Mayor gets tough with union

Editor's note: Due to an editing error, the original version of this story placed a quote from Mayor Nutter in the incorrect context. Nutter's comment about needing "balls to do the right thing" was not a reference to contract negotiations with the city's municipal unions. In fact, he was urging Council to approve the Actual Value Initiative.

TENSIONS between Mayor Nutter and the city's blue-collar workers were laid bare yesterday as hostile workers yelled and booed from the gallery throughout the mayor's budget address in City Council chambers.

But Nutter gave back as good as he got, telling the public workers, who have been working without a contract since 2009, that he wouldn't sign a contract until they agreed to changes to their benefits and work rules.

"I cannot sign a contract that does not deal with the long-term employee-benefit challenges that threaten this city's future," Nutter said. "We're in this position now because the can has been kicked down the road too many times.

Nutter's budget for the 2013 fiscal year, which begins July 1, makes some modest investments and holds the line against major cuts, after several years of austerity budgets.

The police and fire departments are receiving money for new hires, LOVE Park is getting a $20 million face-lift and the city will start design work on a new police headquarters.

The $3.6 billion plan is slightly bigger than the current budget.

During his 45-minute speech, Nutter warned of three factors that continue to put the city budget at risk - employee costs, the financial crisis at the school district and cuts in the state budget.

"I cannot say to you honestly that our troubles have passed," Nutter said. He appealed to Gov. Corbett to reconsider state cuts to education and social services.

By far the most controversial part of Nutter's budget is his plan to move the city to a new property-tax-assessment system based on market values. Nutter says that the city must switch to what is known as the Actual Value Initiative because current assessments are wildly inaccurate.

In making the shift, the city will effectively make permanent the revenue increases from two tax boosts that had been billed as temporary. Also, Nutter plans to bring in about $90 million more in property taxes, all of which would go to the school district.

He insisted that this was not a tax hike, but an effort to reflect the rise in property values.

"There are thousands and thousands, if not hundreds of thousands, of properties that have increased in value," Nutter said. "If you got a raise, you will notice that you pay more taxes, but you're making more money."

Residents will get new assessments in October. To ease the pain, the city wants a three-year phase-in of the changes. It is also seeking state authorization for homestead-exemption legislation that would lower every resident's assessment by $15,000. Low-income seniors could apply for additional relief.

Nutter declined to speculate whether Council would approve the measure, but said that it would take political courage to support the plan.

"You really have to have the balls to do the right thing," he said.

On the spending side, Nutter said that he was committed to investing in public safety and neighborhood improvements.

He's providing money for 400 new cops and will hire more firefighters, which will save on overtime costs.

And the city plans to start work on a new Police Headquarters at 46th and Market streets to replace the Roundhouse, at 8th and Race streets. It will seek $9 million in funding from the Pennsylvania Intergovernmental Cooperation Authority for design work on the building, which would also house the morgue. No word yet on how much it would cost to build.

Nutter also announced a plan to team with the Children's Hospital of Philadelphia to build a health center in South Philadelphia. The hospital will pay for the center, proposed for Broad and Morris streets, where a health center is now situated.