Deferring the pension payments comes at a cost. The city's general fund will have to pay the pension fund about $55 million in interest it would have expected were the payments to be made on time, City Finance Director Rob Dubow said. The pension fund could also lose out if its investments earn more than the 8.25 percent interest rate the city expects to pay.
Still, Nutter said he did not believe deferring the pension payments would hurt the city's bond rating or damage the pension fund.
The latest plan was, in part, met with a degree of skepticism.
"Part of the challenge the city has faced with the pension system in the past is deferring payments for the future," said Steven Wray, executive director of the Economy League of Greater Philadelphia. "So the concern you have on that is if the economy doesn't recover as fast as we all hope it will, we are piling up the bills for future taxpayers even higher."
Similarly, said City Controller Alan Butkovitz, "to defer large chunks based on uncertain contingencies is problematic and raises significant concerns about whether the city will maintain the discipline necessary to make its required payments to the pension fund over time."
Nutter and Council were looking to nail down a deal by Thursday so it could be introduced in Council that day and come up for a final vote on May 21.
As in his original budget, the compromise version would freeze employee salaries for five years, lower city contributions to union health plans, create a host of fees, and implement $300 million worth of service cuts over five years.
It was clear that the collective lack of confidence in the city's property-taxing system as run by the Board of Revision of Taxes had played some role in undermining Nutter's property-tax proposal.
Nutter said he would work with Council to address the BRT as "fast and as responsibly as humanly possible."
City Councilman Jim Kenney expressed relief that a final agreement was at hand. Kenney also said he was relieved that the solution avoided increasing the wage and business taxes, moves he said would have been "a major error." Nutter held the same position.
"It's time to get a workable plan and move on because, frankly, I'm tired of hearing about it," he said. "We got extremely bogged down in this process. . . . I want to start talking about policy and programs and some vision again."
Contact staff writer Jeff Shields at 215-854-4565 or jshields@phillynews.com.
