PHILADELPHIA, DEC. 25 -- A funny thing happened when Garnett Littlepage, whose firm provides security at Philadelphia's Veterans Stadium, tried to collect $93,000 from the city. The bill still hasn't been paid -- but the city did come up with the $9,000 owed from another job he did two years ago.
"We had sort of written it off, because we spent more time and effort trying to collect the money than it's worth," Littlepage, president of Scotlandyard Security Services, said of the earlier job guarding a voting machine warehouse. "Then we started calling to collect the money for the Vet, and they came up with the check from two years ago."
In some ways, Littlepage is luckier than most vendors and service providers doing business these days with Philadelphia -- at least he got some money. But since September, he's put 21 guards on duty each day at Veterans Stadium, and so far he hasn't seen a penny to cover their paychecks.
Philadelphia, which is due to run out of money by the end of this week, is trying desperately to secure a loan package to carry the city through the winter, after which the next large infusion of tax revenue will come into its coffers. Although the city initially wanted to borrow $300 million, current negotiations are in the $150 million range.
Meanwhile, the city has been pinching pennies for months, and many of the thousands of vendors who supply equipment and services to the city are waiting to get paid. Currently, about 4,000 contracts worth about $46 million are on the list of unpaid bills. Hundreds of angry calls come in daily to the finance department, where a new form has been developed to log in the complaints.
Although city officials would not comment on the overdue payments, the list of contractors awaiting payment was made available. Each Monday, finance officials plow through the list to decide who will be paid, guided by priorities set forth by Finance Director Betsy C. Reveal.
Highest priority is given to repaying the city's loans, providing paychecks for employees, keeping up public health, safety and judicial services, and airport payments. Then come payments to vendors who face bankruptcy, layoffs or closing; most overdue payments fall at the bottom of the list.
The amount of cash available each week to pay these bills varies, and sometimes the city will make partial payments to try to keep vendors happy enough not to cut off services. This is what happened to Arthur Loev, whose clothing firm, Loev Brothers Ltd., provides police uniforms for Philadelphia's finest. With the city already in debt to the tune of $145,000 and no payments in sight, Loev informed police officials that he wouldn't supply uniforms for the 99 officers scheduled to graduate Dec. 21 from the police academy.
When word of this leaked to the press, the city managed to come up with a check for about $43,000. "I've had a good rapport wth the city," said Loev, who's been doing business with Philadelphia for about 20 years. "I said if they come up with some money, I would provide them with garments for the graduating class."
Even so, the payment was delayed long enough so that the trousers were not ready in time for last weeks' scheduled ceremony. For the first time in memory, the police academy graduation was delayed for lack of pants. According to police spokesman Richard DeLise, the graduates will be assigned inside duties until their trousers arrive.
The amount of the unpaid bills ranges from under $100 to hundreds of thousands of dollars. A court reporter has called repeatedly trying to collect $2,000; a small publisher that provides United Nations research materials to the Free Library of Philadelphia has threatened to cut off service unless the city coughs up $20,000. Many, like Littlepage, are borrowing money to carry them through until they get paid, which costs them money. Some, like Loev, manage to keep their necks above water for a while because the city accounts for only a small percentage of their business.
But Mary S. Hanlan, executive director of Interac, a multi-service social services agency, doesn't have many options. So earlier this month, with the city already $60,000 behind in its payments for substance-abuse counseling at homeless shelters, Hanlan gave tentative layoff notices to the program's three counselors. They will be out of jobs as of Dec. 31 unless a check comes through.
Although Hanlan was told last week that the account would be paid, she said, "I'll believe it when I see it, and I'll doubly believe it when I take the check to the bank and it produces money."
Joseph Halfpenny, whose firm, Gayle Corp., provides equipment for water and waste systems, last month laid out $87,000 for an emergency repair at a water-pumping station. He said officials at the water department assured him the payment would be expedited, but he is still waiting. Meanwhile, he's using a line of credit to pay his own bills. "It's the only order I did with the city this year, and I don't know whether I'll do it again," he said.
Philadelphia's financial plight notwithstanding, those who do business regularly with the city complain of a long history of overdue bills.
This time last year, Loev said the city was three months late paying almost $150,000. "My terms are 30 days for payment, and I've come to expect 60 days from the city, but it's getting longer and longer," he noted. "At least last year they told me I'd get a check in a month; now they can't tell me anything."
Based on 20 years of experience, Loev routinely adds the cost of borrowing money to his bids for city work. But while he seems resigned to the drawbacks of doing business with city hall, many others are not so understanding.
"I'm angry," Halfpenny said. "This didn't just come up overnight. Even when they had money, it was difficult to get paid on time."