become starts now. >> good evening, and welcome to "business matters," very, very special show tonight, mayor ed pawlowski, mayor michael nutter. we are sitting in a beautiful rejuvenation of a city. mayor nutter first and foremost, thank you for coming up. i wanted to first ask you. this is our mayor's day, we are not only going to honor mayors but all municipalities across the valley large and small. so thanks for being here. >> let me give a huge shout out o ed pawlowski, doing a fantastic job. he is a leader in the u.s. conference of mayors but also a great friend to thank you very, very much. >> unbelievable job. he rejuvenated a city. >> i appreciate that. thank you very much. >> mayor, let's start with this, and that is, did you ever envision -- i know when we talked about this eight years ago when you first took office, things were not as bright. did you ever envision you would be where you are today? i know you want to say, yes, but is this beyond your wildest dream? >> it is. ten years ago we came in. we were pretty much on the fast track to bankruptcy we were talking it, thinking about it, our finances were down, economy was in shambles, we weren't seeing growth, weren't seeing jobs and ten years later it changes. we went to multi-month-old deficits, we have surpluses. we solved over pension problem. we may be the only people in the state to have a fully funded pension, which reduced our cost dramatically into the general fund. we have a billion dollars in new investment. crime is down eight straight years in a row. we have 4,000 jobs coming back into the urban core and we have been fortunate not to have to raise property taxes. and now we are the fastest growing city in the state of pennsylvania. >> had you not, for say, gotten the water lease, you would be looking at bankruptcy. >> we would have been looking at bankruptcy. there is no doubt. >> you have to be an entrepreneur in this world. and you took a shot at the philadelphia gas works is something you felt strongly that couuld have helped your city? >> we are still in the batter's box. it's a huge undertaking. it's a big deal. it's the largest energy transaction in the united states of america right now. we have a company out of connecticut, uil, which bid $1.86 billion for the philadelphia gas works. philadelphia is the largest cy in america where a municipally owned gas company. we have owned it 176 years. we have had it enough, and the companis doing well, but could do that much better in private hands. gas service at least in my opinion is not an essential municipal service. and uil can do it a lot better, and have access to capital markets that pgw does not. they will invest in levels in pgw is not in a position to and can do more things. investment in our l and g gas facilities as well as exploit opportunities with marcellus shale. so that's one thing that we are working on as ed talked about, the allentown, we have had of course in tough times, recession was hard on all of us. mayors matter, the things that we do make a difference in people's lives every day, and what we are running is small, medium and large coorptions. i want to thank the greater lehigh valley chamber of commerce for, one, hosting this event, but we run businesses. we don't necessarily create jobs. we create opportunity by keeping the taxes low, driving crime down and being innovative as the entrepreneurs that we are. >> mayor, do you think the new governor will be helpful? how will your role change, i guess is the question? >> we will have to figure that out. pennsylvania as we often do, we sent a couple of different messages on election day. the first time ever that incumbent governor running for reelection has not been re-elected. that's never happened in our history. at the same time the senate republican caucus grew, the house republican caucus grew and governor elect tom wolf will have to figure out in a practical business like fashion how am i going to work across the aisle and have the respective relationships that get things done for pennsylvania. still looking at a large deficit. education was, i think, the number one issue in this campaign across the commonwealth of pennsylvania. we have to invest in our children, which is an investment in our own future. >> do you think we will see, mayor, some moneys for education? is that your hope? >> i think it's inevitable. the hole is so huge, and the greatest source out thereor new revenue. as mayor said, seen that is limited because it's state control. the schools affect what drives the economy in our cities. if we don't have folks wanting to, middle class folks moving back into the urban cores the city are not going to grow and the school districts play a huge role in the decision pros e having the investment in public education is going to be the governor's number one task, and it will be very manically beneficial for municipalities in as we get more money. and we need a fair funding formula that funds urban schools. >> we are one of three states in the united states of america is that does not use a student weighted funding formula that looks at how many students go to the school, what's the distance they live from their individual school buildings? what is they are special education or intellectual disability needs? english as a second language? there are 40 other examples across america. this is not rocket science. it's some form of math to figure out a fair funding formula to help better educate children who are going to be your employees eight, ten, twelve years down the line in helping your business to become that much better. so we have to take this issue on. it affects all of us, whether you are directly i charge of schools or not, if you don't have a well educated public, the business people i have talked to in philadelphia and the