The controversial property assessment program Actual Value Initiative – AVI – took a brief backseat during Thursday’s council meeting, as members and community stakeholders threw their collective weight against another perceived scourge: the city’s penchant for entering into risky rate management agreements commonly referred to as “swaps.”
Councilman Jim Kenney’s resolution, which passed through council with a unanimous vote, urges the Pennsylvania Senate to enact Senate Bill 293, which would block all municipalities throughout the Commonwealth from entering such agreements.
SB 293, introduced in February by Sen. Mike Folmer and cosponsored by Sen. Dominic Pileggi, has been referred to the Senate Local Government Committee.
Pennsylvania Auditor General Jack Wagner has long been a critic of the tactic. According to Wagner, a swap is a financial contract between two parties betting on which way interest rates will move. The party that guesses correctly gets paid and the party that guesses incorrectly must pay the other party. The amount of cash being swapped is determined by the size of the debt being financed by bonds with variable interest rates. Wagner in January released a report on the Pennsylvania Turnpike Commission’s involvement in interest-rate swaps has cost Pennsylvania taxpayers and turnpike motorists at least $108.9 million.
A 2009 investigation completed by Wagner’s office of the Bethlehem Area School District found that on a statewide basis, 107 of 500 school districts and 86 local governments had $14.9 billion in public debt tied to swaps. The numbers have since increased to $17.5 billion in public debt, encompassing 108 of 500 school districts and 101 local governments. In the process, millions of public dollars have been lost in interest-rate swap deals.
While economist James Foster testified that the city will lose an additional $240 million if it goes through with swaps, Philadelphia Federation of Teachers President Jerry Jordan spoke of the impact these swap deals had and continue to have on students.
“Swaps certainly have a huge impact on our schools and our students, and I am here today to urge you to support the resolution against swaps in Philadelphia and in the school district,” Jordan testified. “Teachers have become experts on the toll that cuts to education funding have taken on our schools and our children. Philadelphia has only 42 librarians for its 239 schools; we’ve seen the layoffs of 101 school nurses, which has put our children’s health at risk; 25 percent of our schools don’t have music teachers, and there’s been less support for English as secondary language learners.
“These are just a few examples of how the cuts in state aid have been structured to hit Philadelphia the hardest,” Jordan continued. “And the money that the school district has lost on swaps would be money that would put those monies back into those services.”
Of particular note, council also passed a bill that would change the interest and penalty rates for unpaid taxes.
Council President Darrell Clarke wouldn’t floor the Earned Sick Days Bill, intimating that since Mayor Michael Nutter has recently vetoed the bill, there wasn’t much council could do about it at its regular weekly meeting.
Councilman Bill Greenlee recently introduced the legislation, officially titled the Healthy Families and Workplace Bill, and council passed it in late March.
“I am heartened by the vote, and the expression by a solid majority of my colleagues that healthy workplaces and fairness for employees are good for Philadelphia’s economy. This is about respect for all workers, including low wage employees,” Greenlee said. “This also is about public health, and keeping those workers away from the general public when they come down with a communicable illness.
“Today is a great day for the more than 200,000 Philadelphia workers who will be eligible to earn paid sick leave.”
Even without gaining the floor to state their case to council, supporters of the bill – led by the Philadelphia Coalition for Healthy Families and Workplaces – held a press conference in the hallway leading to council. During that press conference, many proponents blasted the mayor’s veto as painful and shortsighted.
“Mayor Nutter’s veto shows that he has chosen to side with cooperate lobbyists instead of Philadelphia’s families who need and want earned sick time. Small businesses and economists alike support earned sick time, and the mayor’s position against the bill misses a real opportunity to get our economy on the right track for all Philadelphians,” said Pathways PA Senior Director of Policy and Media Relations Marianna Bellesorte. “When workers without earned sick days have to forgo a day’s pay, or worse, lose their jobs because they are ill, it affects all of us.
“We call on the city council, which has twice passed an earned sick days bill, to stand up to the corporate lobbyists, override Mayor Nutter’s veto and bring earned sick days to nearly 200,000 Philadelphians who currently are forced to choose between their financial security and their health.”
