Lost amid the delivery of Mayor Michael Nutter’s Fiscal year 2015 Budget Address last Thursday was the release of the administration’s comprehensive “Priorities and Accomplishments.” Even though it was created by the mayor’s Office of Policy, Planning and Coordination — it’s still hard to argue with the data or results from Nutter’s first six years in office.
The report deals with the main tentpole issues of the Nutter administration: public safety, education, the economy, the physical and mental health of Philadelphians and the continuation of greening and sustainability efforts.
Nutter voiced justified satisfaction with his administration’s track record as illuminated in the report.
“When I was elected mayor of Philadelphia, I said that it was time to challenge the status quo, to take bold action to write a new chapter in this city’s great history. Over the past six years, Philadelphia has made significant progress toward a better tomorrow,” Nutter said. “We have lowered the crime rate for Part I Offenses — homicide, assault, rape, robbery and property crimes — by 15 percent since 2007. In the face of unprecedented fiscal challenges facing the School District of Philadelphia, we have invested more than $155 million in our public education system since 2010. We’ve streamlined the business development approval process, lowered the wage tax below four percent for the first time since 1976, and through sound financial management, all three major bond rating agencies have put the city in the ‘A’ category for the first time since 1979.
“Businesses responded by investing more than $7.5 billion in Philadelphia in 2013 with planned, ongoing and completed construction projects,” Nutter said. “And our city’s population has grown each year since 2006, reversing a 50-year trend of population decline … smoking rates have dropped 15 percent since 2008 and we’ve nearly tripled the residential curbside recycling rate. Furthermore, we have instilled a culture of honesty, integrity and transparency in city government.”
The 17-page report highlights the achievements thus far of the Nutter administration, particularly in the area of public safety. The administration received praise for orchestrating the precipitous drop in homicides (from 391 in 2007 to 247 in 2013), a 15 percent reduction in violent crime and a reduction in fire deaths (a 49 percent decrease since 2007); the report also makes note of the administration’s continued support of law enforcement, adding that Nutter is planning to hire roughly 400 new officers to maintain a force of 6,525 officers, increase the use of data and surveillance technology, establish a Unified Call center, build a state-of-the art police headquarters at 4601 Market St. and establishing a database that will become instrumental for the fire department’s ability to more efficiently answer emergency calls.
The report praised Nutter’s work in education, noting that graduation rates have increased and the 2011 creation of the Philadelphia Great Schools Compact is reaping returns.
“At the close of 2013, the high school graduation rate had increased to 64 percent, up from 52 percent in 2007, and the percentage of residents with a four-year college degree or higher has increased to 4.3 percent in 2013 from 1.8 percent in 2007,” the report read, in part. “The Philadelphia Great Schools Compact is a joint commitment between the city, the Commonwealth, and Philadelphia’s district-managed, charter, and Archdiocesan schools to convert 50,000 of the poorest performing classroom seats across the city into high-performing seats. Since 2011, approximately 20,000 of the poorest performing classroom seats have been converted into high-quality education alternatives.”
Regarding the population, business and development segments, the report noted that the roughly 60,000 new residents the city has welcomed since 2006 represents the largest growth of any city in the nation among the all-important 20-to-34 demographic. That, in turn, has boosted the city’s tax base that subsequently allowed for the city to invest in its infrastructure; that demographic is highly sought after by the companies that have and will locate here.
“The city has undergone an unprecedented level of construction with approximately 170 projects recently completed, representing more than $5.25 billion in investment,” the report read. “Minority, women and disabled-owned businesses now account for over 28 percent of city contractors, up from 18 percent in 2007. The administration has set a goal of 30 percent participation.
“The Goldman Sachs 10,000 Small Businesses initiative represents a $20 million investment in Philadelphia small businesses through increased lending and a business education program at the Community College of Philadelphia,” the report continued. “In addition, in partnership with Philadelphia Industrial Development Corporation and First Round Capital, Mayor Nutter launched a public-private venture fund to invest in Philadelphia startups, cementing Philadelphia’s position as a rapidly emerging hub for startups and technology.”
