rate and 1,900 affordable, were either completed, under construction or carrying out pre-development activities. These large scale development projects are occurring in various neighborhoods throughout the City, and are influencing real estate markets in 20 Whole - Res. 050022 - 2/14/05 surrounding areas. Since 2000 the average home in Philadelphia has appreciated in value by 30 percent, when adjusted for inflation. The vibrancy throughout the City is reflected in our real estate transfer tax revenues as well. The City collected 89 percent more in real estate transfer tax in FY'04 than before this administration took office, proof that people want to invest and live in Philadelphia. Next week Mayor Street will unveil the economic development blueprint to the Chamber of Commerce, providing the framework for the City's economic development activities for the next several years. Finally, the FY'04 citizen satisfaction survey contained the highest satisfaction levels for many City services in the eight years since the survey was first conducted, including street repair, trash collection, library services, police protection and recreation programs. 21 Whole - Res. 050022 - 2/14/05 We will continue to make strategic investments that will ultimately lock in the City's world-class status, without compromising the General Fund or accruing additional costs. I. initiatives. The funds will be used to facilitate the transformation of the Delaware and Schuylkill River areas by providing a foundation for turning acres of underutilized land into new communities of residential and commercial investment on the riverfronts. Investments will increase awareness of the waterfronts, stimulate economic activity and improve the quality of life for the City and the region. I. projects as well. This initial investment will be funded through the replacement of cash reserves currently securing water revenue bonds. 22 Whole - Res. 050022 - 2/14/05 The City will purchase a security bond to replace part of the Sinking Fund Reserve currently held for the water revenue bonds, and use these replaced funds for the initiatives.
The City will continue working with the Philadelphia industrial Development Corporation to revitalize and market the Navy Yard and bring new vitality to South Philadelphia. Last fall a master plan was unveiled which called for mixed use development with businesses, housing, recreation, retail and restaurants co-existing at the Navy Yard space. The revitalization of the master plan will generate more than $2 billion in private investment. We achieved these successes despite an increasingly difficult financial situation, with a shrinking pool of funds available for program expansion and new investments. 8 23 Whole - Res. 050022 - 2/14/05 million General Fund deficit, the first negative fund balance in years. 4 While the deficit was primarily 5 attributable to a delay in receiving state 6 reimbursement for human service program 7 costs, the negative General Fund balance was 8 nonetheless a sign of the increasingly 9 limited room for error in City finances. 10 Current estimates leave the FY'05 11 and FY'06 fund balance for each year at $19 12 million. The fund balance is expected to dip to $8 million and $9 million respectively in FY'07 and FY'08. We project to close out the last two years of the plan with fund balances of $75 million and $65 million respectively, assuming the repayment of the City's $45 million loan to PGW in FY'09, and the restoration of PGW's customary annual $18 million payment to the City beginning in FY'09. Projected fund balance in the FY'06, FY'10 plan remain at less than preferred levels. Many rating agencies cite fund 24 Whole - Res. 050022 - 2/14/05 balances in the range of three percent to five percent of revenue as evidence of fiscal health and stability. For Philadelphia, this means carrying a fund balance of at least $100 million. The Government Accounting Office officer's association is even more cautious, recommending that 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. However, since 2000 the City has been faced with a series of challenges to the fund balance, making achieving a healthy fund balance difficult. These challenges include skyrocketing increases in pension and health and medical costs, coupled with slowed 25 Whole - Res. 050022 - 2/14/05 revenue growth, the City's increased commitment to the School District, and an aggressive tax reduction scheme. Specifically, from FY'00 through the end of FY'05, as projected, tax revenues are projected to grow a modest percent during 8 the same period. Both health and medical 9 costs and pension obligations are projected 10 to increase by almost 60 percent. 11 The City shifted its funding policy 12 for the FY'04-FY'08 plan to the minimum 13 municipal obligation required by state law, 14 to meet future unfunded pension liabilities. 15 At that time the shift to the MMO policy reduced the amount of the City's actuary. The actuary projected that the General Fund would have to contribute to the pension fund by $245 million from FY'04 through FY'08. Nevertheless, the poor earnings of the past several years have caused the City's General Fund pension contribution to escalate dramatically and forced severe cuts in more discretionary General Fund expenditures. Whole - Res. 050022 - 2/14/05 Even maintaining the shift to the MMO funding policy for the current plan, the City is projecting $800 million more dollars in pension obligations in the FY'06 to FY'10 plan than was projected in the FY'02 to FY'06 plan before the earnings target was consistently missed, beginning in FY'01. To address this financial situation in last year's plan, the administration outlined a series of tradeoffs in order to maintain fiscal stability.