Source: http://www.phillytrib.com/newsarticles/item/8495-council-argues-against-interest-swaps.html
Councilman Jim Kenney’s resolution, which passed through council with a unanimous vote, urges the Pennsylvania Senate to enact Senate Bill 293, which would block all municipalities throughout the Commonwealth from entering such agreements.
SB 293, introduced in February by Sen. Mike Folmer and cosponsored by Sen. Dominic Pileggi, has been referred to the Senate Local Government Committee.
Pennsylvania Auditor General Jack Wagner has long been a critic of the tactic. According to Wagner, a swap is a financial contract between two parties betting on which way interest rates will move. The party that guesses correctly gets paid and the party that guesses incorrectly must pay the other party. The amount of cash being swapped is determined by the size of the debt being financed by bonds with variable interest rates. Wagner in January released a report on the Pennsylvania Turnpike Commission’s involvement in interest-rate swaps has cost Pennsylvania taxpayers and turnpike motorists at least $108.9 million.
A 2009 investigation completed by Wagner’s office of the Bethlehem Area School District found that on a statewide basis, 107 of 500 school districts and 86 local governments had $14.9 billion in public debt tied to swaps. The numbers have since increased to $17.5 billion in public debt, encompassing 108 of 500 school districts and 101 local governments. In the process, millions of public dollars have been lost in interest-rate swap deals.
While economist James Foster testified that the city will lose an additional $240 million if it goes through with swaps, Philadelphia Federation of Teachers President Jerry Jordan spoke of the impact these swap deals had and continue to have on students.
“Swaps certainly have a huge impact on our schools and our students, and I am here today to urge you to support the resolution against swaps in Philadelphia and in the school district,” Jordan testified. “Teachers have become experts on the toll that cuts to education funding have taken on our schools and our children. Philadelphia has only 42 librarians for its 239 schools; we’ve seen the layoffs of 101 school nurses, which has put our children’s health at risk; 25 percent of our schools don’t have music teachers, and there’s been less support for English as secondary language learners.
“These are just a few examples of how the cuts in state aid have been structured to hit Philadelphia the hardest,” Jordan continued. “And the money that the school district has lost on swaps would be money that would put those monies back into those services.”
Of particular note, council also passed a bill that would change the interest and penalty rates for unpaid taxes.
Council President Darrell Clarke wouldn’t floor the Earned Sick Days Bill, intimating that since Mayor Michael Nutter has recently vetoed the bill, there wasn’t much council could do about it at its regular weekly meeting.
Councilman Bill Greenlee recently introduced the legislation, officially titled the Healthy Families and Workplace Bill, and council passed it in late March.
“I am heartened by the vote, and the expression by a solid majority of my colleagues that healthy workplaces and fairness for employees are good for Philadelphia’s economy. This is about respect for all workers, including low wage employees,” Greenlee said. “This also is about public health, and keeping those workers away from the general public when they come down with a communicable illness.
“Today is a great day for the more than 200,000 Philadelphia workers who will be eligible to earn paid sick leave.”
Even without gaining the floor to state their case to council, supporters of the bill – led by the Philadelphia Coalition for Healthy Families and Workplaces – held a press conference in the hallway leading to council. During that press conference, many proponents blasted the mayor’s veto as painful and shortsighted.
“Mayor Nutter’s veto shows that he has chosen to side with cooperate lobbyists instead of Philadelphia’s families who need and want earned sick time. Small businesses and economists alike support earned sick time, and the mayor’s position against the bill misses a real opportunity to get our economy on the right track for all Philadelphians,” said Pathways PA Senior Director of Policy and Media Relations Marianna Bellesorte. “When workers without earned sick days have to forgo a day’s pay, or worse, lose their jobs because they are ill, it affects all of us.
“We call on the city council, which has twice passed an earned sick days bill, to stand up to the corporate lobbyists, override Mayor Nutter’s veto and bring earned sick days to nearly 200,000 Philadelphians who currently are forced to choose between their financial security and their health.”
Source: http://www.phillytrib.com/newsarticles/item/8495-council-argues-against-interest-swaps.html
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