While bursting with applause for Nutter and his administration, the report also provides the administration’s priorities for Nutter’s final two years in office. Those priorities include continued investment in prime retail and residential areas such as Market East, North Broad Street and the Delaware River Waterfront; creating 3,000 new jobs through the airport expansion projects and the efforts to bring a second casino too Philadelphia; the implementation of the recommendations provided by the Mayor’s Manufacturing Task Force; selling PGW and implementing the city’s anti-poverty plan, Shared Prosperity, among a raft of other administration priorities.
“The report not only presents the accomplishments of our bold vision for the city of Philadelphia, but also our priorities and the work that remains to be done in order to sustain the renewal of our great American city. By focusing on improving public safety, enhancing educational opportunities and outcomes, supporting economic vitality, advancing health and well-being, establishing Philadelphia as the greenest city, acting as an efficient steward of public resources, leading with the highest standards of ethics and transparency, and investing in public infrastructure, we will continue to accomplish great things and write a new chapter of Philadelphia’s history,” Nutter said. This report is a high-level look at the work of city departments in neighborhoods that we serve; an on-going narrative of the story of what is happening and what is to come.
“It is certainly not a catalog of everything we have done, are doing or will do,” Nutter said. “We will continue to provide updates on the administration’s priorities and accomplishments with the help of our community partners, dedicated city employees and citizens.”
On Wednesday, City Council’s Committee on Public Safety will hear a resolution that could help usher in sweeping changes to the way the city interacts with the U.S. Immigration and Customs Enforcement (ICE) agency.
The resolution will look at the moral, ethical and financial ramifications of ICE holds. The public hearing will begin at 10:30 a.m. in City Hall Room 400; and the committee will take up a vote after the hearing.
Members of council have spoken out against ICE holds, which can last for an indeterminate amount of time. Also at issue are the federal government’s use of Philadelphia’s law enforcement resources for ICE-related actions, and the government’s lack of reimbursement to the city for associated costs.
While “Philadelphia is comprised of racially and ethnically diverse individuals … whose collective cultures, backgrounds, and viewpoints join to form a rich community which prides itself on welcoming persons and families of all backgrounds and nationalities, far too many people are lost in our broken immigration and detention system,” according to the bill.
The bill stated that a City Council resolution passed earlier this year indicated that more than 800,000 people had been deported in just two years — action that “tears apart families, causing children to lose one, and sometimes both parents, and many of these children are forced into the foster care system and face possible permanent separation from their parents.”
Current immigration policy has led the city to participate in information-sharing with ICE and in ICE detainer requests, the bill said, citing how, “participation of city employees in these voluntary programs discourages immigrant residents from reporting crimes and suspicious activity and cooperating with criminal investigations which threatens the health, safety and welfare of the entire Philadelphia community.”
The bill argued that state and local law enforcement agencies are not actually required to comply with ICE detainer requests under federal law, and noted wrongful detainer requests cost the City approximately $114 per day per detainee. “The City can no longer afford to spend taxpayer funds on this enterprise which is at times unjust and illegal,” it said. “Although City Council adopted a resolution that condemned the City’s participation in the Secure Communities program and urged the City to discontinue all information-sharing agreements with ICE, the City has failed to end these relationships.”
The bill has gained the attention of the region’s pro-immigrant groups, including The American Friends Service Committee, Boat People SOS, Congreso, Families for Freedom, Juntos, National Day Laborers Organizing Network, New Sanctuary Movement, The Philadelphia Student Union, Pennsylvania Immigration and Citizenship Coalition, One Love Movement, and Victim/Witness Services of South Philadelphia. Representatives of these groups will testify on Wednesday.
“Too many Philadelphia families have been torn-apart through Police/ICE collaboration and to consider writing a policy without hearing from the community is inexcusable,” said Juntos Executive Director Erika Almiron. “If this administration believes in a democratic process then we expect to see them at the hearings, ready to listen to what the people need and want and to start a real process of community engagement.”
Others spoke of the dual-penalty of immigrants convicted of a crime. As the law stands, an immigrant convicted of a felony will first serve their sentence in the U.S., and then suffer deportation to their native country. Many have equated that process to being punished twice for one offense.
