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City of Philadelphia Won t Appeal Firefighters Award: Arbitration Cost is $30M; Gov t Will Keep Hiring Rights

PHILADELPHIA, Penn.-- The Street administration has decided not to appeal a June 2006 arbitration award that gave the Philadelphia firefighters union a 45 percent increase in the city s health-care contributions.

The reason, according to City Solicitor Romulo Diaz Jr., is that while a complicated Commonwealth Court ruling on the arbitration affirmed the costly health-care payments, it also preserved strong language protecting so-called management rights, including the hiring and training of paramedics.

After the Commonwealth Court ruling was made public in late August, the city chose not to appeal. But the International Association of Firefighters Local 22 did appeal, giving the city a chance to make what s known as a cross appeal.

Earlier this month, the Pennsylvania Intergovernmental Cooperation Authority, the city s fiscal watchdog, urged the city to do just that.

PICA noted that the proposed increase in the health-care contribution to the union, from $996 per employee per month to $1,444, would continue a trend of diverting money from services to residents to employee benefits.

PICA Executive Director Rob Dubow said that the benefit increase would cost the city $30 million more than the city planned to spend.

But Diaz said the court s decision on balance was a strong decision in support of management rights.

The city is also locked in a legal battle with the Fraternal Order of Police over its arbitration award. And early next year, the next administration will begin negotiating new contracts with all four city unions.

Meanwhile, PICA has informed the city that it has until the end of the month to offer changes to the city s Five-Year Plan to account for the new spending on benefits.

Dubow said the city will probably cite stronger-than-expected revenue collections in the fiscal year that ended in June. But he added, This decision effectively takes away some of the next administration s ability to carry out its plans while maintaining a balanced plan.

The current plan is fraught with risks that could seriously unbalance it, including the cost of the new municipal contracts, the likelihood that cash-strapped PGW will be unable to repay to the city a $45 million loan, and slowing activity in the city s real- estate market.

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