By Gregory Korte
The Cincinnati Enquirer

A union representing city workers says it's offended by Cincinnati City Manager Valerie Lemmie's proposal to pay a consultant a percentage of the tax money it saves by privatizing city services.

Lemmie has asked City Council to approve a contract for Public Strategies Group Inc., a St. Paul, Minn., firm that would help the city save money through "managed competition."

The company would be paid $165,000 a year for one or two years - plus 10 percent to 25 percent of the savings, up to $1.5 million.

Yodie Mitchell, president of the American Federation of State, County and Municipal Employees Local 1543, said the contract flies in the face of the labor-management cooperation.

"I can't ask my members to agree to a process to help find savings for the city, but which gives the first proceeds of those savings to a private company," she told council's Finance Committee on Monday.

Timothy H. Riordan, the assistant city manager for enterprise services, admitted it was a unique contract, "but it's a unique process."

Republicans on City Council say the administration has been dragging its feet on managed competition. Savings from privatization - or by city workers coming up with ways to make their services more efficient - would pay to restore cuts in recycling and nature education programs in the 2004 budget.

The Finance Committee put a hold on the contract Monday. Councilman David Pepper, a Democrat who was a swing vote for managed competition last year, said City Council shouldn't renege on the promise it made to unions that they would be part of the process.

E-mail gkorte@enquirer.com