“Non-citizens should not be doubly punished by serving time and then immediately entering deportation proceedings after serving their sentence,” said New Sanctuary Movement Organizer Blanca Pacheco. “We believe in second chances and rehabilitation, not in further family trauma and wasting Philadelphia taxpayer money to destroy our communities.”
In a related development, Councilman Dennis O’Brien introduced last week Bill No. 140142, which will regulate the immigrant-services business. O’Brien says his bill is designed to protect immigrants, some of whom may be so desperate to come to the U.S. that they are willing to pay exorbitant fees and take up with scam artists.
“Immigration assistance service providers have a duty and responsibility to fully, properly and fairly serve their clients. Unfortunately, some providers who purport to serve immigrants are mostly out to serve themselves,” O’Brien said. “Exploitative and fraudulent providers are known to leave immigrants in financial ruin and their families and businesses in disarray.
“Unqualified providers, regardless of intent, can do the same,” O’Brien continued. “Those who choose to live and work in Philadelphia out of all the location in the United States deserve our help and protection.
O’Brien contends the city doesn’t currently regulate immigration services providers, and that his bill would lead to greater transparency by forcing service providers to detail the scope of their services while granting the public assurances that the provider will deliver the services provided.
O’Brien’s bill would also provide recourse for those wronged by a service provider.
“There are many good providers who in serving immigrants well do a service to the City of Philadelphia,” O’Brien said. “This legislation will promote ethical, fair and honest practices across the entirety of this service sector and will preserve public confidence while holding service providers responsible.”
The early returns are in – at least from the education sector and a preeminent business organization - regarding the Fiscal Year 2015 Budget Address delivered on Thursday by Mayor Michael Nutter before City Council. It appears as if Nutter could enjoy a rare political triple play: pleasing educators and the business community, all while producing a budget that doesn’t raise taxes.
“Two weeks ago, when [School District of Philadelphia Superintendent] Dr. Hite announced that the District would need an additional $320 million for Action Plan 2.0, I said that I support his broad request for additional funds and that I would do whatever I could within our budget constraints to ensure the District had the additional funding they needed from us,” Nutter said during his address. “Specifically, the District has now made a request for $75 million in recurring annual funding from the City to support District-managed and charter schools. To meet the funding request, I am again calling on the General Assembly to authorize the $2 per-pack cigarette tax, as already approved by this City Council.
“In its first year, the cigarette tax would generate $83 million in education funding assuming a July 1, 2014 start date, and even in the out years of the tax, when smoking rates more than likely will decrease, which is a very good thing for the health and wellness of our citizens, it will still provide more than $70 million of dependable, annual education funding,” Nutter added. “All it requires is the General Assembly simply to pass authorizing legislation, which I will continue to push for in Harrisburg.”
Hite said he was thankful Nutter is supportive of the district and vowed to do all he can to find sustainable funding. The superintendent reiterated the district has already factored in the revenue from the extended Sales Tax.
“We are pleased with the additional revenue that Mayor Nutter has included in the City of Philadelphia’s budget for fiscal year 2015,” Hite said. “Our request for $75 million in recurring revenues, starting next fiscal year, is in addition to the anticipated $120 million in recurring revenues from the 1 percent sales tax increase. The Action Plan v2.0 financial supplement released last month detailed The School District of Philadelphia’s need for a $320 million investment in making all schools great. We are hopeful that our funding partners will join us in devoting the resources needed to provide our students with the education they deserve, and our schools and staff with the support they require.”
Officials with youth education advocacy group Public Citizens for Children and Youth generally agreed with the funding formula Nutter referred to in his budget, but voiced a sense of resignation that Nutter’s plan requires movement and a vote from the state General Assembly.
