Philadelphia's unions, facing an ultimatum to approve a new contract by 5 p.m. tomorrow, are expected to reject the mayor's "last best offer" and have filed a grievance with the slate alleging unfair labor practices.

It remained unclear late yesterday when or if a strike would result, as the standoff continued between Mayor Edward G. Rendell and two of the city's biggest unions, district councils 33 and 47 of the American Federation of State, County and Municipal Employees.

But the initial reaction to Mayor Rendell's final terms was clearly negative. "We consider the mayor's last and best offer to be dead on arrival," said a spokesman for District Council 33, the city's blue collar union. "The 5 p.m. deadline is important only to him."

The mayor's offer freezes wages for two years, then allows for small increases in fiscal 1995 and 1996. It also cuts deeply into paid time off and seeks to streamline health benefits to reduce costs. The unions say the administration is relying too heavily on concessions to restore fiscal balance.

Late last week, Mayor Rendell told the unions if they did not accept the offer by tomorrow evening he would unilaterally impose it on them.

The precedent for such an action, which union leaders say would be illegal, is the subject of a court case now being reviewed by the Commonwealth Court of Pennsylvania. But a decision is not expected until November.

A delegate committee of District Council 33 voted unanimously Saturday to reject the mayor's offer, and members of the two unions are putting together a formal response. Both unions have already held "strike-preparation" meetings.

The unions consider the ultimatum issued Friday "meaningless," according to Deborah R. Willig, chief counsel to the unions.

"We do not believe that he has the legal authority to set any deadline," Mrs. Willig said. "And we do not believe he has the legal authority to implement his last best offer until we reach an impasse, and we are not at an impasse."

At a press conference Friday, Mayor Rendell avoided using the term "impasse" in setting his deadline, but said his proposed contract would be implemented even if the unions reject it. Both unions filed grievances with the labor relations board charging that the mayor's actions were unfair labor practices.

Ms. Willig explained that by going public with his contract offer instead of first showing it to the union leadership, Mayor Rendell had engaged in "direct dealing" with union members. She said he is required to first present any contract proposal to union representatives.

Administration officials were not available for comment yesterday.

Philadelphia is counting on substantial savings from a new union contract to balance its budget over the next several years, under a five-year fiscal recovery plan drafted to win investor confidence in a recent $475 million bond deal.

Moddy's Investors Service yesterday released a statement warning that delays in implementing the five-year plan caused by the lack of a settlement have been "a financial setback" for Philadelphia.

"The city has now reached a critical point in the determination of the fiscal recovery plan's long-term viability," Moddy's said. "Although the city appears committed to achieving its financial plan objectives, neither an embittered and disruptive employee strike, nor a settlement which fails to achieve significant cost restructuring, can be considered a favorable outcome."

Moddy's noted that about $20 million of the savings Philadelphia was hoping to achieve from less costly labor contracts has already evaporated with the delays. The agency said Philadelphia's long-term credit position will not improve until progress is made on implementing the five-year plan.

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