region, presidents, ceos, chairs of companies, the first question out of their mouths is what's going on with schools? it used to be tax breaks and tax levels and they get to that, but it now has really risen to the number one issue. if we are not investing in ourselves, we are not investing in our own future and it doesn't make sense. there is no argument that anyone could make as to why we could not invest properly with accountability in educating children. >> you are watching "business matters," because if it's business, it matters. >> your thoughts on charter schools. i know in allentown's case, $22 million goes to charter schools. and in your case -- well, any way, talk about that, your thoughts on charter schools. >> charter schools are a mixed bag. they were supposed to be laboratories really for testing new ideas and new theories, whether it's medical charter school or arts charter school, and it ha supplemented now public school systems. what it's doing with the formula, funding formula that they have really, i think, totally screwed up in harrisburg is it's taking money directly out of the public school coffers. so it's in direct competition to the public school. we are decimating the urban school districts who have a difficult time funding the operations based on the criteria mike talked about. so it's a huge drag on our school budget. >> half of the charter schools in the state are in philadelphia. half of the charter schools in the state and almost half of the students in charter schools are in philadelphia. so we have been charter friendly. you are talking hundreds of millions of dollars, but it was the reimbursement line item in the state budget. that was cut completely. that cost us $120 million a year, just from that. and with explosive growth and the fact that there is not a separate line item now as ed said, it is a direct drain on the rest of the school system, and so when kids leave regular district managed school to go to charter school which i support high performing charter schools. we have some that are great, some that are okay, and some that are low performing. they should be closed. when kids leave the various schools they don't leave in compact groups of 30, it's five from this school, eight from that school. so the legacy cost for the regular district managed school are still there. you have to heat the place, light the place, clean the place and you end up with same number of teachers and less money because the money went with the kid to the charter school. >> advertise example, we always talk about this. it's a matter of zeros. my zeros are a little bit bigger than other zeros in this room. >> there is a lot of zeros in this room. >> budget, budget tony. -- i lost my train of thought now. but for us, last year, the overall deficit to the school district was about $22 million. $19 million of that came from charter schools. now, that's height. huge.when you combine that with the inadequacy of the formula the deaf it is are getting larger and larger and it makes it impossible for urban schools to compete. and you are draining middle class out of urban cores. >> as a mayor rebuilding this downtown, how important is that? we would like to be here, but we have issues with the school? >> two years ago, and because as mayors we are always busy and goin to different functions, ceremonial functions or other functions. on saturday afternoons my daughter is 15 years old, i like to take her out for lunch to two years ago we went to pan era bread. you got a line, you are waiting for food. we are sitting in the line waiting for food, and two ladies are talking and they are like, well, have you moved out of the city yet? no, i haven't moved out. they said, mayor, it has nothing to do with the city. our kids are getting into middle school, and we are moving out. >> it hit me like a ton of bricks. i thought, wow there is nothing i can do. i can't lower the crime level anymore. i can't put more -- it's not about economic development, it's not about crime, it's not about public transportation. it's about the fact that we have a system that i really have very little, if any control over, because of the restrictions that harrisburg has put on us and it's detrimentally impacting the ability to keep those folks into our city limits. >> you have no control. >> we have no control. he hasly little bit of control but not much. >> our great appeal, quite frankly, it's beyond the moral issue. it's an economic issue for the commonwealth of pennsylvania. my appeal to every business person in this room as much as you might advocate for, you know, some tax reductions some change in tax policy, please put education on your agendat least in the top three of things, democrat, republican, independent, whatever party you want to be in, please talk with your state senator, talk with your state rep, not about the intricacies and in the grass weeds kind of stuff about education, but are you properly funding education f my children, and my future employees? it's a very straight forward basic question, and that really, i appeal to the business community here to raise that as you would any other business issue, because this is the business issue of the commonwealth of pennsylvania and the united states of america. >> you're watching "business matters," because if it's business, it matters. >> so, mayor, a question i want to ask and people have asked me, the rejuvenation is unreal. and it's interesting with you, you have the hockey, the nhl, you have the same thing with the phillies. so he is sort of like your minor league guy, really. >> not really. >> i mean that in a nice way. >> there are all kinds of stuff flying in this room. >> but, mayor, the question i wanted to ask you is people ask you will this rejuvenation that you see in the urban core which has been phenomenal, can it infiltrate into the neighborhoods? will the minority community, the poor get a piece of the pie. >> that's our hope that if you look at the numbers, we were intentional in putting job placement centers directly downtown. so as the development started to occur, we worked with our community college partners and i know some of them are here today. career link, community college, made sure that we really promoted those jobs, those folks in the surrounding neighborhood where is occurring. 