Group Moderators: Bryan McHale and Joan Davis

Group Overview:
This group had 26 participants, including several city workers from Fire, Human Services, Public Health, and other departments. It took a bit of time to understand the process and their charge. A few had process concerns, principally about making decisions without supporting facts and that the Actions list might present a filtered view of choices. After some initial frustration at not being able to evaluate new suggestions, the group set to work. They are to be congratulated for their thoughtful input as described in this report, resulting in decisions that could close the budget gap roughly $116 million. Topics are presented in the order they were raised.

Low Hanging Fruit
• No. 21 Parking Garage/Lot Fee Increase
o The group unanimously supported this revenue source, hoping to supplant some job cuts elsewhere. One objection raised was a concern for the safety of people forced to choose street parking over a garage because the cost became prohibitive.

• No. 16 Vehicle Fleet Reduction
o The group unanimously supported fleet reductions, citing the use of new cars by city officials. However, there was a stipulation that the standard for reductions not impact public safety; police and emergency services vehicles should remain intact.

• No. 20 Eagles
o The group unanimously agreed that the Eagles should be made to pay up. End of discussion.

• No. 1 Administrative Reduction
o The group regarded Administrative staffing as high and unanimously supported this reduction. City Council overstaffing was specifically mentioned; however, Councilman Green shared that Council budget is outside the mayor’s control.

• No. 17 Amusement Tax Increase
o The group agreed to some willingness to pay more, but standards were recommended to make the impact selective. The city should ensure that those in need are not be impacted, and a progressive increase was suggested; for example, high-end tickets ($50+) should incur a greater tax burden. With this condition, the increase passed unanimously.

• No. 10 Licenses & Inspections Reduction
o Participants unanimously called for “getting rid of L&I.”

Several options were discussed as “Low Hanging Fruit” but could not gain the 75 percent support needed and were tabled for later consideration. These rejected options included:

• No. 22 Real Estate Tax Increase
o Members of the group expressed concern for the impact to the RE market in Philadelphia (willingness of new homeowners to buy into that tax burden) and the inability of low-income homeowners to comply. Wanting to first examine the other potential cuts first, this topic was tabled, with only three votes in favor of an across the board increase.

• No. 19 Business Privilege Tax Increase - Net Income
o Discussion touched on making banks and other financial institutions that are currently exempt pay BPT before a general increase. Concern for the impact to Philadelphia’s business climate led to the unanimous rejection of this option.

• No. 1 Administrative Revenue Option - Increase Recording Fees
o Concern over the impact to low-income constituents resulted in the initial rejection of this option, with only three votes in favor. The subject was raised again and later passed as a “Shared Pain” item.

• No. 23 Real Estate Transfer Tax Increase
o Members of the group felt that this option would make a bad situation worse, noting that the city is leaking residents now. A standard was suggested to exempt the elderly, but there were still only four supporting votes.

• No. 3 DROP Program Elimination
o Discussion covered the original intent of DROP for just police and fire as a pension plan, offsetting their exclusion from Social Security benefits; the program was later expanded to all city employees. There was agreement that DROP should no longer be available to elected officials, but retained for police and fire workers. There was limited support for eliminating the program across the board, with only two votes.

No Way, No How:
• No. 8 Human Services Reduction
o The group voted unanimously to remove this from consideration, citing we would pay later if we reduce child protective services now.

• No. 6 Free Library Reduction
o Concern for children with no other access to computers, and the elimination of after-school programs convinced all but two participants to take this off the table.

• No. 5 Fire Department Reduction
o One participant cited the roles were already reduced by 148 fire personnel. The majority agreed that further reductions would make adequate coverage impossible. Twenty participants voted against any further reductions, suggesting that other operations costs be considered that don’t involve employee cuts. Our fireman was right when he said, “You don’t want to see me, but you want to know I’m there.”

• No. 7 Housing Reduction
o The group unanimously agreed that the situation is dire now and no further reductions should be made. Note: There was confusion about the connection of vacant lot greening to this budget item.

• No. 15 Streets Revenue Option - “Pay-as-You-Throw”
o Discussion assumed many would not comply at a cost, resulting in rampant dumping, rats, and public health issues. The group voted unanimously that this was a bad idea in Philadelphia.

• No. 9 Law Department Reduction
o Participants begrudgingly admitted a dependence on the city’s lawyers to keep the city’s costs [liabilities] down, and recognized the positive impact this department has on efficiencies elsewhere in City Hall. Assuming outside counsel would no longer be used, the group rejected the proposed reduction.

