City, unions: Where are the contracts?

A GIANT question mark hangs over the city budget deliberations, which could make it hard to finalize the spending plan.

Put simply: What the heck is going on with union contracts?

Since deals with the city's four unions expired June 30, only one contract has been resolved - with the Fraternal Order of Police, which reached new terms through binding arbitration in December. And it's not clear if the three others will be wrapped up before the May 31 budget deadline.

"The longer it goes and the more the economy improves, the tougher it is going to be to achieve what [Mayor Nutter] wanted," said Zack Stalberg, president of the watchdog group Committee of Seventy.

Roughly 60 percent of the $3.9 billion general-fund budget is spent on salaries, benefits and overtime for city workers, most of whom are in unions, and Nutter has pledged to cut those costs. But so far the police contract has only added millions in unplanned expense to the city's budget woes, due to costly raises.

With three contracts left to go, Nutter is still planning on reducing annual labor costs by $25 million. The firefighters' contract, which will be resolved through arbitration like that of police, is largely out of his hands, leaving only negotiations with the two unions representing nonuniformed workers.

But neither Nutter nor the unions seem in any hurry to make a deal. The city has not had formal bargaining sessions since December with District Council 33 of the American Federation of State, County and Municipal Employees. And it hasn't sat down with AFSCME District Council 47 since July.

"The city has made its various proposals at the table," said Shannon Farmer, an attorney at Ballard Spahr who is serving as the city's chief negotiator. "The unions have rejected them and have not made counterproposals."

She said that there have been high-level conversations more recently.

Of course, there's really no reason for the unions to rush to the table. State labor laws have been interpreted to block public employers from imposing new contract terms when they reach an impasse. So, as long as DC33 and DC47 don't strike, they can keep their current contract terms, which are more attractive than Nutter's offer of furlough days and no raises.

"There's no incentive for the unions to do anything - they know what the administration wants," said Phil Goldsmith, who served as managing director under former mayor John Street. "It's sort of strange. It's a little bit surreal that you haven't had any major negotiations."

If the mayor decides that he wants to play hardball to get results, he would likely have to threaten layoffs or make a more public plea.

The mayors of Boston and Chicago recently laid off workers who would not agree to contract concessions. And when then-Mayor Rendell was faced with a budget crisis in 1992, he launched a public campaign against the unions and won major concessions.

So far, Nutter has not tried those tactics. Asked what would happen if months continue to drag by without progress, Nutter's spokesman Doug Oliver was vague.

"The city will continue to negotiate with the unions as we have to this point and, should we arrive at a place where our efforts are not productive, we'll assess our options based on the landscape at that time," Oliver said.

Goldsmith questioned if threatening layoffs was even an option for Nutter, given that Nutter's budget promises to preserve city services.

"I'm not sure what the leverage is," Goldsmith said. "If he does the layoffs, he's going against himself saying he's concerned about keeping service levels."

DC33 President Pete Matthews said that negotiations haven't gotten close.

"We're stuck on a lot of things," said Matthews. "If there's no movement at this time, what's the point?"

Some have criticized Nutter for not appealing the police contract award. The deal provides raises and maintains current health benefits while loosening residency requirements. It will cost the city an additional $123.5 million over five years. Plus, the award now effectively becomes the baseline for other negotiations.

"We, as a city, completely wasted this crisis and the opportunity to make structural transformative changes to the way the city operates," said Councilman Bill Green.

Nutter has said that he didn't want to lose terms he viewed as favorable to the city. He said that the city will eventually see savings from a new way of paying health benefits and some changes to the pension program. Police officers can remain in the traditional pension at a higher cost or choose a "hybrid plan" that combines a lower benefit pension with a 401(k) plan. The city also won the right to furlough officers, although they are not expected to do so.

Another lingering question is whether Nutter's decision to pursue one-year contracts during his first year in office has paid off. Nutter said that he wanted more time to review the benefit structure.

"Every mayor has dealt with these contracts in the first year," said Goldsmith. "There's no curve ball, there's nothing unexpected. One of my concerns was that I think after his election in the primary, they didn't spend the time that they should have, planning for this stuff."