Philadelphia's oversight board voted 5 to 0 yesterday to adopt the recommendations of a report highly critical of the city's efforts to comply with its five-year fiscal recovery plan.

Although the final vote was unanimous, support among board members was extremely shaky, and sources involved in the process said there were not enough votes to approve the report as late as Tuesday night.

All five members of the board, known as the Pennsylvania Intergovernmental Cooperation Authority, said they had reservations about the tone of either the final report or earlier versions that were leaked to the press over the past several days. And Mayor Edward G. Rendell called PICA staff members "nitpickers" in a speech to the Municipal Forum of New York yesterday in Manhattan.

The dispute, which grew into what amounted to a vote of confidence in the staff of the oversight authority, threatened to become a credit issue as well. Market sources said if the authority had scrapped the critical report because administration officials were displeased with its tone, the board's integrity could have been called into question.

"If PICA becomes politicized or viewed to be politically captured by the city, I think then the market would have strong questions about whether the city would have incentives to correct its structural deficit," said Elliot H. Friedman, vice president of municipal research at Greenwich Partners Inc.

The key finding of the report, and an issue that no one in the city disputes, is that the city is not on track to meet the fiscal goals of its five-year plan. Rendell's finance officials certified last month that the fiscal 1993 budget is about $57 million shy of the plan's goals, and about $144 million below is long-term targets.

The official finding of that "variance," as it is formally called, sets in motion a legal chain of events that could eventually lead to the oversight board withholding state aid payments or bond proceeds. But city sources say that scenario is unlikely because Philadelphia has several months to develop a plan to address the problem. In addition, withholding payments would only drive the city deeper into fiscal crisis, which the board hopes to avoid.

Although declaring the variance was not a major point of contention, the specifics of the authority's report were. The oversight board's assessment, which is an analysis of the city's quarterly report filed last month, says the management system now in place is not adequate to oversee the challenges the city faces.

And Bernard Anderson, the authority's chairman, said the board is concerned that the data the city submitted in defense of its efforts are insufficient even to make a judgment about the plan's success so far.

"And accordingly, we have reservations about the assumptions which underlie a projection of achievement of the plan's goals," Anderson said.

Rendell said yesterday he was especially upset about the report's criticism of city managers, but said his displeasure was more about tone than substance.

The mayor several times singled out PICA staff members for special criticism, distinguishing them from the authority's board.

"I think the staff gets involved with a little nitpicking, and will put a glass-is-half-empty spin on it, whereas the board puts a half-full spin on it," Rendell said. He suggested the staff was motivated by a desire "to be the next Felix Rohatyn," chairman of the Municipal Assistance Corporation of New York. Rendell warned -- to the laughter of the forum audience -- that "if [PICA staff members] want to choose a fight, I will kill them."

He said he would win a public opinion duel with the authority's staff because mayors have "unlimited access" to the press. "If there's one thing I can do effectively, it's communicate," Rendell said.

Ronald G. Henry, executive director of the oversight authority, called the mayor's remarks "unstatesmanlike."

"The mayor has chosen to personalize the performance and work product of a dedicated staff," Henry said.

Friedman said he saw one positive aspect in the dispute about accepting the report. "Both parties are probably acting the way they should be acting," he said. "You don't necessarily want to see them telling each other they're doing a great job, particularly when you've got a $57 million deficit staring them in the face."

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