City Budget

As deadline looms, city, workers keep talking

Contracts for city workers expire one week from today.  The talks between the city's four municipal unions and the Nutter administration are considered a big test for the mayor.  The main issues are pension and health care coverage. 

By Susan Phillips

Listen Now [1 minute 14 seconds]

WHYY News, June 23, 2008

With wages and benefits eating up about 60 percent of the city's budget, Mayor Michael Nutter is understandably cautious.

"We're negotiating and you know my stance [about commenting in public about the negotiations]," said Nutter, "but we've been talking and then one day we'll make an announcement about what the conclusion is."

Nutter earmarked about $400 million in the budget for wage and benefit increases, an unusual move that is a departure from the negotiating strategies of past mayors.  It's unclear whether that will cover the rising health care and pension costs. 

The Pew Charitable Trust issued a report earlier this year that showed that health insurance costs for city workers grew by 80 percent over the last five years.

Cathy Scott, President of AFSCME District Council 47 - the union that represents the city's white collar workers - disagreed with many of the findings of the report and said that it underestimates the contributions made by city workers.  Scott maintained that containing health care costs is also a priority for the union.

"This is a national problem and Philadelphia is a very expensive market," said Scott.  "If we were not in Philadelphia, but somewhere else in Pennsylvania, the cost of health care would be different. Unfortunately there is not a whole lot of competition."

Another of Scott's big concerns is the pension plan, which has been chronically underfunded.  The Nutter administration recently shelved a plan to borrow $4.5 billion to pay off debt that was used to finance the pension fund and to fill the funding gap between the fund and the city's obligations to current and future retirees.  The Nutter administration now plans to borrow about a billion dollars less to focus just on filling that gap.  Contract talks are expected to last beyond next week's deadline.

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