“We thank the Mayor and City Council for their hard work to successfully increase taxes for our schools over the last few years. Unfortunately, to meet the District’s basic budget request, the entire amount of funds requested by the Mayor for the schools — $143 million, requires action by the State Legislature. As such this proposal puts our school children at risk,” said PCCY Executive Director Donna Cooper, adding that PCCY “strongly” urges the Nutter and City Council to use the powers the State Legislature has already granted to the City and shift the full $120 million from the existing sales tax collections to the school district on a recurring basis. “We support the Mayor’s call that the state pass an increase in the local cigarette tax rate and dedicate the first $75 million of those funds to the District to meet the Superintendent’s budget request for the next school year. However, we have serious reservations about a City plan to meet the District’s funding request for local funds that relies on any action in Harrisburg. We believe that a more realistic and prudent approach would be to find the funds in the current budget or enact revenue increases that do not require state approval so that the District can be assured of the minimal funds needed to open the doors next year.”
Like the education sector, the business community seems to be backing Nutter’s budgetary proposals. During his address, Nutter alluded to the business initiatives spearheaded by the Administration that helped rescue Philadelphia from the debilitating recession.
“Working together, we’ve lowered wage and business taxes, bringing the resident wage tax below 4 percent for the first time since the 1970s and we will continue to work together to lower the wage and business taxes, while providing a range of exemptions and incentives to make Philadelphia a more attractive place for businesses to start here, stay here and grow here,” Nutter said. “Working together, our Administration with Council’s active support has increased diversity in city business participation. We have consistently surpassed our goal with regard to the percentage of city contracts with minority, women and disabled-owned contractors. In 2013, we reached 28 percent participation, encouraging us to raise our participation target to 30 percent for FY15.
“I also want to point out that our strong fiscal management, our careful financial stewardship, our ability to work together and make tough budget decisions, is the reason Standard & Poor’s gave Philadelphia its highest rating ever with an “A+” municipal credit rating,” Nutter continued. “And for the first time since the 1970s, all three major rating agencies placed us in the “A” category.”
Greater Philadelphia Chamber of Commerce President and CEO Rob Wonderling said the Chamber was supportive of Nutter’s initiatives, and that the chamber will closely monitor budget hearings this spring in Council.
“The Chamber of Commerce supports Mayor Nutter’s call for budget policies that encourage growth and make Philadelphia an attractive place to do business. The continued plan to reduce our wage and business privilege taxes is a positive signal to businesses in our city,” Wonderling said. “It is a good starting point, and we look forward to working with the Nutter Administration and City Council to ensure a fiscally responsible budget for Philadelphia’s citizens and businesses.”
Shortly after delivering his Fiscal Year 2015 Budget Address to City Council, Mayor Michael Nutter stopped by The Philadelphia Tribune offices and elaborated on many of the particulars included in his speech — chief among them the administration’s intention to sell the Philadelphia Gas Works.
“We have an asset that is PGW. I have taken the position that it is not a core service of the city government. We are the largest city in the United States of America that owns a gas line. Everyone else didn’t have one or either sold one and it is now in private hands. It’s would be as if the city thought, ‘well, maybe we should be in the electric business,’ and bought PECO,” Nutter said, adding that there were nearly three dozen bidders for PGW, and the preferred winner, UIL Holdings agreed to the city’s demands regarding programs for low-income customers, a guaranteed number of jobs and a rate freeze of three years, among other conditions. “The purpose of trying to sell a gas company is the tremendous financial risk, even though they are doing well. [In the ‘90s], PGW was on the verge of bankruptcy, [the city] lent PGW $45 million that we didn’t have, no one thought they would ever pay it back … in the meantime, the marketplace is saying there’s a strategic partner that we can align with that has value.
“ PGW can’t do a few things under municipal ownership. One, PGW can only operate in the boundary of the city of Philadelphia; a privately owned company is not constrained in that way. Two, a privately owned company has more access to more capital for investment than PGW does, and three, [PGW] under no set circumstances will be able to truly expand and exploit on the issue of Shale gas and its export in a variety of places. It’s not what they do, it’s not what they are set up for; it’s just not [PGW’s] line of business,” Nutter said. “And UIL, just like PGW today and just like PECO today, are still subject to jurisdiction and oversight by the Pennsylvania Public Utilities Commission, so this other issue that ‘well, after three years, they’ll suddenly jack the rates up,’ they can’t do it.
