How did you come up with these recommendations?

We went to Council’s budget hearings over the last two years. When we couldn’t go, we listened to or read transcripts of the hearings. We talked to people inside and outside government who prepare and analyze budgets. We talked to citizens with questions about the budget. The idea for this how philly COULD work came about because we wanted to share our observations (as interested taxpayers) – and also because addressing issues related to the city’s budget fits squarely within Seventy’s mission to fight for government that works better.   

RECOMMENDATION #1:  COUNCIL SHOULD RETHINK THE BUDGET HEARINGS BY:
(A) NOT PERMITTING SINGLE ISSUES TO HIJACK THE TRADITIONAL BUDGET HEARINGS, 
(B) PRIORITIZING KEY CHALLENGES FACING THE CITY, 
(C) CHANGING THE FORMAT TO ENABLE MORE MEANINGFUL, AND LESS REPETITIVE, QUESTIONS, AND 
(D) MAKING ALL BUDGET DOCUMENTS ACCESSIBLE TO THE PUBLIC 

What's so wrong with the budget hearings? 

Nothing’s “wrong” with them. But the hearings aren’t designed to enable Council members to exercise what is arguably their most important legislative responsibility – the power of the purse – as effectively as they could.  

Virtually the identical routine is followed by Council every year after the mayor submits the next fiscal year’s budget in early March: six or seven weeks of questioning city department heads who parade in during designated time slots according to a continually changing (eight by our count this year) schedule. Council members come and go at random. If there, they get five minutes each to ask initial questions, and then three minutes for follow-up questions, until a bell goes off to signal that their time is up. A few sessions are held for three-minute comments from the public, occasionally during evening hours in city neighborhoods, but mostly during the day in City Hall.

If Council members aren't complaining, what's the problem?

Actually, Council’s most vigorous advocate for modernizing how the budget is handled, At-Large Councilman Bill Green, skipped most of the budget hearings this year, telling the Daily News: “The entire idea of waiting four hours and asking 15 minutes of questions is just not a good use of anybody's time.” Green said he instead meets with departments directly. Unfortunately, the public doesn’t get to hear what’s discussed. 

What issue "hijacked" the traditional budget hearings?  

During last year’s budget hearings and again during this year’s budget hearings, a single issue consumed an overwhelming amount of Council’s attention: the city’s new system for assessing residential and commercial property, known as AVI or Actual Value Initiative. (The School District’s funding crisis was a close second.) All the other pieces of the annual operating and capital budgets, large and small, suffered by comparison.  A number of city departments with budgets of $5 million or less were left off the hearings schedule to allow more time for AVI and the schools.  

What should Council have done: ignored AVI?

Of course not.  We do not question the amount of attention devoted to AVI. But once Council decided to put off implementing AVI during the 2012 budget hearings, it was no secret that AVI would top the agenda once again during the 2013 budget hearings. 

Couldn’t all-AVI related issues have been addressed during a concentrated set of hearings -- and at an earlier time – rather than allow them to overrun the traditional budget hearings? (The Nutter administration made matters worse by delaying the release of the new property assessment numbers from September 2012, as promised, until February 2013.)  

Was there any actual harm in not having separate and earlier AVI hearings?

Arguably, yes. They would have brought closure to the extreme anxiety felt by all property owners about the impact of AVI on their 2014 real estate tax bills. 

They also would have given the General Assembly more time to approve legislation that would give Philadelphia the power to (1) use age and financial need to help longtime homeowners in gentrified neighborhoods hardest hit by new assessments (such as Northern Liberties, Queen Village and the area around Graduate Hospital), and (2) put liens on properties owned by tax delinquents in other parts of Pennsylvania. Both measures were left dangling when the General Assembly left Harrisburg for summer recess.

Do you have other recommendations to improve the budget hearings?  

For starters, Council can make it a priority to devote significant time to how the city intends to meet its major challenges over the upcoming fiscal year. 

