AFSCME D.C. 47 Challenges Budget Forums Calling It the "More Rats or Fewer Libraries" Campaign
On Monday, members of AFSCME District Council 47 held a press conference to challenge the mayor's community forum process around the budget crisis.
President Cathy Scott gave the opening remarks and explained "The question shouldn't be what cuts do we make to address the budget crunch?" Instead she argued that in this time we must ask, "how do we run the best possible city with the current level of services? How much will it cost? And where will we find the revenue." She ended on a hopeful note exclaiming: "This is the time to do this right!" Amongst other speakers, Stan Shapiro spoke on behalf of One Phiadelphia, a coalition of groups across the city. In the context of Philadelphia's budget crunch Mr Shapiro argued: "It's time that the Governor and legislature remembered that Philadelphia is part of Pennsylvania. The State owes the City $1.5 billion in Court costs according to Pennsylvania Supreme Court rulings. Unless that debt is paid, the catastrophic budget cuts that are coming will be fully the responsibility of our leaders in Harrisburg." Ending the event, Eric Braxton from the Save the Library Coalition spoke demanding a fair open process around the budget, which does not pit one service or worker against another. Along with Mr Braxton, Mr Shapiro and Ms Scott, John Hogan spoke from Neighborhood Networks a .
This event marks the beginning of a heightened campaign to challenge the Mayor on the proposed budget cuts while pushing for a more genuine community process then the one the University of Pennsylvania Project for Civic Engagement offers. The first community forum on the budget is this Thursday, and promises to see more community opposition from One Philadelphia and the Save the Library Coalition. Coming soon is a video from DC 47's press conference and follow-up on later actions around the budget forums. Below see Cathy Scott's entire comments.
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Penn/WHYY Forum Press Conference
Monday, February 9, 2009
My name is Cathy Scott. I am President of AFSCME District Council 47. Joining me today are, Eric Braxton, a spokesperson from the Library Coalition, Stan Shapiro from One Philadelphia, and John Hogan from Neighborhood Network.
We thank you for attending this press conference.
Over the next weeks before the Mayor' March 19 budget address, the City has the opportunity to explore all aspects of the budget for the next five years before making decisions that will impact all of us. The City and its elected officials have a responsibility to openly, transparently, expertly and honestly examine every potential action that may impact the lives of our fellow citizens. To date, the Mayor has failed to do so.
The Mayor was widely criticized for the secret process he engaged in prior to announcing his first round of cuts in City services. Responding to blistering criticism, the Mayor, the City and their allies have now embarked on a Public Relations Ploy to give the appearance of openness, transparency and honesty as they prepare their next round of cuts in services.
In preparation for his Budget address, the Mayor has announced two programs to explain, from his point of view, the wisest choicesin what has become termed, The Budget – Round Two.â€
One program is Phillystat meetings.
The second program is a forum co-sponsored by Penn and WHYY that is subtitled Community Forums to Explore Budget Cuts. The title announces that the forum results are already determined – more cuts on top of more service cuts.
The initial forum will be repeated in three other areas of the City. But one can expect the results of the first forum to be mirrored at the other three.
By design, by intent, and, to date, by action, the program is fatally flawed.
It presents only one option to the public -- Cut services here, or cut services there. We call it the, More rats or fewer librariescampaign. The result of the forums is foreseeable. It' predictable. And, unless the process is subject to major revision, it will lead the City and its citizens down a false and self-defeating path.
Pretending democracy, claiming citizen involvement with some limited freedom of choice, the forums will provide little political cover from another round of blistering criticism because they provides only false and unacceptable answers to a situation that has many facets.
Unless a change is made in the information and decision making process, the deck has already been stacked in favor of additional service cuts.
With only the information presented to date, true civic engagement is impossible.
Picture Philadelphia as resting on a four legged stool. Now, due to the economy, the four legs are uneven and Philadelphia is shaky. If you keep sawing away at the serviceleg, the stool will fall over.
