Officials projected that the deal would add $127 million to the city's costs over five years. Mayor Nutter, who had been in Atlanta attending a Democratic National Committee meeting and returned to announce the deal Friday at City Hall, acknowledged that financing the agreement would be challenging, but said he believed it was fair to employees and taxpayers.
"It wasn't always pretty," the mayor said of the negotiations. "But we've gotten through it. It's a good moment for us."
Union president Pete Matthews, who did not attend the announcement, did not return phone calls seeking comment.
City Council President Darrell L. Clarke lauded the agreement Friday, saying the union went far too long without raises.
"Our workers heroically got our city through the worst winter in recent memory," the statement said. "This contract guarantees they are fairly compensated for their labor."
The 2008 recession set the stage for the lengthy dispute, Nutter said, leaving the city cash-strapped.
"We cut services. We stopped paying vendors at one point," he said. "I think this gives the sense that maybe that period is really over, and we're moving forward."
The tentative deal runs through June 30, 2016, and replaces one that expired in 2009. In the coming days, city officials said, ballots for voting on the pact will arrive at the homes of the union's current and retired trash haulers, streets workers, and other city employees, with an expectation that votes will be counted by Sept. 5.
Members would get a 3.5 percent raise effective Sept. 1, plus the bonus within a month of ratification, and a 2.5 percent salary boost next July. The contract would also lift the freeze on so-called step and longevity increases, meaning many workers would receive added raises.
On average, a D.C. 33 member earns about $35,000 annually, said Nutter spokesman Mark McDonald. The two raises would increase that by $2,200.
The deal offers current workers a choice of enrolling in a new hybrid pension plan, similar to a 401(k), or starting to contribute an extra 1 percent in 2016 to stay with the current pension fund. New hires would pay 2 percent more to join the traditional pension plan.
The city also agreed to make a one-time payment of $20 million to the union health fund while increasing per-member contributions. The deal also ends a sick-leave policy that let workers count such leave toward overtime.
The city had asked for the right to furlough workers for a time each year. Though the contract does not include furloughs, changes that would be made to civil-service rules appear to accomplish a similar goal - by allowing employees to be temporarily laid off and then return to work with no effect on their pensions or benefits.
Also, if the deal is ratified, Nutter has agreed to drop the lawsuit he filed last year seeking to impose new contract conditions.
Until recently, talks with D.C. 33 seemed stuck. Last year, union members drowned out Nutter's attempts to give his budget address to City Council. But in February, members of District Council 47, the city's smaller, mostly white-collar, union reached a deal, and last month, Nutter signed one with the police union.
McDonald said the city would revise its five-year plan to account for the costs of D.C. 33 contract. He declined to spell out how it would be funded, but said that some money was available and that the city's financial team would fit the cost into the budget.
Sam Katz, former head of the Pennsylvania Intergovernmental Cooperation Board, which oversees the city's finances, said the deal ensured that the issue would not overshadow Nutter's final months in office.
Katz, who has hinted at a third run for mayor next year, speculated that a ratified deal could also aid the city's chances of winning its bid to host the 2016 Democratic convention. As The Inquirer reported Tuesday, union leaders hoped the DNC bid would prod contract talks.
But Katz noted the end date on the tentative deal, saying, "That it's only for two years means that the labor situation has only been Band-Aided."
Highlights of the Agreement
The tentative agreement between the City of Philadelphia and the 10,000-member AFSCME District Council 33:
Through June 30, 2016.
$20 million lump-sum payment by the city within 30 days of ratification.
$1,100 monthly payment per member effective Sept. 15, increasing to $1,194 by July 1, 2015.
Employee contributions will be made pre-tax.
$2,800 lump-sum payment within 30 days of ratification.
Increase of 3.5 percent effective Sept. 1.
Increase of 2.5 percent effective July 1, 2015.
City cannot furlough workers but can lay them off if pension and benefits are unchanged.
Effective next year, sick leave will no longer count toward weekly overtime.
New employees will pay an additional 1 percent of pay over employees currently enrolled in the city's traditional pension plan, or may choose to enroll in the hybrid pension plan, which is a combination defined-benefit / 401(k) plan.
Employee contributions increase 0.5 percent of pay Jan. 1, 2015, and another 0.5 percent Jan. 1, 2016.