Compromise in works on Phila. budget crisis

State House and Senate leaders are looking for a compromise on controversial pension language in the Philadelphia budget-relief bill ahead of a possible House vote tomorrow.

Paul Parsells, chief of staff to House Speaker Keith McCall (D., Carbon), said top legislative staffers worked over the weekend on new pension amendments that would assuage union concerns while meeting the city's needs.

Parsells would not discuss details of the compromise, saying it was still being worked out. And it remained unclear yesterday whether it would have enough support or could pass quickly enough for Philadelphia to avoid massive layoffs and other cost-cutting moves.

Senate Majority Leader Dominic Pileggi (R., Delaware) said his caucus was working to address the concerns of organized labor, but he was not ready to say a deal with Democrats was close.

"The process is ongoing," he said. "We are not there yet."

If a compromise can't be struck with Senate Republicans, Parsells said, the House, controlled by Democrats, likely would reject the Senate version and send the original bill back to the upper chamber.

"What started out as a modest piece of legislation aimed at helping Philadelphia stabilize its pension and finances morphed into a document that was unrecognizable when it came back to this chamber," said Johnna Pro, spokeswoman for House Appropriations Committee Chairman Dwight Evans (D., Phila.).

The legislation, as originally drafted and approved by the House, would provide Philadelphia $700 million in revenue by allowing the city to raise the sales tax by 1 percentage point and temporarily defer pension payments in order to help cover city expenses. It was amended in the Senate to require the state to take over severely distressed pension funds - including Pittsburgh's - and freeze current pension benefits and reduce benefits for new workers in Philadelphia and elsewhere.

Police and firefighters - hundreds of whom rallied outside the Capitol yesterday - strongly oppose the amended bill as an assault on collective bargaining. At the rally, state Fraternal Order of Police president Les Neri called on legislators to tackle the sales-tax and pension issues separately.

"As it is, this legislation is a disgrace and a shameful thing to do," he said.

Gov. Rendell, in an interview with The Inquirer's editorial board yesterday, said the debate over Philadelphia budget relief had become "tremendously" distracting to negotiations for a state budget. Rendell said he wanted to call Democrats from both houses together tomorrow. But the House members will be busy with the pension bill.

Rendell said he appreciated police and fire unions' concerns that the bill would remove major pension issues from collective bargaining.

"That's true, but this is an emergency," Rendell said. He questioned whether Senate Republicans would be willing to accept major changes, calling their proposals "basically sound."

Pileggi said there was "no agreement" in either caucus to consider only a bill to allow Philadelphia to raise its taxes and "do whatever they wanted with it."

If the compromise legislation is approved in the House tomorrow, it would not likely be heard in the Senate until next week, at the earliest, when that chamber returns for its next full session day.

Anticipating yet another week of uncertainty in Harrisburg, Mayor Nutter yesterday held a two-hour open meeting with more than 30 top city officials who outlined the impact, department by department, of a contingency budget that the administration continues to work on.

That budget, known as Plan C, would reduce spending by that same $700 million over the next five years by, among other measures, closing every library and recreation center and eliminating 3,000 city jobs, including nearly 1,000 in the Police Department.

There was disagreement at the meeting over whether the actions would be temporary or permanent.

In any case, Nutter said, "unfortunately, we've moved from a stage of talking and planning to one of implementation."

Notices of some of the pending cuts in Plan C may begin appearing tomorrow - including signs on libraries, used by 25,000 people daily, that the buildings may soon close. And residents this week will begin receiving automated calls informing them that trash pickup may be reduced to every other week.

Letters informing employees of layoffs would be mailed Sept. 18.

Most of the reductions, though, aren't slated to occur until Oct. 2, which would be the effective date of the job losses.

In the week prior to that, Fire Commissioner Lloyd Ayers said, he expects to publicly identify which six engine and three ladder companies, and five medic units, would close under the plan.

Some of the steps being planned would take longer than Oct. 2 to execute. For instance, two health centers slated to close - not yet identified - wouldn't cease operations until Nov. 6, according to Deputy Mayor Don Schwarz.

Meanwhile, city vendors should this week begin receiving payments that were delayed in early July, courtesy of a $275 million loan to the city from JPMorgan Chase & Co.

Dozens of religious leaders gathered yesterday at the Pennsylvania Capitol in Harrisburg for an interfaith prayer service over the state budget.

Catholic, Protestant, and Jewish leaders prayed for God to provide politicians with wisdom, understanding, and a sense of responsibility.

The Rev. Brenda Alton, senior pastor at Kingdom Embassy in Harrisburg, said that it's a major challenge to work out a budget in the current recession, but that politicians need to remember that continued delays are harming people's lives.

Pennsylvania is now the only state without a budget agreement. The stalemate is in its third month.

- Associated Press

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