These tradeoffs included shifting costs, eliminating programs, selling City-owned assets, seeking legislation to increase revenues from other governments to more appropriate levels, and right sizing the number of facilities. Administrative service centers serving several departments were formed to cluster back office services, administrative, human resource, and budgetary functions, instead of replicating stand-alone back offices across departments. With the help of City Council, the 27 Whole - Res. 050022 - 2/14/05 administration updated fees for environmental health licenses and permits, expanded the Department of Licenses and Inspections, accelerated permit review program and updated the fees for police accident reports. Through the Fleet Reduction Initiative, departments relinquished 329 vehicles, resulting in a cost avoidance of $9 million through the life of the plan. Under the City's right sizing efforts, five recreation centers were winterized and closed for the winter months, and programs and staff for an additional five centers were shifted and reallocated. This summer three pools will be demolished and replaced with spray parks which are not only less costly to maintain, but since they have no standing water, provide a safer way for children to cool down during the summer. Our asset sales initiative aims to reduce the City's inventory of buildings, many of which are underutilized or vacant. Our plan includes an aggressive 28 Whole - Res. 050022 - 2/14/05 target of $10 million in asset sales for '05, and $24 million more from '06 through '08. We cannot realize these funds without the help of City Council. Additionally, several bills have been presented to you for consideration that would allow the City to better regulate street construction, provide improved disincentives for committing violations to The code and better punish those who choose to short dump in our City. The City worked successfully with the state legislature, and two key bills were passed this fall which paved the way for a significant reduction in quality of life violations against the City and increased revenue. The first piece of legislation allows the City to raise the maximum fines from $300 to $2,000. The second bill allows the City to increase the fines for individuals who choose to short dump within the City to $5,000 Legislation to implement this new 29 Whole - Res. 050022 - 2/14/05 authority has been submitted to Council. In addition, the right-of-way ordinance that was transmitted to this body earlier this month will allow the City to recover not only costs associated with managing rights-of-way, but will also enable better enforcement, improve coordination between entities who need to enter the right-of-way and better preservation of the City's investment in roads throughout the City. Your passage of these ordinances will further enhance the quality of life in this City and generate additional revenue to support the General Fund. Despite implementing innovative programs and consolidation, the City recently was faced with a looming deficit projection of $40 million for '06 and had to supplement existing workforce reduction efforts with employee layoffs. Through a combination of attrition, replacing only half of the DROP retiree positions and employee layoffs by FY'06, the City will have reduced the General Fund 30 Whole - Res. 050022 - 2/14/05 position level by 2,023 positions since FY2000. Approximately 90 percent of the City's workforce reduction has been taken in Mayoral agencies. Our police force and Fire Department will be operating at the lowest levels in 40 years, as will Streets, L & I and the Recreation Department and the Free Library System. The administration attempted to minimize the impact of these cuts. However, some services will be reduced or eliminated. Trash collection will be standardized across the City. The number of buildings cleaned and sealed will be reduced.
