Philadelphia Mayor Edward G. Rendell said Friday city unions must accept his most recent contract offer by Wednesday or he will implement it unilaterally, an action almost guaranteed to provoke a strike, a lawsuit, or both.

The mayor, acting after the state Supreme Court ruled in his favor last week on a related labor issue, said if the unions reject his proposed contract he will put his "last best offer' in place anyway.

Aides to the mayor have previously said they believe he has that power under the terms of a controversial practice that is itself being challenged in court.

Labor leaders said Friday after the mayor announced his intentions that the move seemed aimed at provoking a strike, and would likely at least result in a lawsuit for unfair labor practices. City sources said a lawsuit would be the most likely first reaction, but the unions are also not expected to work under the terms of a contract they never approved.

Mayor Rendell has warned since taking office in January that a strike was possible, given the scope of the changes Philadelphia needs in its union relationships in order to restore a balanced budget. He said the budget deficit, which hit $248 million at the end of fiscal 1992, would reach $1.4 billion in four years if not brought under control. The city's budget is $2.3 billion for fiscal 1993.

The major has steadfastly refused to raise taxes further or agree to additional cuts in services to store balance, arguing that those policies have been tried in the past without success.

The city's oversight board, the Pennsylvania Intergovernmental Cooperation Authority, sold $475 million of bonds in June to help Philadelphia pay off accumulated deficits and finance upcoming capital projects. Despite recent upgrades, the city remains well below investment grade and unable to access the capital markets at acceptable rates.

As part of the bond sale, Mayor Rendell and the authority agreed to a five-year fiscal recovery plan that served as the lynchpin needed to shore up investor support. But the five-year plan counts heavily on union concessions to balance the budget, and so far the unions have balked.

On Friday, after more than two months since the contracts officially expired, Mayor Rendell set forth the details of his final offer.

Although he originally called for no pay increase until 1996 unless the city managed to begin generating budget surpluses, the new offer envision a 2% raise in fiscal 1995 and one of 3% in 1996. An 8% hike that look effect last April would be retained.

Health benefits, one of the most bitterly contested aspects of the going negotiations, would be changed dramatically as well. The city originally said it wanted to take control of health benefits away from the unions because it had found a single provider to handle the contract at a savings of almost $100 million. The current offer would still replace the various patchwork of health plans now in effect, but would give workers a choice between three health maintenance organizations and one Blue Cross/Blue Shield plan.

Philadelphia has been criticized by outside analysts for having an overly generous vacation and sick leave policy, and Mayor Rendell has proposed slashing the amount of paid time off city workers enjoy. But the proposed cuts were scaled back somewhat in his most recent offer. Paid sick leave, for example, would be cut to 12 days per year from the current 20, instead of to 10 days as first proposed.

A no-layoff clause that has limited Philadelphia's ability to trim its work force in times of fiscal weakness would also be eliminated under the mayor's plan, and the city would be granted more leeway in privatizing services.

On development that helped break a logjam in the negotiations was a decision last Wednesday by the state Supreme Court, which ruled that a team of fact finders appointed in June to study disputed issues had to be disbanded because it was assembled too late in the process.

The decision was a victory for the administration, which argued for the fact finders were delaying a new agreement with the unions and costing the city $2 million a week in lost savings from leaner contracts.

Mayor Rendell said Friday that District Council 47 and District Council 33 of the American Federation of State, County and Municipal Employees, which represent 15,000 non-uniformed workers, have until 5 p.m. Wednesday to accept his contract offer.

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