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Strike in Philly Brings Focus on Health Care, Retirement Costs

November 8, 2005

The recent strike by the Southeastern Pennsylvania Transportation Authority (SEPTA) ended on November 7 after a seven day shutdown of services. The strike was being closely watched by cities, unions and government agencies across the country. The impasse was reached after Philadelphia’s workers refused to accept SEPTA’s demand that workers accept a 5% salary copayment to offset budget deficits and rising healthcare insurance premiums. The agreement that brought a resolution to the standoff resulted in a much lower 1% donation that would be contributed by workers.

The automotive and airline industries have similarly faced more publicized and difficult collective bargaining over rising health care costs in recent months. The stakes are high for state and local governments and is certain to spark new battles over the threat of budget cuts or tax increases to defray costs.

The Post-retirement benefits issue will likely prove to be a colossal financial liability burden for governmental bodies and taxpayers. Newly approved Goverment Accounting Standards Board (GASB 45) rules will begin to be effective after December 2006.

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