Sept 26 (Reuters) - About 5,500 city employees in Philadelphia, Pennsylvania's biggest city, will get 2.5 percent pay raises starting Oct. 1, but some will have to pay more for health and pension benefits, the mayor announced on Wed nesday.
Most of the affected employees hold civil service positions and are not represented by unions, or are at-will employees.
The workers have not had a raise since 2007 and did not get the $1,100 lump sum bonuses received by unionized employees in 2008. Some non-union employees were also subject to furloughs and salary cuts, Mayor Michael Nutter said in a statement.
Because the recession has left cities across the United States with thin budgets, many have made changes to employee and retiree benefits to rein in ballooning pension and healthcare costs.
"At the heart of this compensation package is a connection between employee pay raises and benefits reform that will move the city toward fiscal sustainability," Nutter said.
Some of Philadelphia's biggest, fastest-growing expenses are employee health and pension benefits, according to the its comprehensive annual report for the year ending June 30, 2011. The two combined comprised 25 percent of proposed budget expenditures.
Philadelphia took in nearly $3.9 billion in revenue in fiscal 2011. Revenue collections are expected to contract slightly, to $3.7 billion by 2017, while total employee benefits are projected to grow from just under $1 billion in fiscal 2011 to nearly $1.2 billion in fiscal 2017, according to the city's five-year financial plan.
The net changes revealed on Wednesday will cost Philadelphia $17 million through 2017, the city said.
The city has about 22,300 full-time employees under its fiscal 2013 budget. Nutter's administration has been trying to win similar benefit concessions from unions representing non-uniformed public employees since 2009, but those negotiations stalled.
In the past, the city's non-unionized employees have received the same compensation boosts as its unionized civil servants.
Philadelphia's general fund surplus for 2017 is estimated to be $60 million, but that does not include the cost of the changes announced on Wednesday.
It also does not account for possible changes to two key labor contracts. The city's police are operating under a contract, but it is due to be opened to wage negotiations soon. The city is also appealing an arbitration award with firefighters that it says could cost up to $200 million if it is upheld.