There are other ways to even the legs of our wobbly financial stool. Build up income. Streamline spending. Collect uncollected revenues. Make those who get a free ride pay their fair share. Ask those who benefit more to pay more.
There have been dozens of ideas for revenue increasing measures that do not require citizen tax increases.
To mention a few:
The new members of City Council presented a plan.
The Controller presented areas to raise revenue and collect taxes.
The newspapers have targeted abatement losses, perks and pet projects, red tape and inefficiencies.
A recent proposal suggested taxing oil refined in Philadelphia by just twenty-five cents per barrel that would add millions to the City' budget options.
The union I represent will continue to provide additional sources of new and lost or uncollected revenue over the period of these forums. Other unions are prepared to identify areas for savings and enhanced revenue.
These are not insignificant amounts. Over five years, these proposals would save or produce hundreds of millions that should be part of the pie citizens are falsely being asked to cut up at forums.
We stand in front of a building that used to generate $121,000.00 in real estate taxes to the City. It was bought by Penn. Due to Penn' tax exempt status, it now generates only $83,000.00 in real estate taxes – a figure Penn seeks to reduce further.
There are hundreds of similar properties throughout the City, which pay little in real estate taxes but gobble up costly city services -- for example, trash collection, street lighting, fire and police protection.
At Temple, there are buildings just like this. Children' Hospital continues to eat up city blocks and services and skips on paying its fair share.
There used to be a program that generated millions to the City. It was called PILOT – Payments In Lieu Of Taxes.
Rather than addressing making the wealthy pay their fare share, the Mayor' Phillystat materials promotes these three exempt entities as areas of growth which will bite even more off the real estate tax rolls.
But, there is no talk of PILOTS, either mandated or voluntary.
Before continuing callous service cuts, let' ask, what does Amtrak pay? Is that fair? What does Independence Blue Cross pay? Is that fair? Why does SEPTA pay less than the Sunday Breakfast Association an organization that tends to the homeless and poor who can ill afford more service cuts. Is this fair?
If PILOT payments were made equaling just 40 percent of real estate taxes currently exempted, the City would collect more than $38 million a year. Or, more than $190 million over five years. Just 14 of the largest exempts, paying a fair share would garner $21 million per year. Or, more than $104 million over five years.
Leaving aside that only the government' information will be presented, the only two announced questioners of these facts will be Tom Ferrick of WHYY and Chris Satullo.
Neither is totally independent of the process. Sometimes just the appearance of a conflict of interest is enough to raise questions. I have heard some of those questions.
Does Mr. Ferrick come to the table with a mind already made up? His recent writings on the budget matters suggest he will. Mr. Satullo is the co-founder of the Penn Project for Civic Engagement – the group running the forums. Penn, as explained a moment ago, has a stake in the outcome of the budget decisions.
Will the question be asked, Should Penn pay the City for the many services it currently receives for free or should we close the pools to save money?â€
I can predict the answer to the question if it is asked. But, I cannot predict that the question will be asked.
No one is suggesting that Penn, WHYY or the Mayor has any ulterior motive. But any pollster or researcher will acknowledge that how you present a question can determine how it is answered.
An example. Would you rather have government raise your taxes or accept some cuts in minor services? Would you rather government did a little better job collecting taxes or see cuts in services? Similar questions. Different answers.
This difference of intent is at the core of the situation facing Philadelphia.
It is our position that the second, third and fourth forums must be changed to address the other legs of the wobbly stool. Specifically, one meeting for discussing increasing revenues; one to discuss potential savings; and, the third, to discuss the implementation of a comprehensive program under which the City actually collects what it is owed.
Genuine engagement of the citizens requires the citizens to have all the facts before they are asked to make a choice.
The question at the remaining forums shouldn’t be, What cuts do we make to address the budget crunch?