Curb side pickup of white metals, such as refrigerators, will be eliminated. Trash basket collections in Center City will be reduced by one daily, and branch library hours are also affected. We hope the outcome of these budget hearings will not require additional layoffs or employee reductions because further 31 Whole - Res. 050022 - 2/14/05 reductions are likely to jeopardize services and undermine advances we have made to the quality of life in our neighborhoods and citizen satisfaction with City services. Over the next year, City departments will focus on internal management and implement the restructurings and process changes necessary to operate efficiently with low staffing levels. Efforts to control overtime are already under way and will continue through the life of the plan. The Streets Department will consolidate survey districts from six to five and will consolidate highway districts from six to three. The Police Department will restructure its bureaus and reduce the number of deputies from six to four. The Free Library will restructure the hours of operation at branch libraries to better serve children and working adults. The Recreation Department will consolidate program districts from ten to 32 Whole - Res. 050022 - 2/14/05 seven. The City's facilities management initiative will allow the City to better maintain City buildings, by consolidating staff dedicated to these duties under the Department of Public Property and deploying staff on a district basis. We are also committed to adjusting resources in the Fire Department to better reflect the needs of citizens by adding eight additional medical units and by reducing the number of engine and ladder companies by four units each. We do not intend to close any fire stations in this restructuring. Where possible, the City will explore using technology to improve processes, and in particular reduce the number of manual processes in the City. A new human resources information system will eliminate stand-alone department systems, increase efficiency in processing new hires, improve the accuracy of the City's information, and reduce much of the paper pushing currently required. 33 Whole - Res. 050022 - 2/14/05 In '06 the Department of L & I is expected to complete an automation project that will enable faster and more effective response to citizen complaints, better management of resources thanks to readily available productivity data from each employee, increased efficiencies in public safety and code enforcement due to reduction in lag time, elimination of double data entry by inspectors and office staff. In FY'06 the taxpayer information processing system will expand to support the Law and Revenue Departments collection efforts. An electronic bill payment tool was launched in '05 which for the first time allowed residents and businesses to conduct transactions online. Services enhancements through expanded use of technology entail substantial costs both to implement and maintain. They also require significant commitment of staff time. During this plan the City expects to 34 Whole - Res. 050022 - 2/14/05 receive new support from the Commonwealth. 2 million expected through the end of the plan. 9 million through FY'10. The City also expects to be reimbursed approximately $2 million annually for medical care provided for prison inmates who are medical assistance eligible. Beginning in '06 we expect the state to assume patrol of City highways. State highways in Philadelphia are currently the only highways in the state that are not patrolled by state troopers. 5 million in gaming revenues between FY'08 and FY'10. In FY'05 the administration proposed reducing the budgets of the First Judicial 35 Whole - Res. 050022 - 2/14/05 District and court-related agencies and the offices of the independently elected officials. With the help of City Council these efforts were largely successful.
However, we need Council to continue working with us, as we continue with efforts committed to in our prior five year plans, and introduce new ideas to help balance the budget in a fair and reasonable way across all parts of government, not just within the executive branch. We call on your cooperation again, as the City's budgetary constraint required the administration, to request the offices of independently elected officials in the First Judicial District and court-related agencies to participate in absorbing the same five percent reduction in '06 budgets imposed on Mayoral departments. If we do not all work together, the burden of meeting the City's fiscal realities will fall disproportionately on citizen services. 36 Whole - Res. 050022 - 2/14/05 We remain committed to reducing burdensome taxes that hamper our City's ability to grow. The administration's position is that tax reductions beyond those currently in law should be offset by new revenue sources. Accordingly, the administration proposes two new tax changes. First, the proposed plan would accelerate the reduction of the gross receipts portion of the Business Privilege Tax, so that it would be on pace to be eliminated by 2018 instead of 2020. 4 mills, which is 17 more than twice as large as the eight percent 18 reduction currently scheduled by legislation. 