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Sheer Fantasy

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I wouldn't recommend the artibitrator's report on the Philadelphia firefighters contract as light reading, but it has its moments of unintended humor.

One of them comes in a 39-point riff in the midst of the report about a wonderful city where the economy is booming, city government is flush with cash, where the outlook for the future gets brighter each day and where peace and prosperity reins.

Then I realized that Arbitrator Michael Zobrack was writing about Philadelphia. You know, the city struggling with an 11 percent unemployment rate, where 26 percent of its people live in poverty, where the median household income hovers around $36,000 a year.  A poor city, a battered city, with a city government chronically short of cash.

No matter.  In Zobrack's view, Philly is doing, as Tony Tiger likes to say, Grrreeaaattt!

And he used this as a basis for giving Local 22 of the Local Firefighters Union virtually everything it sought in its new contract with the city.

They include 3 percent raises retroactive to 2010, a generous increase in the city payment to the union's Health and Welfare Fund, millions in additional payments to a retirees trust fund, even $325,000 more for the legal fund enjoyed by members.

Total bill over the next four years: $216 million.           


Which is $216 million the city says it does not have.  The back story here is that the arbitrator's original award was challenged by the city in court on the grounds that it ignored the provisions in state law that said arbitrators had to consider the city's financial condition - i.e., its ability to pay - in considering awards. The court agreed and remanded the case back to the arbitration panel.

Well, Zobrack stuffed that requirement back down the city's throat with his LaLa Land rendering of the city's Grrreeaattt  financial condition. The arbitrator's opinion - naturally joined in by the union's rep on the three-member arbitration panel - was labeled as "sheer fantasy," by Kenneth Jarrin, the city's representative.

Jarrin is right and wrong in his characterization.  The city's economic condition, as described by Zobrack is sheer fantasy.  But, fantasy is the new reality when it comes to municipal contracts.

While the rest of the world is hunkering down and taking hits in the hard times, this city's unions show no inclination of trimming their sails.  They want more, more, more and they want it now. No concessions, no change in work rules, no attempt to find a way to share the pain in a battered economy.

Some examples:  in the real world, most workers contribute a big share to the cost of health insurance, which is only partially subsidized by the employer.  In Philadelphia, the firefights contribute zero.  The entire cost is born by the city.  And the arbitrator has just decreed that the city's payment go from $1,274 per employee per month to $1,679 PEMP.

And, as Jarrin dryly notes, this is being done despite the failure of the fire fighters H&W board consider recommendations to trim expenses.  It even recently added Lasik Surgery as a covered benefit.

By the end of this contract, the city will be paying nearly $20,000 a year for fire union members medical insurance - which is more than double what it pays for the medical insurance provided members of the city's white- and blue-collar workforce.

The city says it cannot afford the raises and benefits increases approved by the arbitration panel and that it will drive the city budget into the red. The issue is now before PICA, the state board that oversees city finances. A ruling is expected soon.

However, there is more to this than whether PICA will agree or not. If the question is: can we afford the contract or can we not,  the reality is the city can come up with the $216 million required over the next five years --  not from some magical fund it keeps hidden away, but by making cuts in other city services.  To put it another way, the budgets of L&I, the Revenue Department, Parks and Recreation, etc. can be cannibalized to feed the fire fighters needs.

More important, the arbitrators' ruling blasts apart the city's construct that for every dollar in additional pay/benefits it gives to employees in contract talks it must get a dollar in compensatory concessions or savings. The fire fighters got nearly everything they wanted and did not have to make a single change in how they operate.

Finally, with this award and with a previous arbitration award for the FOP, the police union, a pattern has been set for the city's 10,000 blue collar workers and 6,200 white collar workers: increases in pay to the tune of 3 percent a year; increases in health and welfare payments in an undetermined amount (though, let us hope, not the 32 percent increase granted the fire fighters.)

DC33 and DC47, the blue- and white-collar unions respectively, have been 'bargaining' for a new contract with the city since 2009 - to no avail.  Sooner or later, the Nutter administration is going to have to make a deal.

Any increases they give these larger unions will be far costlier than the fire fighters settlement. The city will again be saddled with hundreds of millions of additional labor costs - with little to show for in terms of concessions.

It would be crazy to think we could afford to pay for these added costs without a tax increase, major cuts to services or some combination of the two.

Unless we embrace the fact the fantasy is the new reality.

-- Tom Ferrick

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