Mayor-elect Michael Nutter yesterday introduced his third appointee with Washington connections, this time the city's new budget director, Stephen J. Agostini, who is chief financial officer for the Economics and Statistics Administration within the U.S. Department of Commerce.

Agostini, 47, recently lived in Philadelphia while his wife taught at Villanova University, but they tired of the long commuting and moved to the Washington area.

Agostini has extensive experience in fiscal positions in city governments in San Francisco and Milwaukee County, Wisc.

The city's incoming finance director, Rob Dubow, the executive director of the Pennsylvania Intergovernmental Cooperation Authority and himself a former budget officer, said Agostini is "one of those people the second he walked in and we started talking to him we realized he was going to be perfect for this job."

A budget director, Dubow said, has to be able to say no but still have people like him. Agostini will fill the bill, Dubow predicted.

Said Nutter: "He is uniquely qualified to understand the necessities of our city budget process."

Also joining the administration is the former Washington police chief, Charles Ramsey, and incoming Managing Director Camille Barnett, who in the late '90s served as Washington's chief management officer at a time when a financial-control board ran the District of Columbia.

The Dubow-Agostini team will be confronting a series of difficult fiscal issues facing the city, from complex labor negotiations with the four municipal unions to the uncertainty of future federal funding.

Calling the city's financial condition "problematic," Nutter said, "On paper, anyone can see the city has been running a positive fund balance for some time, but with a pension fund only 52 percent funded, with double-digit increases in our health-care costs, contracts to be negotiated [with city unions], lack of investment in our infrastructure, facilities that in many instances are in deplorable condition . . . we are in the unusual position of appearing to be fiscally sound on paper and we have an incredible number of financial challenges ahead of us." *