19 After 2006, the rate will continue 20 to be reduced until it is zeroed out in 2018. 21 The faster-paced reduction means an additional $71 million in Business Privilege Tax relief over the proposed plan, on top of the $109 million in business tax relief already planned to occur without this 37 Whole - Res. 050022 - 2/14/05 acceleration. Second, the proposed plan would increase the parking tax rate from percent 5 to 20 percent, in order to offset the 6 revenues lost resulting from the accelerated 7 phase out of the gross receipts portion of 8 the BPT. 9 The parking tax increase will 10 generate $13 million in '06. Increasing the 11 parking tax to 20 percent is one of the Tax 12 Reform Commission's suggestions for changing 13 Philadelphia's tax mix to afford Business 14 Privilege Tax reduction. 15 The administration's proposed gross receipts reduction is the full amount of tax reduction that can be funded by this proposal. The administration also recommends that the $45 million loan repayment expected from PGW in '09 be used towards the reduction of net income portion of the BPT beginning in '10. In addition, the City will continue making wage tax reductions and will make its 38 Whole - Res. 050022 - 2/14/05 11th stepdown in January 2006. 7 percent for non-residents will be percent lower than 6 the rate in 1995 and the lowest rate since 7 1976. 6 10 percent for non-residents. 11 The City's wage tax reduction is 12 expected to be supplemented by statewide tax 13 reform approved by the Governor in July '04, which will provide $101 million in annual funding to the City, to further reduce wage taxes beginning in 2007. Consider the magnitude of the City's tax reduction program to date. 1 billion to the taxpayers through the end of '05, including $71 million in accelerated BPT relief that I have just described. The proposed plan provides for an additional $378 million in wage and business tax relief. 39 Whole - Res. 050022 - 2/14/05 I must convey a word of caution. Our projections show that the impact of scheduled tax cuts and credits may exceed natural growth in the tax base beginning in FY'11. The incremental annual impact of wage tax cuts and credits mandated under current law from FY'10 to FY'15, combined with the continuation of the City's BPT rate reduction, is projected to exceed $70 million each year. Although long-term forecasts are speculative, this impact is projected to roughly meet or exceed the growth in the tax base from FY'11 through FY'15. Tax cuts currently planned or mandated could very possibly lead to a nominal revenue decline in some or all fiscal years beginning in FY'11 through FY'15 period.
And the proposed plan projects that tax revenue will grow by only $7 million in FY'10. In light of the many rapidly growing expenditure obligations, such a scenario, if 40 Whole - Res. 050022 - 2/14/05 it occurs, would be fiscally insupportable. As I stated earlier, we expect to end FY'05 and '06 with a fund balance of $19 million. Our projections for '07 and '08 leave the fund balance at $8 million and $9 million respectively. A such low fund balance we cannot afford to restore funds in areas that have already been reduced, and we cannot afford any additional tax cuts beyond those current cuts in the plan without providing offsetting revenues. Challenges we face are growing. We are currently analyzing the potential impact to the City of the proposed Federal and state budgets which could have significant direct and indirect negative effects on the General Fund, based on changes to Medicaid, the Community Development Block Grant, 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 41 Whole - Res. 050022 - 2/14/05 further such shifts. Negative outcomes at the state and Federal levels would require us to pursue alternate contingencies to maintain a balanced plan. Other threats to the budget include future health and medical costs. , health benefit costs were determined only for the first year of the four-year contract award, with further costs to be determined by reopening bargaining, beginning for the FY'06-'08 period. Similar contracts were struck with DC33 and 47 will have reopened bargaining sessions for health costs in '07 and '08 respectively. 's ongoing financial crisis poses another risk to the City's finances. Any proposal that includes an increase in matching funds would require greater payments from the City. While a few of these risks cannot be 42 Whole - Res. 050022 - 2/14/05 controlled, there are a few that Council can help mitigate. We again ask that no 4 restorations be made to the cuts currently contained in the proposed budget. Thank you for the opportunity to present this testimony in support of the proposed five-year financial plan. We would be happy to answer any questions that you have at this time. Additionally, representatives of City agencies included in the five-year plan are here to answer questions about their sections of the plan.
Miss Wilkerson, now that the Governor has submitted his budget to the legislature, are there any adjustments that the administration will be proposing to the City's budget or five-year plan?