During his January 2012 inaugural address, then-incoming City Council President Darrell Clarke pledged that Council would act aggressively to confront what PICA has repeatedly warned is Philadelphia’s “greatest long-term fiscal challenge:” its ability to meet its obligations to current and future retirees. Finance Director Rob Dubow testified on March 25, 2013 that pension costs eat up 16% of the city’s budget – which puts Philadelphia “in worse shape than other cities.” Yet, during the 2012 and 2013 budget hearings, a detailed strategy for combating the pension problem was never articulated.  

Were other major challenges not addressed?

It was surprising not to hear more about efforts to bring down the high unemployment rate – 9.6%  in mid-April, according to City Controller Alan Butkovitz’s latest Economic Report – notwithstanding a “blueprint for action” contained in a January 2013 Philadelphia Jobs Commission report. In fact, in April 8, 2013 testimony, the Commerce Department’s Chief Operating Officer Kevin Dow told Councilman W. Wilson Goode, Jr. (who sat on the Jobs Commission) that the administration had not made a final decision whether or not to keep the Commission intact, as recommended in the report in order to hold the city accountable on jobs creation and retention on a continuing basis. 

You mentioned format changes? 

As Councilman Green suggested, the short window to ask questions is inadequate and frustrating. Because Council members come and go during any given testimony, many of the same questions are repeated.

How about pooling questions to avoid plowing over the same ground again and again? 

Each Council member chairs a committee that handles specific areas of city government. Councilman Curtis Jones, Jr., for instance, is in charge of the Committee on Public Safety that addresses all matters relating to the police and fire departments. Why not consider giving Councilman Jones the floor for a majority of the allotted time period to ask in-depth questions of those two department heads? And to continue with an especially meaningful line of inquiries without being interrupted by the alarm bell? This would not preclude other Council members from asking questions, but would at least better ensure that questions truly relevant to the purpose of the budget hearings get asked and answered. 

Anything else? 

One final thought – and this one relates to transparency, which we believe the public expects more and more from its government in an age where it’s technologically possible to make data readily available. During the budget hearings, Council members make multiple requests for follow-up information from the administration. Yet it is unclear whether the additional information is ever provided and, if so, how to access it. All budget information should be publicly available and easy to find online.  

Is there such a thing as "too much" public information?  

Not in our view. It’s pretty simple: if the information belongs in the public domain, it should be accessible. It is up to taxpayers to decide what they wish to read.  

While we’re on the subject of transparency: a great deal of time was spent during the budget hearings by Council members (notably Council members Blondell Reynolds Brown and W. Wilson Goode, Jr.) asking department heads to report on diversity within their offices. Some department heads came prepared. Many others did not. Next year, all city departments should be required to submit statistics on diversity within their offices before the budget hearings and this information should be made publicly available online. 

Aren't you expecting too much?  

We don’t think so. Taxpayers can’t expect too much of the people they elect to serve them. Actually, these recommendations are just the tip of the iceberg. There are cutting edge ideas for improving the budget process that other cities are using, such as iPhone apps to engage citizens. But those ideas are for another day. 

RECOMMENDATION #2:  CITY COUNCIL SHOULD HAVE INCREASED IN-HOUSE BUDGET ANALYSIS CAPABILITY 

How does Council go about analyzing the budget?

Council has a Chief Financial Officer (who, at $145,000, makes more than every member of Council except President Clarke) and a financial analyst. Council also has a technical staff, controlled by the Council President. Each Council member has his or her own staff. No one on the technical or Council members’ staffs (to our knowledge) is exclusively focused on the budget. 

By contrast, the city’s Budget Bureau, which operates within the Finance Department, has 17 full-time staffers with salaries totaling over $1.2 million annually.    

Are you saying Council needs a big budget staff? 

We are not talking about creating a new bureaucracy. What we are saying is that Council needs better tools to analyze the city’s spending in order to make more informed budget decisions. This could potentially be accomplished by redeploying existing staff and within Council’s existing budget. 

Do other City Councils have different models?