70% of the jobs we have totaled so far are allentownian and many are at or below the poverty level. i was in the arena the other day and a woman walked up to me and she said i want to thank you, mayor. i don't usually get that. i said, i said what do you want to thank me for? she said as a result of this development, i got a job here. my three kids also have jobs here as well. it's changed our entire course of our family and our lives. our kids are going to college, and i want to thank the city for really driving this economic. >> i can tell people i want to thank our friends from the trades. let's hear if for the mayor, he created a lot of jobs for a lot of people, for a lot of houses, cars. so the same thing for you, mayor, philadelphia, a city for everyone? >> it's wide open. philadelphia is becoming the great international city that it had been in the past. i'm working hard to raise our profile. we have since january of 2013 we had 200 projects either completed, announced or about to start. that represents $8.5 billion of economic investment in the city of philadelphia. cranes all over the place, you know, we capitalize on our strengths, healthcare, and education. about 35% of our jobs in philadelphia are tied to healthcare and education, but also life sciences, bio, pharmaceuticals, and i said on my first day in office a good while ago back in january 2008 that philadelphia would become the number one green city in america and that's a bold pronouncement. i appreciate that that. that wasn't the applause line. it was a bold announcement because we didn't have a plan. it was the first day in office. but we are recognized as one of the green cities across the united states. everything that we do, every day in one way, shape or form has to be about jobs. that's how you get the mom and the three kids who are working. that's how we have lowered our unemployment rate which was up near 12% at the height of the recession down now hovering between 6% and 7%. it has been tough times but we are putting people to work. we are have an 8 plus rating from standard & poor's. and an a from every one of the three rating agencies for the first time since the 170s, budget, balance, people working, crime down, education up, government run with integrity, and we have really changed the face of philadelphia. so international and national companies looking at the city wanting to grow in philadelphia, stay in philadelphia and make their presence in the united states, the international companies right on the east coast in the city of philadelphia. so cities are coming back across the united states of america because mayors get stuff done. if we weren't on tv, i would say something else. and the reason is because unlike some other elected officials, mostly our folks down in washington, d.c., see, we can't pass a continuing resolution on whether or not we are going to pick up your trash, fill a pothole or move the snow. people judge us on what we do each and every day and we interact with you in that fashion, and we run into our folks. >> and we have to balance our budgets. >> and we have to balance the budget and not a new one each and every year. the congress came back and said we are going to keep the feds running for three months and we will come back to that issue. we could never do that. >> you're watching "business matters." >> come on up, tony. apparently i didn't feel i could keep up with you guys. so we brought in tony from bsi, tony, you have a question, and you look good, by the way. >> thank you. >> fire away. >> gentlemen, real quick, question, you have democratic elected governor, house and senate majority republican. mayors get things done. so when i was in college, i had a college football coach that said are you committed or interested? so i think all of us have been downtown allentown recently, and seen the difference between what it's like to be committed to something versus interested. so what's your advice to these individuals with respect to short and long-term, where can they find common ground and move? >> great question. >> it's a great question. >> get lost. get out of here. >> you know, on the committed and interested, that is, that reminds us, of course, of the story about ham and eggs. you know, the chicken is interested. the hog is fully committed to what is going on on that plate. i think that the public spoke a little bit last week, but your job is not over just because -- and i appreciate the folks who vote twice a year, but the job is not over. those other 363 days of the year your voice has to be heard. so i think sending that message back to harrisburg gets stuff done. so let's fix education. you did something on transportation. what are we doing on economic development across the commonwealth of pennsylvania. what are the great issues, and then the democrats and republicans, the house and the senate, the four caucuses and the governor need to sit down and say these are the things that we are going to work on on behalf of pennsylvanians, not on our, just on our caucus, not the score points, not who is up and down. the election was last week. you have plenty of time for that. it is now time to invest in this commonwealth and move us along and i think the first thing we have to do is have a serious plan for investing in