The questions should be, How do we run the best possible city with the current level of services? How much will it cost? And, where do we find the revenue?â€
There is time to do this right. Today, I ask if there is the will and courage to do this right.
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This is One Philadelphia's position on the City Budget Crisis
ONE PHILADELPHIA FIVE YEAR BUDGET PROPOSAL
Mayor Nutter is forecasting a deficit of more than $1 billion over the life of the City's next Five Year Plan covering the period from Fiscal Year 2010 to 2014. To cover the shortfall, City officials have revealed that major service cutbacks are likely in such areas as trash delivery, homeless services, health centers, libraries, fire and police services, recreation centers and virtually everything else that Philadelphians rely upon. These cutbacks would come in the face of a growing economic upheaval that is throwing thousands of Philadelphians out of work and stressing the City's social service delivery service system to the breaking point.
One Philadelphia recognizes the fiscal challenges that the City faces. We also applaud the Mayor's efforts to explain in detail the nature of those challenges and to solicit input from residents throughout the City to deal with them. One Philadelphia intends to provide that input, and hopes that the Mayor's budget process guarantees thoughtful review of the positions presented below, as well as all other community offerings.
OUR POSITION
One Philadelphia is a network of organizations committed to building a united Philadelphia community, one that advances the fundamental rights of all of its people to a living wage, decent housing, adequate food, education and medical care and necessary social services, in a safe and healthy environment.
Solutions to this crisis must be based on values and priorities that flow from a vision of a just world. We cannot impose the burden of solving problems on the backs of those who already have little or nothing left to sacrifice, nor on those working people who are just struggling to get by.
Further, this crisis was not created overnight, and to be resolved in an equitable manner, cannot be solved overnight. Fortunately, the City is committed to a five year planning process. That five year process should apply to the effort to develop new and better funding streams, as well to any efforts to make the City government more efficient. If we try to solve the $1 billion shortfall all in the first year, much unnecessary suffering will be caused.
With a long range perspective the City can solve the main five problems that inhibit its ability to raise the funds it needs to preserve and enhance City services.
In order of importance these problems are the following: 1) failure of the City to use all of its revenue-raising tools; 2) lack of federal support for cities; 3) failure of the Commonwealth to adequately fund City services; 4) failure of the Commonwealth to empower the City to enact progressive tax measures; and 5) the need for the City to restructure its taxes.
1. Failure of the City to use all of its revenue-raising tools.
A variety of good revenue sources are available that have been ignored by the City. The City Controller recently identified up to $400 million of uncollected fees, fines and other debts due the City that the City has failed to collect, or sometimes even bill for. The Eagles and Phillies are doing little for a City that has done so much for them. The Eagles owe the City $8 million in superbox fees, and both teams collect a total of $30 million a year for debt service on their stadiums, an amount the City can't afford. The teams should be asked to waive or defer those payments until the crisis is over. Huge non-profit institutions like the University of Pennsylvania and a variety of hospitals consume services but pay no taxes to the City. They should be asked for contributions in lieu of taxes. Grantees of other abatements could be asked to waive them, and the program cancelled going forward.
The City should also look to cut expenses is ways that don't impact services. For instance, it should review all of its outsourcing and cancel contracts for services that it could provide more cheaply in-house.
The Solution: The City should vigorously pursue to conclusion all of these options before assuming that any of its revenue gap must be filled through service cuts or increases in regressive taxes.
2. Lack of Federal Resources
Cities have been the unwanted stepchildren of the national government at least since Ronald Reagan's presidency. But cities remain the center of commercial, cultural and lifestyle dynamism in the United States, not to mention the place in which most of us live. The federal government can no longer simply leave cities to their own declining resources. This is especially true when Washington has extended massive aid to huge Wall Street brokerage and banking firms whose greed and hubris are directly responsible for major urban budgetary shortfalls. In Philadelphia, as Mayor Nutter has pointed out, the collapse of Wall Street has massively grown the City's unfunded pension debt.
