June 16, 2008

Nutter’s Honeymoon May End As City Union Contracts Expire

By Chris Brennan, Philadelphia Daily News

Jun. 16--IT IS A political rite of passage and every new mayor confronts it -- negotiating contracts with Philadelphia's four municipal unions just months after taking office.

Ed Rendell used chaos to his advantage in 1992. With the city's finances collapsing, Rendell swung a deal that froze wages while cutting holidays, some starting salaries and contributions to union health-care plans.

John Street faced a stronger economy in 2000 and unions holding a serious bargaining chip -- the Republican National Convention was due to start just after the contracts expired and a strike would draw national attention. The unions got increases in wages and health benefits.

Enter Michael Nutter, who has enjoyed smooth sailing in the opening months of his first term. His $4 billion budget and five-year financial plan were approved by City Council last month.

Now, Nutter faces expiring contracts on June 30 with the blue-collar District Council 33, the white collar District Council 47, Local 22 of the International Association of Fire Fighters and Lodge 5 of the Fraternal Order of Police.

Nutter set a tone both open and stern in his Feb. 14 city-budget address, calling the contracts "our most pressing challenge."

With 22,000 employees, the unions consume 60 cents out of every city tax dollar. A massive chunk of that is spent on the four union health-care funds.

Nutter took a different approach to the contracts from previous mayors, announcing in the address that the city has $400 million set aside in the five-year plan to fund increases for the unions in wages and benefits.

But there are many uncertainties. Contracts for two of the unions, the police and firefighters, are usually decided by an arbitration panel so the city won't know the exact cost of those contracts until that process ends, perhaps months after their contracts expire.

Nutter on Friday repeatedly said he has pledged to the unions to not negotiate in public. But the $400 million was clearly meant to send a potent message.

"Hopefully the public employees and certainly their leaders took that as a sign that we're serious, that we're not trying to play games and hide money and all that kind of stuff," Nutter said.

City Councilman Bill Green, chairman of the Committee on Labor and Civil Service, said Nutter was trying to be transparent.

"I hope that approach is successful," Green said. "I think most of the union officials that I've talked to view it as sort of the city's opening bid rather than its final and best offer."

Cathy Scott, District Council 47's president, said putting out the $400 million figure was unusual since "in the past, some mayors had it a little closer to the vest." But that doesn't mean the union is terribly impressed.

"It sounds like a large amount of money," Scott said. "But when you look at it and the size of the city work force, it's not really a large amount of money."

While the city says the money amounts to a 4 percent increase in pay and benefits, Scott said it works out closer to 2 percent.

Health benefits are of particular concern to Nutter. Rendell and Street tried unsuccessfully to have the four union health plans merge into one city-run plan to cut costs. Nutter refused to say if he would try that, adding: "Obviously we're all concerned about not only the quality of the care but also the cost of the care."

Brian McBride, head of Local 22 of the firefighters union, said health benefits are a big concern.

"We are in a profession that many die in every year and many, many more are injured in every year," he said. "Things like pensions and health care are important to us because we use them."

The city's troubled pension system is another issue where Nutter took early, public action. The city now has more retired workers then active employees.

In his budget address, Nutter proposed borrowing $4.5 billion to help fund the city's pension plan, which has only half the money it is obligated to pay to retirees. Nutter's staff had planned to use some of that money to pay off previous bonds used to fund the pension plan, an idea that has since been dropped as uneconomical. Still, Nutter looks to borrow $3 billion, which would increase the pension plan to about 90 percent of its obligation.


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