By most accounts, the worst of Philadelphia's fiscal crisis is over. By some accounts, that means prospects for long-term reform have dimmed.

Some investors and analysts worry that the reform movement, born when a routine note sale disintegrated in the summer of 1990, will wither without the atmosphere of immediacy that near-bankruptcy can generate.

But Mayor Edward G. Rendell, generally credited with leading the city's dramatic turnaround, says he has plans to keep the momentum going.

In a recent interview, Rendell held up an August edition of the Philadelphia Inquirer, and pointed to a page-one item detailing continued hemorrhaging in the city's job base.

The story says that, even with low-wage service companies moving in, the city has lost far more jobs than it has gained. Recent surveys put the difference at 1,750 jobs per month over the past year.

"This is more devastating than anything," Rendell said of the figures.

The mayor said he plans to make such news article a feature of his public appearances. "Without the crisis atmosphere, it is my burden to continue to make the case to the people that it's important to do what we have to do to reverse this trend," Rendell said. "We have to be relentless."

To make his point, the mayor likes to tell audiences about the "cancer patient with a gunshot wound."

Rendell argues that the city has managed to remove the bullet and stop the bleeding. Philadelphia will not die from its brush with insolvency. But what's left, the mayor says, is a city dying of cancer -- oppressive tax rates, businesses fleeing to the suburbs, consistent and severe population declines. Curing Philadelphia's cancer won't require a trip to the emergency room, Rendell says, but the treatment will require steps almost as dramatic.

What will it take?

"I think we will be one of the first major cities to reduce taxes," the mayor said in last month's interview. "We are determined to do that."

Rendell said it is impossible to say when a tax cut would come, but he said fiscal 1996 would probably be the earliest possible date. Tax increment finance zones are also high on the mayor's list of economic stimulus plans.

Other steps will aim at luring more high-wage employers to the city. Rendell says, for example, that he hopes to use Philadelphia's numerous colleges and well-respected medical centers to convince more health-related companies to move to the city.

Philadelphia's new convention center, one of the country's largest, also figures in the revival effort. Rendell says he believes it will help make Philadelphia one of the top convention cities in the nation.

Riverboat gambling would also lend a hand, if city officials can convince the state Legislature in Harrisburg to allow it.

Rendell has developed a kind of cult status among analysts and investors, who associate virtually all of the city's turnaround to his dynamic personality and optimism about the city. Ben Hayllar, named by the mayor to be Philadelphia's new finance director, joked recently about why he took the job: "I'd like to meet the person who ever said no to Rendell."

Ralph A. Saggiomo, a senior vice president at Kidder, Peabody & Co., gives Rendell much of the credit for luring back investors.

"Rendell's not saying, ~Look what I did,' " Saggiomo said." He's saying, "We have a long way to go, and it only gets tougher from here on.' That gives investors a lot more comfort, a lot better feeling about the city. "

But what some analysts want to know is whether activism and the reform spirit will become traits of the city, not just of its mayor. That concern boils down to the three-word mantra being repeated by city officials and rating agency types: "institutionalization of reform."

Michael Johnston, manager of Northeast ratings at Moody's Investors Service, warned, for example, that much of the reform so far "has been forced from the top to the bottom."

Cultural Change Needed

"Upon institutionalization, it may become a realistic expectation that people will come up the ranks with new ideas and innovations," Johnston said. "But to do that, there typically needs to be a cultural change."

Rendell says that is already happening, pointing to the city's "Parkway Night Out" celebration in June, which was part of a two-week festival marking the opening of the city's new convention center. Rendell said that Diane Dalto, director of Philadelphia's Office of Arts and Culture, halved the bill for the event's sound systems after deciding to question the fees. That kind of initiative, Rendell said, is being repeated throughout city management.

Not everyone agrees. An Aug. 2 editorial in The Wall Street Journal, for example, tweaked Rendell with this line: "Philadelphia's Ed Rendell beat back a municipal workers' strike and started contracting out services, though the pace of reform has since slowed to a crawl."

Rendell, who won glowing reviews from the Journal in a front-page article in 1992, said he couldn't figure out what the newspaper meant.

"I don't think it is correct to say that reform has slowed in any way, shape, or form," the mayor said.

A more detailed analysis of the city's progress will come next month, when the administration must report on whether initiatives in the city's five-year fiscal recovered plan began to materialize as expected in the first quarter of fiscal 1994.

The report will show whether city officials have fulfilled their "commitment to making the fundamental changes they said they were going to try to do," said Ronald G. Henry, executive director of the city's oversight board, the Pennsylvania Intergovernmental Cooperation Authority.

"It will show the willingness of the city to pressure the system to justify new personnel and initiatives and areas of new expenditures with the same degree of diligence of the last 18 months," Henry said. "Because if you step back and take the pressure off, the momentum of government will fill it up."

Henry said the city now must begin looking toward longer-term horizons and examine the kind of underlying issues that Rendell would say are contributing to Philadelphia's "cancer."

They include the city's relationships with the state and federal governments, and which layers of government should be expected to provide which social services. Other issues include reforming the way the city delivers services, including whether additional privatization moves are called for.

Looking Toward Horizon

The questions herald a new era not only for city planners, but also for PICA itself, Henry said. With its bonding capacity exhausted by recent bond sales and the city's deficits effectively bonded out, PICA will now shift from the short term to the long term.

As that transition begins, investors holding Philadelphia and PICA paper await what they believe are inevitable upgrades.

Philadelphia sports a B from Standard & Poor's Corp., a Ba from Moody's, and a BB from Fitch Investors Service. Yet most investors believe those bottom-of-the-barrel credit ratings are out of line with reality. Unenhanced portions of the city's recent bond sales were sold at rates closer to triple-B, market sources said.

Buoyed by that reception, Rendell won't speculate on when an upgrade might come. "I'm almost tempted to say after our recent experience, ~Who cares?'" he said.

Richard Larkin, a managing director at Standard & Poor's, said the rating will be revisited shortly, after confirmation that the first quarter of fiscal 1994 played out as the city forecast.

Moody's Johnston said he is watching for the same thing. "We want to see them continuing to balance budgets without PICA helping," he said. "The '94 budget is expected to do just that, and we want to make sure that happens. And we want to make sure they are as aggressive in pursuing any budget gaps that may arise as they have been in the past."

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