Philadelphia Turnaround May Offer Lessons for L.A. : Riordan has consulted with mayor who pushed through new union contracts and privatization of municipal services.

If Richard Riordan’s first year and a half in office go as well as the mayor of Philadelphia’s just have, Los Angeles just might get another multiterm leader in City Hall.

That is probably why Riordan--during a recent visit to Washington--took a side trip to Philadelphia to spend the afternoon with its mayor, Ed Rendell.

Rendell, 49, has won glowing praise and credit in the national media for turning around a nearly bankrupt government and for initiating the kind of “reinvention” of government espoused last year by then-presidential candidate Bill Clinton.

Most publicized--and most interesting to Riordan during his visit, Rendell officials said--has been Rendell’s contracting out of city services and his renegotiation of union contracts and his installation of new labor-management practices.

Those less impressed think the city had nowhere to go but up when Rendell, a Democrat, took office in January, 1992, with the city $248 million in debt, unable to meet its next payroll or to convince Wall Street to lend another dollar.

“He arrived when people had made up their mind that things could not get worse,” said City Councilman Thatcher Longstreth, a Republican whose colleagues have given uncharacteristic unanimous support to Rendell’s two cost-cutting, tax-restraining budgets.

The current budget forecasts no year-end deficit, the first in 10 years to do so.

Even those who say Rendell has benefited from a broad political consensus for change also believe that he was the right kind of politician to take advantage of the situation.

“He can be enormously engaging. He has the ability to establish an aura of mutual trust with the people to whom he is talking. People really feel he will help them,” Longstreth said.

Rendell is a gregarious, linebacker-sized hand-shaker, but he says all the attention can be a bit embarrassing.

“When I go to my Conference of Mayors meetings or when all the mayors went down to the White House (earlier this year), I feel a little sheepish sometimes,” he said. “We’ve done nothing that other mayors haven’t done. We have just confronted problems in a way that maybe is novel because we’ve been forced to do it all at once. But privatization didn’t start in Philadelphia . . . reasonable contracts that cut the financial burden of cities didn’t start with Philadelphia. The California state government got wage rollbacks from its workers in its last contract.”

Riordan, a Republican, was impressed enough to consult the Democrat’s office throughout his campaign, Rendell aides said.

Rendell and Riordan are said to represent a new kind of big-city mayor who is less guided by political affiliation or ideology than by the belief that local governments, like companies in the same industry, are in competition with each other for consumers: tax-paying businesses and residents, who can pick up and move to the suburbs or other urban centers if taxes rise too high or services falter.

Rendell also said he believes that turning to the federal government for money--unless targeted for specific urban problems like mass transit, prenatal health or AIDS treatment--only postpones reform.

“We must learn to get our economic house in order first,” he said.

Rendell says he is most concerned about the economic effect of Philadelphia’s wage tax, the nation’s highest.

“We are a city that has raised taxes about 10 times in 11 years. If we don’t raise taxes, that will allow us to have the opportunity to develop and grow our economy,” Rendell said, “but if we have to raise taxes again, you can forget it. People will be flooding out of this city.”

Key to his plan to lower the costs of government was renegotiating the city’s contracts with its two major labor unions last fall.

Rendell fought it out in the media, preparing citizens for a long strike and threatening the workers with layoffs and privatization.

After only 16 hours, angry but resigned union officials settled for a two-year wage freeze, the elimination of four paid holidays, a 25% cut in the city’s payments for employee health benefits and abolishment of work rules that Rendell said had the effect of swelling payrolls and overtime.

As expected, the labor unions are not happy.

“Its tragic that people would perceive him as successful. Services have declined. There is less police, firefighters, social workers, libraries, public health people,” said Thomas P. Cronin, leader of one of the unions.

Cronin said Rendell, a former district attorney, approached labor negotiations “like a prosecutor.”

Though Rendell began privatization slowly, hiring a janitorial service for City Hall and the museums, he now hopes to save $9.5 million contracting out the management of the city’s only nursing home and $4 million privatizing food services at the city’s 10 jails.

Rendell says the most important advice he can give Riordan is to share information and plans “early and often” with key legislators.

“And don’t let any disagreement produce any long-lasting wounds or scars, or . . . you will not have an effective government,” he said.