We have not concluded our review of the Governor's proposed budget and its implications, as a 43 Whole - Res. 050022 - 2/14/05 lot of the changes that are proposed are in the social service arena. And it takes a very careful reading of state law and Federal law in trying to work through the various initiatives that we have funded. We expect to complete our review in the next week or so and will return to Council with our estimate of what's -- what the potential impact is. Several years ago, when the Governor's budget first came out, it appeared that there would be a $90 million-plus impact on the City. But as we work through the legislative process, we were able to reduce that to a much more manageable level. And I anticipate that it will be that same kind of back and forth that will happen this time.
Thank you. You indicate that we will be reducing the number of daily trash basket collections in Center City. You don't mention about the trash 44 Whole - Res. 050022 - 2/14/05 baskets that are spread throughout the City. Will there be a reduction? For instance, I know that we have them on South Broad Street. I know that we have them in commercial areas. How frequently will trash be collected? Is it just going to be in Center City that we're reducing the number of trash collections?
The proposal is a Center City proposal. Currently I believe the baskets in Center City are emptied three times a day. The recommendation -- The proposal is to reduce that to twice a day. In addition, in some sections of Philadelphia we have twice a week trash pickup. We propose reducing that, so that across the City there will be once a week trash collection for just general streets, curb side trash collection.
What is the proposed change -- Well, you expressed what the proposed change is going to be. But how much are we actually saving? 45 Whole - Res. 050022 - 2/14/05
I'm Diane Reed, Budget Director. I'm just checking my information on that. One second. We're anticipating saving about $700,000 in this fiscal year.
And how frequently will the trash pickup be, for instance, in the commercial districts? Is that changing any or is this simply going to affect Center City?
The proposal is a Center City proposal, from three times a day to twice a day. And also standardizing the trash collection across the City to once a week.
Point of 46 Whole - Res. 050022 - 2/14/05 information on that issue, Madam President.
The Chair recognizes Councilman Rizzo for a point of information.
Just to follow up on President Verna, about the trash receptacles, Miss Wilkerson, we have fire hydrants now that are missing in Center City. And now I've noticed we have fewer trash cans. As a matter of fact, there is one that's normally in front of the M.S.B. building in mid block, that I went there looking specifically to throw some trash away. It's gone. Is it gone because we've reduced the number? Or could you report on the number of containers that we have. And has the administration, Streets Department, taken any of those containers away? Because I've noticed two locations this week that have no containers where they once were.
I can ask the Streets 47 Whole - Res. 050022 - 2/14/05 Department, Miss Tollson, the representative from the Streets Department, to comment on the number of trash receptacles we have in Center City. I don't know that.
Is Miss Tollson in the room or a representative?
Good morning, Council president. My name is Michael Zakagne, I'm the Deputy Commissioner. Thank you. My name is Michael Zakagne. I'm the Deputy Commissioner. And as for the exact number of baskets, I don't have that information here. It is only affecting Center City. We are going to keep an eye on those baskets also that have high volume. We feel we're going to be able to do that. If there are some specific baskets, Councilman, that we need to look at, please, if you'll let us know, we can check that out.
My question is, 48 Whole - Res. 050022 - 2/14/05 is there any program right now to take away, because I've noticed that there were baskets at specific locations, exactly right across the street from City Hall, mid block, J.F.K. There was once a trash receptacle there. It's no longer there. I went to another location in Center City on Locust Street where I normally have a cup of coffee. And I finish it at that point, and I put it in the receptacle. It's gone. So, now, you're making me think there's also a reduction in the number. And we'd like to be assured, I'm sure, that you're not taking away trash receptacles. So...
I don't know of a plan that we're specifically taking away or going through systematically taking away. But we certainly will check into that for you.
We have one missing. Then somebody has taken one of your...
We will certainly 49 Whole - Res. 050022 - 2/14/05 check that out.
Okay. You'll get back to us on that, whether or not there's any effort to reduce the number?
Okay. (Voices speaking away from the microphone, inaudible to the