City, unions brace for costly talks

With little progress to date on municipal labor contracts that expired nearly four months ago, city officials and union leaders are bracing themselves for an expensive negotiating period that will likely extend into next year.

Senior Nutter administration aides could not provide a breakdown of how much they budgeted to cover contract-related costs with the city's four unions, nor whether that figure was still on target given the time delay.

However, the mayor's senior aides say they expect that total taxpayer dollars spent to strike new agreements will almost certainly exceed the $2.6 million spent by the city last year.

According to a memo provided to City Council by the Mayor's Office of Labor Relations, a review of payment vouchers, and interviews with city and union officials, the bulk of last year's expenses were, as expected, related to consulting and legal fees.

The Ballard Spahr law firm alone, which has provided legal work to the city on labor contracts for years, was paid more than $750,000. A second law firm, Archer & Greiner, collected about $180,000.

The city also paid $200,000 to Aon Consulting, which advised it on pension and health-insurance issues, and $125,000 to Public Financial Management, which provided expert witnesses who testified at some of the hearings related to the police and firefighter contracts.

The deals struck last year were unique in that they lasted just a year, expiring June 30, rather than the three- or four-year period typical of past contracts.

Mayor Nutter, then in his first months in office, sought the unusually short deals so that he could spend more time in search of fixes to the city's fast-growing pension and health-care costs, which now represent nearly 25 percent of all city spending.

But the one-year pacts came at a price: Independent arbitrators who determine contract terms for the police and firefighter unions instructed the city to pay both unions' arbitration-related bills, which included fees for actuaries, lawyers, consultants, and economists.

That inflated the city's total labor costs last year by an additional $800,000.

"We went in there with the argument that it would be quite costly to do it again in another year," recalled John McNesby, president of Lodge 5 of the Fraternal Order of Police. "I guess the arbitrator agreed."

The bills for the two unions totaled about $400,000 apiece. The city did not similarly pay the bills for the non-uniformed unions, District Council 47 of the American Federation of State, County, and Municipal Employees, which represents white-collar workers, and AFSCME District Council 33, whose members hold largely blue-collar jobs.

Other city dollars last year were spent on routine services, such as court reporting to transcribe arbitration hearings, and to rent meeting space.

Last year, the unions and city negotiators chiefly met at the Sheraton Philadelphia City Center Hotel and the Crowne Plaza Hotel. With meeting space running about $1,000 a day - in addition to coffee at $62 per gallon and miscellaneous food costs - those expenses last year totaled $87,000.

Asked if the union talks could be held in public facilities to save taxpayer money, Nutter spokesman Doug Oliver said doing so would be difficult. For one thing, for years union negotiations have taken place at hotels because they are considered neutral sites.

Also, he said, "public buildings provide challenges in providing enough space" - such as smaller, nearby breakout rooms, in addition to one large room - "and the tools needed to negotiate for extended periods of time." That can include Internet access and couches or beds.

In interviews, labor leaders and city officials agreed that overall, such expenses promised to be far greater this year.

"It would make sense because this is a more complex set of negotiations," city Finance Director Rob Dubow said. The city is pursuing a more detailed set of proposals to achieve savings on employee pensions and health insurance.

Already, the city and police union spent 20 days this year providing testimony during arbitration hearings in recent months. By contrast, last year both sides needed fewer than 10 days, McNesby said.

Whatever the total cost of reaching new contracts, it will be well worth it, said David L. Cohen, chief of staff to Gov. Rendell when he was mayor. He said he expected the new pacts would last four years, and noted the city spends at least $2 billion a year on pension, payroll, and employee-benefit costs.

"So to spend $2.6 million to get the best deal for taxpayers on how $8 billion is spent is a bargain," Cohen said.

The police union contract is expected to be completed first, with arbitrators possibly announcing a new deal in November or early December.

This week, hearings began concerning the firefighters' agreement, with testimony scheduled to spill into January, according to Bill Gault, president of Local 22 of the International Association of Fire Fighters. "I expect this next arbitration to cost half a million," he said.

To date, the city has not scheduled any negotiating sessions with District Council 47 or District Council 33.

The city has not met with either union since July.