We are intrigued by San Diego’s Office of the Independent Budget Analyst (IBA), which is appointed by City Council, and was created through a voter-approved referendum. The IBA publishes an analysis of the mayor’s proposed budget within two weeks of its release, reviews the fiscal impact of all proposed legislation, offers training on financial issues for Council members and analyzes monthly revenue and expenditure reports by the City Comptroller. The IBA participates in all City Council meetings and committee meetings, often testifies in City Council and also publishes online reports on selected city issues. 

Are you recommending a similar office in City Council?

It’s something Council should at least consider. In fact, in Council’s last session before summer recess, At-Large Councilman David Oh introduced a proposed Charter amendment to create a Legislative Budget Office within Council to better inform its members on the budget process, “including the efficiency, economy, and effectiveness of government expenditures, as well as fraud, waste, and abuse.” You can read the proposal here.

Does Seventy have a position on this proposal?  

Not yet. We need to know a lot more about it, for example, how much the office will cost (the budget for San Diego’s 10-person IBA is $1.6 million annually), what qualifications are required for the job (by law, the head of the IBA must have specific professional qualifications and experience relevant to municipal finance) and how the independence of the office will be safeguarded (IBA’s employees may not have served on the staff of either the mayor or City Council, or have been a registered lobbyist, during the previous eight years). 

We urge Council’s Committee on Law and Government, to which the proposal has been assigned, to hold a public hearing to answer these questions and consider other ideas to enhance Council’s ability to conduct a more meaningful review of the city’s annual budget and to handle budget-related matters throughout the year. 

Doesn't PICA handle some of the things an IBA would do? 

PICA does issue revenue updates and reports on key city issues. But PICA doesn’t exist to help City Council. So it’s not a substitute for an in-house budget capability. 

For those who need a reminder: PICA is the city’s fiscal overseer that was created in 1991 when Philadelphia was on the verge of bankruptcy because of many years of high spending and bad budgeting. The state didn’t want to see the city go broke, but also didn’t want state taxpayers paying for Philly’s mess. So a five-member board whose members are chosen by the Governor and legislative leaders in Harrisburg was installed to fix the mess (by selling bonds -- in effect, taking out loans -- and giving the money to the city) and to oversee the city's budget and five-year financial plan. PICA will be around at least until the bonds are paid off in 2023.  

RECOMMENDATION #3:  THE MAYOR AND CITY COUNCIL SHOULD WORK TOGETHER ON THE BUDGET THROUGHOUT THE YEAR, INCLUDING HOLDING A MID-YEAR PUBLIC BUDGET REVIEW    

This seems like a pretty basic no-brainer recommendation. 

It should be. But the truth is that the customary approach to the budget virtually ensures passage of the mayor’s version of the budget, typically with little variation. 

Greater participation by Council on the front end – certainly before they receive the budget in March, but optimally on an ongoing basis throughout the year – may actually help soothe relations between the two branches. Unnecessary complications and distractions infected this year’s budget hearings in a number of ways. 

What kind of complications and distractions? 

•    President Darrell Clarke deciding to recess Council during Mayor Nutter’s televised budget address rather than silence city unions’ protestors. 
•    Councilwoman Marian Tasco cursing top administration officials over the delay of a playground project in her Ninth District. 
•    Councilwoman Jannie Blackwell accusing Chief of Staff Everett Gillison of refusing to hold AVI briefing sessions for her Third District constituents. 
•    President Clarke asking Budget Director Rhynhart why no one informed him that the city was trying to sell the Love Park Garage to raise revenues. 
•    Councilman Curtis Jones, Jr. wondering about the city’s anti-poverty strategy when Philadelphia has the highest rate of people with incomes below half the poverty line ($5,700 for an individual; $11,700 for a family of four) among the nation’s 10 most-populated cities. (The mayor announced a new strategy on July 11.) 

All of these episodes, and many similar confrontations, happened during this year’s budget hearings. But the tug-of-war was evident from President Clarke’s very first day of presiding over the 2012 budget hearings when he asked: “What’s the threshold that we as a Council have to meet to get something in this document?” 

Isn't this just the typical way our Councils and mayors relate? 