The Solution: Our federal representatives must step up to demand that the TARP program include low interest loans to urban pension funds like Philadelphia's, and provide other sources of low interest credit to cities. This single step could save the City hundreds of millions of dollars over the next five years in increased pension expenses.
We also applaud Congressman Brady's legislation to restore revenue sharing to cities, and support that measure.
3, Failure of the Commonwealth to Fund City Services
In its final report, the City Tax Reform Commission noted that the City's overall tax burden is seven times higher than the median of other Pennsylvania counties, and more than ten times the average burden of other Pennsylvania cities. These ratios are unconscionable and require that our representatives insist on fair treatment.
The Solution: One immediate step they could take would be to provide funding for the Philadelphia courts, as required by the State Supreme Court years ago, but to no avail. In addition, the State should substantially increase funding for City social services. An emergency revenue sharing stream should be created for all cities in the Commonwealth with distressed pension funds. Finally, state law should provide that large institutional non-profits must pay a fee in lieu of real estate taxes so that they bear a fair proportion of the City services that they consume.
4. Failure of the Commonwealth to empower the City to Enact Progressive taxes
As we have pointed out, the City is overtaxed. But after 16 consecutive years of tax cuts, it may be time for the City to at least temporarily reverse course. However, the City's ability to do that in any kind of fair way is inhibited by restrictions imposed under state law. The chief problem is the "uniformity clause" of the State Constitution. That provision, creates legal uncertainty, at best, about any City efforts to structure state or local taxes in a progressive manner.
The Solution: The clause should be repealed. In addition, state law protects banks, insurance companies and PECO from being taxed at the same rates as all other businesses in Philadelphia. That provision also must be repealed. Other measures that are recommended below in the City tax restructuring section may also need state approval in order to be enacted.
5. The City Must Restructure Its Taxes.
The City may well have to raise some or all of its major City-based taxes, namely its wage, business and property taxes. Each of them should ideally be restructured before they are increased. In the event that there is insufficient time to obtain needed authority from the state in order to avert service cuts, however, One Philadelphia supports such increases in current taxes as they are currently structured to the extent needed.
The Solution:
The following changes should be made in the tax structure:
a) Wage Tax. The City should use its current authority to exempt low wage workers from the tax. As soon as possible, the wage tax should be converted to an income tax, preferably with progressive rates, which would broaden the tax to cover dividends and capital gains.
b) The Business Privilege Tax. This is actually two taxes, one of which falls on business gross receipts, the other on net income. There are a number of ways to target this tax to fall more heavily on big, profitable businesses, particularly those that are located outside the City that sell products or services into the City. To accomplish that, the gross receipts portion of the tax should be amended to do one or more of the following:
1) exempt the first $25,000 of receipts from the tax;
2) allow businesses to deduct the gross receipts tax that they pay against their net income tax liability.
In addition, insurance companies, banks, utilities, stock brokerage firms and port related businesses should pay the tax at the same rate as all other businesses. And an oil processing tax that was in effect for only one year in the 1980's should be reinstated.
c) Real Estate Tax
The real estate tax is highly regressive since it is imposed without any regard for the income of the payer. And it is highly arbitrary in Philadelphia due to an assessment system that is skewed against people living in lower income neighborhoods. Two things should happen before there is any increase in the real estate tax; the assessment system must be equalized, and protections must be created for low income homeowners. Either of the following would be acceptable protections for low income homeowners:
1) a circuit breaker that would cap taxes paid at a certain income percentage of income; or
2) an exemption of a certain dollar amount of a property's assessment application of the tax.
Instead of an absolute exemption, a deferral of the tax that would otherwise be exempted would be acceptable.
In addition to these two measures, the property tax abatement should be repealed.
What we've presented here is a menu of options that would help fill the revenue gap that the City now faces. We hope and trust that together these ideas advance the discussion of how to preserve vital city services in a manner that is just and affordable to all the people and businesses in our City.