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State Rep. Jewell Williams D-Philadelphia www.pahouse.com/williams

Philadelphia's House Delegation calls on Pileggi to push measure to stabilize city's pension, finances

HARRISBURG, Aug. 11 – The state House's Philadelphia Delegation said it will hold Sen. Dominic Pileggi, R-Delaware/Chester, personally responsible if legislation aimed at stabilizing Philadelphia’s precarious financial situation is not moved in the state Senate by Aug. 15 -- the date that the city will be forced to lay off thousands of police officers, firefighters and other workers, as well as close health centers, reduce trash collection, and close entire service departments.

State Reps. Jewell Williams and Dwight Evans, both Philadelphia Democrats who co-sponsored the bill, said House Bill 1828 is critically important to the short- and long-term fiscal health and viability of the city of Philadelphia. It provides for municipal pension changes and authorizes a five-year temporary 1 percent increase in the local sales tax. It passed the House 112-85.

The legislation is now in the Senate Finance Committee, where it is scheduled for a hearing tomorrow. The committee's chairman, Sen. Pat Browne, R-Lehigh, has said a vote in committee isn’t expected until August 24. Pileggi contends there is no urgent need to move the bill and its passage should be tied to the state budget. However, the Pennsylvania Intergovernmental Cooperation Authority set Aug. 15 as the deadline for the city to get approval for the changes contained in the legislation or the city will be forced to make dramatic cuts in personnel and services.

"It’s stunning to me that Senator Pileggi is so short-sighted," said Williams, chairman of the Philadelphia Delegation. "We do not need more hearings. We need the Senate to take action. If Philadelphia collapses, so does the entire southeast region, the very region represented by Senator Pileggi. His failure to act is simply irresponsible and smacks of politics, not leadership."

House Bill 1828 would permit the city of Philadelphia to:

• utilize a 30-year amortization period for its pension fund instead of a 20-year period;
• defer a portion of city pension contributions in fiscal year 2010 and fiscal year 2011;

• defer $150 million of over $447 million in city pension contributions in fiscal year 2010;
• defer $80 million of over $538 million in city pension contributions in fiscal year 2011;

• repay deferred amounts with interest in total by fiscal year 2014;

• repay the entire $230 million deferral amount in fiscal year 2013 and fiscal year 2014;
• pay 8.25 percent interest on the amounts deferred during fiscal year 2010 through fiscal year 2014; and

• increase the sales tax by 1 percent for five years and earmark revenue from the increase to city pension payments.

"Senator Pileggi is one of the top Republican leaders in this state and he should show leadership on this issue," added state Rep. Cherelle Parker, a Philadelphia Democrat and delegation co-chairman who helped shepherd House Bill 1828 through the House. "He should understand that Philadelphia is more than Pennsylvania’s largest city; it’s also one of the largest cities in our nation, and arguably the most historic. House Bill 1828 provides the city with essential tools to help the city help itself. It does not cost the state one dime."

The measure would provide a total of $700 million in new revenue and savings over the life of the city’s five-year plan by authorizing the city to take actions to manage its pension obligations and to impose a temporary sales tax increase.

Williams said that if House Bill 1828 is not enacted by the legislature, the city will be faced with no choice but to dig deeper and make painful cuts in programs and services. According to the mayor’s office, these actions would require eliminating almost 1,000 positions in the city's police department and 200 in the fire department, closing two health centers, reducing trash collection from weekly to two times a month, and closing entire service departments, including Parks and Recreation, libraries, Planning and Commerce.  

"Thousands of workers commute to the city each day for their job; they will be affected," Williams said. "Thousands of conventioneers and tourists visit Philadelphia each year; they will be affected. Thousands of people from the region spend evenings and weekends in the city enjoying the Art Museum, the Zoo, Fairmount Park, the Kimmel Center, the Italian Market, the Constitution Center, the Liberty Bell; they will be affected. Thousands of college students are enrolled in the 26 colleges and universities in the city; they will be affected. And hundreds of vendors who provide the city with supplies and services will no longer have any business opportunities with the city; they too will be affected."

Philadelphia is the only city in the state that is both a municipality and a county. As such, Philadelphia taxpayers must pay for both municipal services, including police and fire departments, streets and recreation, and state-mandated county functions, such as courts, child welfare and mental health/mental retardation services. This affects Philadelphia’s ability to respond to this economic crisis in a manner not experienced by other cities, Williams said.

He added that the city, under the leadership of Mayor Nutter and Philadelphia City Council, has worked responsibly and aggressively to respond to the fiscal crisis, but the magnitude of the problem is hard to fully grasp.

Williams said Philadelphia had to close a $2.4 billion hole in its budget and five-year plan. Through a series of actions, the city has reduced this deficit by $1.7 billion.

Some of these actions included:

• stopping wage and business tax reductions;
• increasing a wide variety of fees and fines;
• eliminating nearly 1,100 full-time and 2,000 part-time positions;
• reducing overtime citywide and reduced the number of city vehicles by 335;
• enhancing delinquent tax collection efforts;
• deactivating five engine and two ladder companies in the fire department;
• reducing library services from six days to five days a week;
• mandating five furlough days for exempt employees; and
• stopping longevity and pay increases for civil service employees.

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