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Date: Fri, 13 Nov 92 13:07:19 EST
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11/13/92


TITLE #m#gmtlj/wm#m#Philadelphia Mayor Ed Rendell: Hoping To
Leave A Legacy As His City's 'Great Fixer' Thomas McArdle In Phi-
ladelphia When Ed Rendell heard that former congresswoman Bella
Abzug - a living symbol of New York City's big government li-
beralism - said Bill Clinton would have to turn to experts like
her for direction on urban policy, he rolled his eyes and howled.

"We don't need a return to the blank-check federal programs,"
said the stocky, street-smart Democrat. A native of Manhattan, he
was elected mayor of Philadelphia a year ago by a comfortable
margin, after a campaign that promised pain, not goodies.  "Here,
Mr. Mayor. Here's $200 million for Philadelphia. Here's $300 mil-
lion for New York City. Here's $100 million for Detroit. It would
be a Ed Rendell

disastrous mistake to go back to doing that," Rendell cautioned.

"And Bill Clinton is, in fact, a new type of Democrat, and he's
not going to do that." Rendell endorsed Clinton in April. Along
with Chicago Mayor Richard Daley, he considers himself one of the
president- elect's most listened-to backers among the country's
mayors.  If Clinton needs a prototype for the "New Democrat," he
would certainly have one in Rendell. The only item in the former
district attorney's campaign platform that could be found in a
typical politician's bag of promises was a pledge to put 1,000
more police officers on the streets.  Virtually everything else
was root-canal politics. For example, no tax cuts for anyone -
rich, poor, middle-class, businessperson or worker. Right now,
the mayor says, "I'm breaking my back" trying to avoid a tax in-
crease.

Rendell won because Philadelphia was on the brink of insolvency
after two terms of big spending under Mayor Wilson Goode and a
decade of no fewer than 19 tax increases.  For a middle-class
family, the City of Brotherly Love might be more properly nick-
named Taxadelphia. The city takes nearly 13% from a family of
four


Can Philly's Rendell Be His City's 'Fixer'?

making $25,000. A total 350,000 residents fled to the suburbs
over the decade the tax increases occurred.  But the budgetary
situation is still so bad that Rendell won't even consider tax
cuts during his four- year term.  His aggressive five-year
budget-cutting package reduces holidays, sick time and disability
pensions for municipal employees. It also freezes city pay for
1two years with modest increases thereafter.

Rendell is also trying to privatize city services such as garbage
collection and security guards for city-run buildings, with a
minimum of job loss.

The five-year target for total savings is $1.2 billion. Rendell
has slashed $400 million so far.

Picketed At Convention

It wasn't easy. The American Federation of State, City and Muni-
cipal Employees activated their national apparatus, even picket-
ing him at the Democratic National Convention in New York, where
he served as a Clinton delegate. But local private unions, tired
of high taxes, supported him.  When push came to shove in Oc-
tober, a strike of 15,000 municipal employees lasted a total of
16 hours. The unions blinked in large part because the mayor's
staff made it known there was a comprehensive plan to deal with
major strikes.  The struggle is far from over for Rendell, howev-
er. Contracts with the police, fire department and other unions
still lie ahead.

There's a joke in Philadelphia that it takes three airport work-
ers to change a lightbulb - only it's no joke. It is codified in
the municipal employment guidelines.  To help him administer his
bitter medicine, Rendell documented some of the more outrageous
city employee perks, such as 52 days off, including holidays and
vacations, a year.  Also helpful was John Street, the tough-
talking black president of the City Council, who has the trust of
the unions and got unanimous approval from the council for
Rendell's plan.  "We would never have gotten a contract without
the leadership of John Street," Rendell acknowledges. "He under-
stands the fiscal realities of the city." The city council head
promised union leaders he would oversee privatization initiatives
or, as the mayor prefers to say, "competitive contracting."

Street's Stand Unclear


Quiet meetings with Street's staff on specific proposals have al-
ready begun, but it is unclear whether Street will give full sup-
port to the entire privatization agenda.  "There have been
prepared about 25 or 26 different areas for contracting out," ac-
cording to Ronald G. Henry, executive director of the Pennsyl-
vania Intergovernmental Cooperation Authority, an advisory body
established to give Philadelphia some fiscal breathing room, and
which has approved Rendell's plan.  "But I would not be surprised
to see some of the privatization go away as a price for getting
bigger numbers in the way of salary caps and benefit givebacks,"
he said.

Street's Support Vital

Street's continued support is vital. But Rendell, top aide David
Cohen, and the mayor's staff have been consistently savvy about
sharing responsibility -and, more importantly, credit - with oth-
er elected officials.  Rendell himself brought the art of
schmoozing to new heights last July when he played in a softball
game with suburban lawmakers while still recovering from elbow
surgery, and with a catheter still in his chest.  That may have
been carrying the tough-guy image too far, but it let suffering
Philadelphians see their mayor sharing some pain.  During the
depths of the city's financial crisis in the summer of 1990, its
bond sales plummeted and its credit rating was a B, or "highly
speculative." Its bonds now rate an improved BB, or "specula-
tive." "The crisis in Philadelphia seems to have bottomed out
now," remarked bond trader Stephen Leslie, senior vice president
at M.R. Beal & Co. in New York and a native Philadelphian him-
self.

"The city is clearly going to need continued strong leadership,
because market players are going to be watching very closely."
Thomas Dorsey, senior vice president at AMBAC Indemnity Corp. in
New York, is similarly pleased with the Philadelphia government
in the last year.  "Today, a mayor or city council cannot in-
dependently solve all these kinds of problems," Dorsey said. "It
takes a coalition. Rendell has formed one, and he certainly has a
commendable plan. But I think it may be difficult at best to sus-
tain support for it in its entirety." What kind of advice will
Rendell give Clinton?  "If I didn't know that he was going to run
for president, I'd tell him to hire Jack Kemp," he said. Rendell
considers one of the tragedies of the Bush years that Kemp, the
Secretary of Housing and Urban Development, "was never listened
to." Rendell testified earlier this year to the Senate Finance
Committee on behalf of enterprise zones. He prefers Kemp's plan,
which would eliminate capital gains taxes within zones. A watered
down version from Sen. Lloyd Bentsen, D-Texas, would "do it on
the cheap," in Rendell's words.

Advice On Taxes

State versions of enterprise zones have mixed results because,
according to Rendell, "the payoff was too small," a flaw that
would not exist if done at the federal level.  Rendell also said
he will advise the new president to cut capital gains taxes in
half for future investments held five years and repeal much of
the rest of the 1986 tax reform act.  "I've already asked him to
roll back the 1986 tax act and just give us every investment in-
centive he can, particularly for enterprise zones, but generally
just to get the economy moving again," he said.

+++8EH3%" This article is copyright 1992 Investors Business Dai-
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