By Tom Ferrick

(part 3 of 5)

To understate the case, the city has not been successful over the years at getting its labor unions to make concessions on wages, work rules and fringe benefits.

Union leaders are not elected to give up their members’ hard-earned rights and benefits.

Confronted with this resistance, the city has often resorted instead to layoffs to extract the savings it needs. Laying off 100 blue-collar city employees, for instance, will yield a savings of about $8 million year - or $40 million over 5 years.

Union leaders don’t like layoffs either, but put yourself in their shoes of Pete Matthews, the head of District Council 33, the city’s blue-collar union. What would you rather have happen? Lose 100 members to layoffs or infuriate your other 9,800 members by making major concessions at the bargaining table?

Matthews and his fellow union leaders would rather eat the layoffs than face thousands of angry members.

In fact, Matthews was elected head of DC33 in 1996 when he defeated the incumbent, Jim Sutton, after lambasting him for concessions he had made at the bargaining table to then-Mayor Ed Rendell.

So, you see the dilemma. The city finds it next to impossible to extract concessions. To save money, it must layoff workers - and further diminishes city services.

Are there only these two options?

No. There is a third path - and one that the city already has the power to use.

It can privatize some city services. Rendell won the right to privatize in his first negotiations with the unions (the one that cost Jim Sutton his job). There are steps the city must take before it does take some services private - for instance, it has to give the employees working for the department a right to bid on the work.

But, it can privatize certain city functions without too much difficulty. In most cases, citizens wouldn’t notice the difference.

Giving private companies contracts to run city services saves money because those companies usually pay lower benefits to their workers and sometimes (though, no always) lower wages.

I don’t think the city should privatize public safety functions (police and fire) or enforcement (L&I, for instance). But, there is one area where it could save money: the city prisons. The prisons are a huge cost burden to the city. Figuring in benefits, it costs about $320 million a year to run them. (It averages out to $32,000 per prisoner in city jails.) I picked the prison system not only because it is a big-ticket item, but because there are private firms around the nation that have been running prisons for years. It is an established industry. And let’s face it. It isn’t rocket science. It’s incarceration.

Other areas that may be open to privatizing include district health centers and trash collection - again, two areas where private industries that specialize in these services already exist.

If privatizing the prisons could yield a 10 percent savings to the city, it would save about $32 million a year.

Savings over 5 years: $160 million.

Tomorrow. Option No. 3: The 5% Solution