education. >> mayor pawlowski -- >> i think that we all have an extremely important role to continue to push our legislators to make sure that the issues that a important to us as mayors, and cities and boroughs and twchs across pennsylvania -- townships across pennsylvania are heard because many times we are ignored in the discussion and dialogue. i have often times said as we go to harrisburg, if some of our folks would just take the hippocratic oath to do no harm. that would be, you know, a vast improvement from what we have seen over the course of the last, you know, several legislative sessions continuously we are getting laws that are passed that are actually putting greater burdens on us to do a job on a daily basis. so we have to be committed to push our legislators to say look at our interests, hear what our interests are, and act on those interests in a way that's positive for all of us as we move forward. >> we have to deal with the growing, and i commend the mayor with what he has been able to do with regard to pensions, but some of us are not as fortunate. pension reform is a massive issue in the commonwealth of pennsylvania, not only for the state itself, but forany, many cities. our pension fund is 49% funded. issues of public safety, so i am a strong supporter of the second amendment that i have said on a few occasions i'm a strong supporter, i think i have a first amendment right not to be shot. issues of illegal guns, illegal guns, not our good law abiding citizens who like to hunt or collector whatever it is they might want to do, but illegal guns are the scourge of the commonwealth of pennsylvania and certainly for me in philadelphia. there are a number of issues. democrats and republicans, urban, suburban, rural, middle of the state, wherever you are, we really have to come together and cut out a lot of non-sense and work on behalf of the citizens. you are our boss. >> you have said it. we have so many important issues. we are dead last in job growth and creation among the states in the country. we are dead last. our education system is in shambles. we lost 20,000 teachers over the course of the last 3.5 teachers. we are dismaiting public education and we are not building economies. if we don't do something to fix cities we are going to see cities follow like dominoes on a board, and it will have economic effected across the entire commonwealth of pennsylvania. you can't tell me -- take johns town, for example, if johnstown's economy falls that it won't have a negative impact on the regional economy. you can duplicate that over and over again across the state. so we are critically important. our cities are critically important and we have to address thes issues to make sure we build up these economies or we are going to have, we are going to continue to be dead last in job growth, we are not going to attract jobs into our state and we are not going to help folks and corporations -- >> does it have a social impact too in terms of concerns for jobless. >> we are first in a lot of things but we are also first in a couple of things i'm not proud of. philadelphia has the highest poverty rate of the top ten cities in the united states of america. i want to be sure we are not scaring our good business people here, the greater lehigh valley chamber of commerce. we care about the issues that affect you as well. this is not about just let's spend more money, take it from you to send over somewhere else. as i said earlier, it has to be about accountability, but what are the issues that affect you in the commonwealth of pennsylvania? i don't know that our tax structure is the greatest in the world, but it's not an area of expertise for me, but i'm constantly trying to lower taxes in philadelphia. invest in education, make sure that citizens feel safe. how can we create a better business environment that folks want to, whatever you are, start here, stay here, grow here, but also that wewe are heling you to invest in your businesses, that we are actually helping to attract investment from across the country and around the world right here. there is no reason why pennsylvania, you look at our location, when you look at what we have to offer and our assets, why we shouldn't be one of the leading statetein the united states of america. everything that you could possibly want you are going to find somewhere in pennsylvania. >> and we were in the past, and we be it again. >> i could do this, we could do this for an hour and sometimes as a host you need to be quiet, because you guys ran with it. 30 seconds each of you, your parting thoughts to the audience and we can close it out. >> thank you for caring. thank you for being in business. thanks for taking that chance. and we still have many, many great and bright days ahead of us. the two of us, the past president of the municipal league, i'm the current president of the pennsylvania municipal league representing millions of people across pennsylvania. we care about you. for all of the things we want to do, if we don't have jobs, don't have businesses, none of it matters. you are the ones that drive the economy of this commonwealth and we want to make sure you are successful. >> mayor pawlowski? >> i think we have lots of challenges in this state. we have lots of opportunities. we need to squeeze those opportunities. we have a chance to make an impact as we collectively come together. let's make sure we continue to push our legislature in harrisburg to look out for the best for our cities. as we have done that it sets a solid foundation for our business community to thrive and our communities to thrive overall. it was a great, great show. thank you so much, everyone, for being here. thank you so much for watching "business matters," we will see
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