Clock ticking on Nutter, unions

Posted: February 11, 2014

IN HIS 2009 BUDGET address, Mayor Nutter reiterated a goal he set for himself when he took office a little more than a year earlier: to reach contracts with the city's municipal unions that will help reduce runaway pension and health-care costs.

"Fourteen months later, I can say with certainty that reform is never an easy process," he said.

Five years later, he can say the same thing.

Three of the city's four major unions are working without contracts. Benefit costs, meanwhile, have been eating away at the city budget, going from 24 percent of spending in 2008 to 31 percent this year.

"I never thought . . . that we would be going into five-years-plus without contracts," Nutter said in an interview. "That was never an idea, that was never a strategy, never a plan, nothing, zero."

Asked what he needs to do before leaving office to declare victory on these issues, Nutter said his efforts are "not about winning."

"It's not just about four years or eight years," he said. "It's really about what happens to our pension fund over the next 15, 20, 30 some-odd years down the line - and did you during your time try to set it on a course of assured fiscal stability as compared to what's been going over the last 20, 30 years?"

With two years left in his term, will Nutter become the mayor who set the city on that course? Or will he just be the guy who tried?

Nutter has little political capital in City Hall - in no small part because organized labor has unified in opposition to almost everything he does.

But he has one ray of hope: Two unions have voted out presidents who were seen as unwilling to work with the administration, and he claims to be optimistic about a deal with one of them.

Costly gridlock

Former Gov. Ed Rendell, who as mayor in the early 1990s took on the unions over wages and won major concessions, says Nutter is "on the right track."

"He's got the right ideas. He's got to persuade the union leaders to accept those ideas," Rendell said. "So far, he hasn't done it."

Rendell negotiated those contracts when the city was on the verge of bankruptcy and his administration could credibly argue that the money simply wasn't there.

A common criticism of Nutter is that he wasn't able to do the same thing during the 2008-09 recession, when the city had to cut billions in its five-year fiscal plan.

"He squandered a great opportunity when the economy was down significantly to sit down and deal with unions," said City Councilman Bill Green, whom Gov. Corbett recently nominated to chair the School Reform Commission. "They didn't press that point and they now don't have municipal contracts and pension, and health-care costs continue to increase every year."

Nutter insists it was the union leaders, not the administration, who were avoiding the subject during the recession.

"I don't think we've been shy about calling for a contract, but it takes two people to sign a contract," he said. "It's something that we've talked about as aggressively as anything else."

Nutter pointed to the 2009 budget address, in which he called out the four major union presidents by name.

"It's time for leaders to lead, not to follow the screaming crowds," he said.

His greatest nemesis has been Herman "Pete" Matthews, president of the AFSCME District Council 33, the blue-collar union. With 9,700 workers in its largest bargaining unit, DC 33 represents the biggest chunk of the workforce and has historically set the tone for talks with other unions.

Matthews, who has called Nutter a "tyrant," a "dictator" and "the Scott Walker of the east," said he will not agree to "concessions" on health-care and pension benefits.

A week after contracts expired in 2009, Nutter froze wage increases and health-care contributions for most city workers. Matthews said that the move was a failed attempt to strong-arm the unions into making concessions.

"It's been five years. You wanted to bury us. You couldn't do it. You didn't do it," he said of Nutter. "The mayor is just being mean-spirited about this."

A year ago, Nutter gave the union what he called a "final offer," which Matthews did not accept. Nutter then asked the state Supreme Court to allow him to impose contract terms, arguing they had reached an impasse.

The high court declined to rule, and the two sides are now in Common Pleas Court. The legal battle may not be finished by the time Nutter leaves office.

Another hurdle for Nutter is City Council, where he has struggled to gain support for major priorities despite having served in the body for 15 years.

Nutter in 2012 asked Council to pass a bill that would make changes for the city's roughly 4,000 nonunion employees similar to his proposals for the unions. One provision would have enrolled new employees in "hybrid" pension plans with 401(k)-style accounts and less generous defined benefits.

The bill went nowhere.

"It's the concern - I'll use that word - possibly by some [Council] members that the unions will seek to exert pressure or make their lives more difficult for doing anything related to the pension fund," Nutter said.

Council President Darrell Clarke said Nutter needs to negotiate contracts with the unions before Council acts.

"Traditionally, there's an agreement reached with the bargaining units, and then the exempt employees traditionally get what comes out of that," Clarke said. "The mayor wanted to do that before he got an agreement with the bargaining unit, which is why that didn't move."

The issue overwhelmed Council chambers last March, when union protesters screamed and blew whistles drowning out Nutter until he was forced to abandon his budget address midspeech.

That day, Clarke promised to become involved with the union negotiations. Asked what those efforts have produced in the past 10 months, Clarke said that he has been talking with both sides but that he doesn't want to discuss specific proposals in public.

"In my government lifetime, I've never seen a situation of going this long without a contract," said Clarke, a possible mayoral candidate next year. "So clearly there needs to be a change of strategy, maybe on both sides, one side or the other."

New face in the game

In September, white-collar District Council 47 threw out its president, Cathy Scott, and elected Fred Wright, who led a local that represents nonprofit workers.

Scott contested the results on technical grounds, and AFSCME ordered a rerun. Wright won by an even greater margin than he had the first time.

Wright doesn't live in Philadelphia, he's never worked for the city, and he's never been in a union. But he has successfully negotiated more than 50 contracts, and DC 47 members, who haven't had a raise in a half-decade, are hungry for a contract.

Wright and the administration have been meeting regularly, and both sides say they are optimistic a deal will be reached soon.

"He's a very sincere, straightforward labor leader," Nutter said of Wright.

With the DC 33 dispute in court, the firefighters contract in arbitration and little change expected in the next police officers contract, striking a deal with DC 47 may be Nutter's best hope to significantly reduce benefit costs.

But he'll have some persuading to do with Wright, who, despite a more conciliatory tone, said he is "committed" to maintaining a defined-contribution pension plan.

On Twitter: @SeanWalshDN

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