“By the way, in three of the last four years, PGW has sought rate increases and gotten them approved by the PUC under the current ownership,” Nutter said. “So let’s not act like under municipal ownership, rates never go up … Philadelphians are paying the highest gas rates certainly in our market and possibly in the nation. In a private ownership situation, they can spread their costs over all their other businesses and sectors, and keep the rates down.”
Nutter also voiced frustration at the slow pace of negotiations with District Council 33, the city’s blue collar union, noting that if the union had agreed to the city’s “last and best” offer, its members would have pocketed thousands of dollars via raises and seniority step increases.
Instead, the city and DC 33 are engaged in a sort of two-step, but Nutter is tiring of the dance.
“The part that is distressing to me is that DC 33 folks are now the only people who have not gotten a raise in our entire time. Everyone else has gotten one. They haven’t gotten one since July 1 2007, six months before I came into office. They got an $1,100 bonus in the summer of 2008 for the one-year contract, which expired in June 2009,” Nutter said, noting that his administration and DC 33 leadership still talk, but the union has yet to present to the city a written counter proposal. “They are running out of money. And their members have now forgone thousands and thousands and thousands of dollars.”
City Council President Darrell Clarke — who said he wouldn’t entertain the chaotic scene which transpired last year as Mayor Michael Nutter delivered his budget address — ensured that Nutter would have an unfettered platform to deliver the fiscal year 2015 Budget Address on Thursday.
With beefed up security — including uniformed and plainclothes officers who roamed several floors of City Hall, and particularly on the fourth floor where Nutter delivered his address — it was clear that neither Clarke, Nutter or City Hall security personnel wanted a replay of the embarrassing scene from last year, where catcalls from union supporters drowned out Nutter, forcing the mayor to deliver that address in another room.
Council expedited its usual business by holding all bills until next Thursday’s session, promptly clearing the podium for Nutter’s address.
The security and Clarke’s leadership helped produce a tranquil chamber for Nutter’s address, even as hundreds of District Council 33 members protested outside on City Hall grounds.
“Today, my proposed FY 15 budget builds on our collective track record of fiscal responsibility and strategic investment. It includes investments that support Philadelphia as we continue on the path to prosperity. It makes targeted investments for our children and adult citizens, in our neighborhoods and in public safety. This budget continues the incremental wage tax reductions that we restarted last year to bolster economic growth,” Nutter said. “This budget proposes no tax increased for the city’s General Fund.”
Nutter noted that on the whole, tax revenue is down $41 million, or 1.5 percent below predictions, due to the expiration of the one percent sales tax and other reforms to the Business Income and Receipts Tax.
Nutter’s budget has several spending proposals, including $2 million for the Office of Fleet Management to replace aged vehicles in the police department and other operating departments; $10 million for the Office of Fleet Management to purchase large vehicles such as medic units, pumpers and compactors; $2 million for the Department of Licenses and Inspections to hire 31 additional inspectors and supportive staff to strengthen demolition controls to ensure safe public and private demolitions; $3.3 million for Office of Innovation and Technology to fund costs associated with significant technology upgrades occurring at the city and to fund the one-time $1.5 million Data Center upgrade; $1.9 million for the Office of Property Assessment to fully maintain the property assessment function; $1 million to the Office of Supportive Housing to compensate for federal sequestration cuts; $1.2 million to the Sheriff’s Office to hire additional Deputy Sheriffs for new Family Court Building; $500,000 for Community College of Philadelphia to help offset tuition increases; $500,000 to Parks and Recreation to fund expanded programs at recreation centers; $500,000 to the newly created Land Bank for one-time startup costs and $500,000 to the Mann Music Center to fund continued operations.
Neighborhood-centric spending proposals include $15 million for Departments of Parks and Recreation to fund improvements to facilities across the city; $16 million for the Streets Department to pave neighborhood streets throughout the city; $7 million for Fire and Police station improvements as well as for the completion of the former Woodhaven U.S. Army facility for police use; $5 million for improvements to neighborhood commercial centers; $2.5 million for a concourse extension linking existing underground markets in Suburban Station to the new Comcast Tower and $2 million for improvements to several library facilities.