Not necessarily. Former Mayor Ed Rendell went out of his way to nurture a strong working relationship with then-Council President John Street. Michael Nutter’s relationship with his former Council colleagues is chilly at best and, at times, openly hostile. The result can be seen in legislation passed by Council designed to force the administration to give them more and better budget information.  

What legislation are you talking about?

One you might remember best was just on the city’s November 2012 ballot. City voters approved a proposed amendment to the Home Rule Charter (the city’s governing document) that gives Council the authority to require the Finance Director to provide additional budget information to Council, “including, but not limited to, information about the cost of performing specific functions, the effectiveness of such functions, and the costs versus benefits of proposed expenditures, and to require the Finance Director to provide such information.” 

Is Council trying to take over functions that belong to the executive branch?

Interesting observation. The Nutter administration at least tried not to view it that way with the ballot question. At Council’s Committee on Law and Government’s June 18, 2012 public hearing, city Budget Director Rhynhart testified that the Nutter administration agreed with the principle behind the proposal, i.e., using performance measurements and cost/benefit analyses to inform budget decisions. 

However – and this points to another problem that continually irks Council – Rhynhart said the administration would not have the technology required to provide this information for all departments by Fiscal Year 2014 (which began on July 1, 2013). 

Speaking about technology, why does the City appear to be so behind the curve on technology? 

That’s what Councilman Jones asked Chief Innovation Officer Adel Ebeid during his budget testimony. Another measure enacted by City Council this spring is to require the city’s Finance Director to submit an annual Information Technology Strategic Plan to Council, along with the annual operating budget. 

Do we have to wait until next spring to find out whether there is a greater flow of information between Council and the administration?

We hope not. Council should consider holding a mid-fiscal-year public budget summit, which many other cities around the country convene, for reports on the performance of city departments compared to budget expectations. The administration should readily participate.  

RECOMMENDATION #4:  CITY COUNCIL SHOULD MAKE DETAILS OF ITS OWN BUDGET PUBLIC  

I thought the City's budget is a public document?

It is. However, unlike other city departments (including the mayor’s office) that have pages and pages of spending details, City Council’s budget consists of one page, which you can see here

We know little more than Council’s overall budget for this fiscal year: $15.8 million, with almost $14 million going to salaries and benefits. We also have no idea about funding received by individual Council offices, which is distributed by Council’s President. 

We can find out the details of Council's budget during the budget hearings, right?

Actually, no.  Again, unlike most city departments and other taxpayer-funded units of government (including the School District), there is no public hearing for anyone to ask questions about Council’s budget. Every year, Seventy asks the President of Council to make Council’s budget public and to hold a hearing. (We even suggested a way to do this, which you can read in this year’s letter to President Clarke here.) 

How did Clarke respond?

He never responded.  Neither did his predecessor Anna Verna. 

The Council President is the only person who can make this happen. This is unfortunate because in responses to the Ethics Agenda sent by Seventy to all 2011 City Council candidates, the following now-Council members said they would support making Council’s budget (and the budgets of individual Council members) available online and holding a public hearing on Council’s proposed budget: Bill Green, Dennis O’Brien, David Oh, Brian O’Neill, Maria Quiñones-Sánchez, Mark Squilla. Opposed to the idea was Blondell Reynolds Brown, who said budget “details” were already available online. The other City Council members did not respond to Seventy’s Ethics Agenda.  

Why do the details of Council's budget matter? 

Taxpayers pay for their government.  They deserve to know where their money goes. 

Council’s continuing refusal to present their budget – especially when Council is increasingly demanding more transparent and readily available information from the Nutter administration – is arrogant and disrespectful of the public. These are among the reasons for Council’s continuing mediocre job performance ratings – 35% approval and 43% disapproval, according to the PEW Charitable Trusts’ February 2012 public opinion survey.   

So here is our maiden edition of how philly COULD work. We hope it inspires you to learn more about the city’s budget process and to give us your ideas for the budget or for future editions. Please send them to futureofthecity@seventy.org

07/16/2013