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MOODY'S ISSUES COMMENT ON STATUS OF PHILADELPHIA'S LABOR CONTRACT NEGOTIATIONS

 MOODY'S ISSUES COMMENT ON STATUS OF PHILADELPHIA'S LABOR CONTRACT
 NEGOTIATIONS
 NEW YORK, Sept. 21 /PRNewswire/ -- Moody's today issued the following comment on the status of Philadelphia's labor contract negotiations:
 On Sept. 16, 1992, the Pennsylvania Supreme Court struck down the municipal unions' request for fact-finding in negotiations with the city. The decision opens the door for the city to declare a negotiating impasse and unilaterally impose the proposed wage and benefit changes included in the city's financial stability plan. In a press conference held Friday, Sept. 18, Mayor Rendell outlined the city's final contract offer to municipal employees and set a deadline of 5:00 p.m. on Sept. 23, 1992. If the city cannot reach agreements with municipal unions by that time, it will implement its last contract offer. While the mayor's recent announcement indicates that the city expects to move quickly to implement personnel cost savings required by the financial plan, the potential exists for a debilitating municipal strike and/or further legal action by the unions to prevent the implementation of the city's last best offer.
 The inability to reach a settlement with employees has been a financial setback for the city. Since the beginning of the current fiscal year, the city has continued to fund employee compensation and benefit costs under the pre-existent contracts. At this point in time, the city estimates that it may be as much as $20 million behind on efforts to achieve compliance with the financial plan. Because the five-year fiscal recovery plan relies heavily on wage and benefit cost savings which must be achieved through contract negotiations, the city's inability to obtain a settlement has prevented significant progress towards fiscal stability.
 The city has now reached a critical point in the determination of the fiscal recovery plan's long-term viability. A rapid, mutually acceptable contract settlement, which achieves the city's financial objectives, is clearly the most favorable outcome. Although the city appears committed to achieving its financial plan objectives, neither an embittered and disruptive employee strike, nor a settlement which fails to achieve significant cost restructuring, can be considered a favorable outcome. Absent progress on the cost saving measures dictated in the financial plan, or other effective solutions, no improvement in the city's long-term credit position can be expected.
 -0- 9/21/92
 /CONTACT: Michael Johnston, vice president/manager, Mid-Atlantic Regional Ratings, 212-553-7810, or Cathy Krust, assistant vice president, Mid-Atlantic Regional Ratings, 212-553-7706, both of Moody's/ CO: City of Philadelphia ST: Pennsylvania IN: SU:


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Date:Sep 21, 1992
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