Nutter touched on several core issues during his budget address, including education, the sale of PGW, and the continued contract negotiations with DC 33, the city’s blue collar labor union.
Before getting into the nuances of his budget — and after thanking a litany of city workers — Nutter reflected on his six years as mayor.
“Working together, this City Council and our administration achieved a great deal. We’re attracting new business, creating jobs [and] we’re safer, greener and growing in our population and economy,” Nutter said in opening his address. “In just the last two years, working together, we transformed the city skyline with more than $7.5 billion worth of recently announced, under construction or completed projects, including Comcast Innovation and Technology Center, a new $1.2 billion development project we announced last month.”
On education, Nutter noted that high school graduation and college attainment rates have risen since 2007, but repeated his contention that the School District of Philadelphia has a “structural funding deficit.”
“Our administration and City Council have time and time again shown leadership, increasing annual, recurring education funding by $155 million over the last three years. Despite increased funding from the city and making tough decisions to reduce costs and implement savings, the School District is operating under a significantly constrained budget because it did not receive the full funding it needed for its current budget,” Nutter said, adding that the district recently requested $320 million in additional recurring funding — $120 million of which would be generated by the extension of the one percent sales tax, a tax currently being debated in council. “Because we’re required to budget revenues consistent with existing law for measures that have already been enacted, our budget assumes that the District will receive that $120 million. But, and I have been consistent on this issue, we are in agreement that a 50/50 split of the one percent sales tax extension, coupled with the implementation of the cigarette tax, is vitally important for the financial stability of the School District and the fiscal health of our City Pension Fund. And I will continue to advocate for change on the sales tax extension legislation in Harrisburg.”
Nutter also intimated that he would work to secure the $320 million in funding requested by District Superintendent Dr. William Hite for Action Plan 2.0.
Nutter also apologized for closing libraries due to the recession of 2008, but vowed to include an additional $2.3 million in fiscal year 2015 funding to bring branch libraries up to full operation six days a week. Nutter’s budget also includes an additional $500,000 to help offset rising tuition at Community College of Philadelphia, and another $500,000 for Department of Parks and Recreation-sponsored programming.
Regarding PGW, Nutter announced earlier this week that the administration has agreed to sell PGW to UIL Holdings, and during his budget address said the sale of PGW would lead to “incredible business growth” and job generation.
“The proposed sale would freeze gas rates for three years. That means no rate hike for three years and any new owner cannot raise rates without the approval of the Pennsylvania Public Utilities Commission, just like PGW now,” Nutter said. “The sale of PGW could go a long way to rejuvenate our severely underfunded Pension Fund. The $1.86 billion agreement with UIL Holdings could infuse between $420 million and $630 million into the Fund.”
Nutter also addressed the elephant in the room — the administration’s dragged-out contract negotiations with DC 33. As DC 33 members chanted and shouted outside — well out of earshot of Nutter, Council members and gathered city officials — Nutter that he “wanted to give DC 33 a contract,” and that Nutter set aside money in the General Fund in fiscal year 2015 for contract settlements.
“I have said many times that I want contracts with all our municipal unions, and I know City Council feels the same way, but the agreements in my view have to be fair both to the financial interests of our citizens and our public servants,” Nutter said, while referencing the Wednesday ratification vote cast by DC 47 members to accept their recently-negotiated contract with the city, which will add $122 million in costs to the administration’s Five Year Plan. “That remains my goal as we continue negotiations with District Council Union 33, which unfortunately is now the only group of public employees that doesn’t have a contract that provides raises for workers. We are also concluding the arbitration process with the Firefighters Union, whose members received raises last year, and entering the arbitration process with members of the FOP who received multiple raises in their five-year contract … therefore, we are setting aside some of our fund balance for future labor contract agreements, as we did in our FY 14 budget.
“We are committing more than $44.3 million for potential obligations with DC 33, Local 22 of the Firefighters Union, Lodge 5 of the Police union and non-represented employees for the new DC 47 contract in the FY 15 budget,” Nutter said. “Over the span of the Five Year Plan, we are reserving more than $375.5 million for contract costs, including the full cost of the contract with DC 547.”