One additional topic was discussed for placement in the “No Way, No How” bucket, but it did not have the required 75 percent support:

• No. 11 Police Reduction
o An extended conversation took place regarding the state of crime and crime prevention in Philadelphia, as well as the link to item No. 12 - Prisons. Recognizing the potential savings with cuts in this service area, some felt the opportunity was too big to ignore, stating, “We can’t get there without reductions in police.” The group rejected taking this off the table, with only two vote supporting “No Way, No How.” The topic was considered again during the “Shared Pain” dialogue but rejected there as well.

Shared Pain:
• No. 13 Public Health Revenue Option - Co-Pays and Fees
o One participant cited that health centers are prepared to collect payments and would be able to apply fees on a sliding scale based on a means test commonly used by hospitals. The group unanimously agreed that this revenue option, although not desired, it is a viable revenue option provided that it is applied in a reasonable way that considers ability to pay and does not put public health at risk.

• No. 21 Sales Tax Increase
o With suggestions for selective application such as targeting tourist industry and liquor sales, the group unanimously voted in favor of the proposed increase.

• No. 15 Streets Reduction
o Participants considered twice monthly recycle pickup and blinking traffic lights to be reasonable service reductions, while less responsive street repair / cleaning were more painful tradeoffs. In the end, 22 voted in favor of the proposed 20 percent reduction.

• No. 15 Streets Revenue Option - Fees for Commercial Collection
o Participants expressed surprise that there aren’t commercial fees today, but set a standard that small businesses should be exempt. Twenty voted in favor of this revenue option.

• No. 25 / No. 27 Wage Tax Increases for Residents and Commuters
o The group objected to any increase, but in the end determined that the city had to generate income from somewhere to offset the items deemed “No Way, No How.” Proposing that steps be taken to approve a progressive tax instead, the group voted unanimously for a near-term increase of the higher revenue options - .1 percent increase to 4.0396 percent for residents, 3.5997 percent for commuters.

• No. 1 Administrative Revenue Option - Increase Recording Fees
o The group again raised this option, and this time 20 voted in favor, with limited additional discussion.

Several options were discussed as “Shared Pain” but could not gain the 50 percent support needed and were tabled for later consideration. These rejected options included:

• No. 11 Police Reduction
o The group again considered reductions to the police force, including just not filling open positions; reallocating officers / community relations personnel to the street; cuts to just management and civil-service positions; and a lower 5 percent reduction instead of 10-20 percent. Statements regarding improvements achieved in just the past couple of years would be lost, brought strong agreement that the crime rate today is still unacceptable. The group voted unanimously against the proposed 10-20 percent reductions across the board, and only three voted in favor of a 5 percent reduction.

• No. 12 Prison Reduction
o The group considered a standard of releasing only nonviolent offenders but felt the proposed reduction went beyond that. Statements included: “Repeat offenders should go to jail and stay in jail,” and “Police arrest today, then arrest again tomorrow because we don’t keep them there.” The majority rejected prison reductions, with only two voting in favor.

• No. 14 Recreation Reduction
o Stating “we depend on rec centers to keep the neighborhood sane,” participants considered other options. It was a close vote, but this item could not gain majority support for an across the board reduction as proposed, with 12 voting in favor.

Gut Wrenchers:
Time didn’t allow us to revisit topics that were put aside early in the process; those included increases to Real Estate, BPT, and RE Transfer taxes; eliminating DROP; and reductions to Recreation, Prison and Police budgets. Had we done so, we may have had a few added as Gut Wrenchers.

The final tally for this group was 58 points.

We did not discuss the list of Big, Hairy, Ambitious Goals.

Recap of Other Ideas:
• Use prisoner labor to service Fairmount Park.
• Reduce or eliminate tax abatements.
• Find ways to reduce theft of city / school property.
• Charge Real Estate tax and BPT to institutions that are not required to pay now. Banks, financial institutions, educational institutions, and nonprofits were thought to have tax exempt status. They should also pay for all city services used.
• Consider the potential revenue generated by casinos.
• Reduce the number of City Council representatives and their staff.
• Make DROP unavailable to elected / appointed officials.
• Ensure that all opportunities to save operating costs be taken before considering any reduction in staff. Eliminate duplication of services to further reduce operating costs; e.g. redundancies now that 311 has been implemented to answer calls.
• Collect all fines due to the city.
• Redraw the crime emergency grid and redeploy some police from areas like Chestnut Hill and Penn’s campus.
• Eliminate police overtime for court appearances.
• Reduce rec center hours, but don’t close any.
• Solicit private resources to bolster the budget for rec centers / pools.