The Pennsylvania Supreme Court Wednesday handed Philadelphia unions their latest in a string of defeats, ruling that a team of fact finders mediating contract disputes must be disbanded because of a missed deadline.

The ruling had been eagerly awaited by both the city, which argued that the prolonged fact-finding process was eroding savings Philadelphia needs from more favorable contracts, and the unions, which have already authorized a strike if an agreement with the city proves out of reach.

Union leaders said last month after the strike authorization vote that they would wait at least until the Supreme Court decided the fact-finding case before calling a walkout.

But after Wednesday's ruling, labor representatives were careful to avoid the perception that a strike is now imminent.

"We do not read the state Supreme Court's ruling ... as a green light for reckless actions or rhetoric," said James Sutton, president of District Council 33 of the American Federation of State, County and Municipal Employees, Philadelphia's blue collar union. "We will continue to do everything possible to avoid a strike."

Thomas Paine Cronin, president of AFSCME District Council 47, the white collar union, has been somewhat more confrontational.

During a rally Tuesday to protest the role of the city's oversight board in the contract dispute, Mr. Cronin and several other union representatives entered the board's offices and demanded to speak to members, according to Ronald G. Henry, executive director of the Pennsylvania Intergovernmental Cooperation Authority, as the board is formally known.

PICA, created last year to help the city out of its fiscal emergency, issued $475 of bonds in June to help Philadelphia pay off its accumulated deficits and fund upcoming capital projects. The unions have argued the authority is interfering with contract negotiations and forcing the city to demand unreasonable concessions to balance its budget.

Mr. Henry said he had to ask the police to remove Mr. Cronin and his associates because they were disrupting PICA operations, but the authority decided not to press charges after the union leaders were arrested.

"The time of Philadelphia labor leaders would be better spent negotiating contracts than defending themselves in court," Mr. Henry said.

Mr. Cronin could not be reached for comment yesterday.

The state Supreme Court's 5-to-1 ruling was based on a strict interpretation of the statutes governing the appointment of fact-finding teams. Under those laws, the Pennsylvania Labor Relations Board can appoint an independent fact-finding team to mediate disputes no later than 130 days prior to the budget submission date, which this year was March 31. The fact finders were appointed June 26, or about seven months after the legal deadline had passed.

The majority said that fact alone was enough to void the process, but one justice, Rolf Larsen, agreed with the unions' argument that mitigating circumstances should have overruled a strict interpretation of the deadline.

For one thing, Justice Larsen noted, the deadline fell amid a change in leadership in the city, when former Mayor W. Wilson Goode was about to be replaced by Mayor Edward G. Rendell. The city's fiscal situation was on hold during the transition, so the appointment of fact finders would have been inappropriate, he wrote. The majority's strict adherence to the deadline "elevates form over substance" and ignores the intent of the laws governing the fact-finding process.

"The majority opinion is another reactionary step in the transformation of this great commonwealth of Pennsylvania from the cradle of workers' rights to the coffin of those hard fought for earned rights," he said.

David Cohen, Mayor Rendell's chief of staff, called the court's ruling a reaffirmation of what we've been saying, which is that the unions have been using the fact-finding process as a delaying tactic."

The next move in the bargaining process will come from Mayor Rendell, who has called a press conference for today in which he is expected to set a deadline for an agreement with the unions. If the deadline is missed, the mayor is expected to declare an "impasse" and unilaterally impose his last best offer on the unions.

The legal precedent for such an action is being disputed in the Commonwealth Court of Pennsylvania, under a case involving the Philadelphia Housing Authority. But a decision in that case is not expected until November.

Ever since Philadelphia unveiled its plan to restore budget balance earlier this year, the unions have charged the city is demanding too many contract concessions. But their efforts to halt the process have been continually shot down. A lawsuit filed in February calling for a dismantling of the oversight authority was quickly rejected by the Supreme Court.

The unions also tried to derail the authority when the city council was considering whether to approve the board, and they attempted to kill Mayor Rendell's five-year fiscal recovery plan in the city council. Both efforts proved unsuccessful.

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