Philadelphia was foundering in an ocean of red ink when Ed Rendell decided he had the stuff to save it. His 'tough love' policies have helped turn the city around.

Al Gore called him "America's mayor." Time magazine called him "the Rocky Balboa of American mayors." No less an authority than Murphy Brown called him "that animal." (More on that later.)

He has described himself as "Philadelphia's biggest cheerleader" and its "biggest beggar."

The truth is, somewhere between all the gushing headlines and corny publicity stunts is the real Ed Rendell. He is, in fact, all of those things.

He is also American City & County's Municipal Leader of the Year for 1996.

Ed Rendell has ridden a political roller coaster for much of his life. (He had previously won a shocking victory in the race for Philadelphia District Attorney and was subsequently re-elected, then lost one race for governor and one race for mayor.) But he has finally -- at least for the moment; there is much talk of the future -- found his niche.

Still, when Rendell successfully sought the office, the mayor's job did not look like much of a springboard to anything. The city was foundering in an ocean of red ink; it was running at a $250 million deficit, its bonds would not have supported construction of a phone booth, it had suspended contributions to its pension fund, and its residents had seen 19 tax increases in little more than a decade. At any given time, 30 percent to 40 percent of the city's fleet was down.

"He believed very strongly that he could make a difference in Philadelphia," says David Cohen, Rendell's chief of staff. "But it wasn't an easy decision to make. The press had written his political obituary in 1990. If he was mentioned at all, it was in the 'washed-up' category, not the I it 'shining lights' category."

But what Philadelphia residents needed was tough love, and Rendell was the only candidate in 1991 to give it to them. "I was determined to tell people what I planned to do," he told the New York Times. "If they didn't want it, I was reconciled to not winning."

His 68-percent-of-the-vote victory was all the validation he needed. Rendell set about his economic fix with the zeal of one given a last shot at immortality. He slashed spending to the bone, eliminated nearly 1,500 city jobs (7 percent of the workforce) and instituted one of the most massive competitive contracting programs the country has ever seen. So far, the city has subjected 37 different city services, including custodial work, maintenance services and security at its art museum, to its competitive contracting program. Thirty-three of the services have been contracted out; four were won by the municipal workforce.

Additionally, when it looked like state funding for child welfare services might be cut, Rendell threatened to sue then-governor Bob Casey.

Most importantly, however, Rendell took on the unions. Less than a year into his first term, the mayor offered city workers a contract that would freeze wages for almost three years and cut benefits. "What he did was not easy," Cohen says. "But not a single municipal worker got laid off, and there were no pay cuts. He cut benefits, but Philadelphia workers still have among the best pension and benefits plans in the country. I think the average municipal worker wasn't that upset that he lost Flag Day as a holiday. In fact, it might have been embarrassing, being the only guy on the block who had Flag Day off."

The unions, predictably, struck. Rendell fought back, taking his case to the citizens. Without public support, the strike lasted 16 hours.

Now, Cohen says, the mayor has a much better relationship with the unions--or at least with the rank-and-file. In his 1995 re-election bid, Rendell was strongly opposed by all four municipal unions but still got nearly 80 percent of the vote, the largest post-Depression margin of victory in the city. He swept every political ward in the city, including those heavily populated by municipal workers.

None of Rendell's actions would normally fall into the category of "popular political moves."

"Things we had to do weren't popular with anyone," Cohen says. "It's not popular to close a branch of the library; it's not popular to restrict spending; it's not popular for a Democratic mayor to threaten litigation against a Democratic governor. But it's massively popular for government to live within its means."

With that combination of spending cuts, competitive contracting and reorganization, Rendell has spearheaded one of the most dramatic turnarounds in the history of urban America. Philadelphia is now saving or generating $300 million a year.

The past two years have seen cuts in the city's wage and business taxes, the highest in the country, and a five-year plan projects additional cuts in both taxes every year.

Additionally, Rendell and his wife, Midge, a federal judge, have pushed hard for the establishment of an Avenue of the Arts in Philadelphia, an area that would include theaters, art galleries, lofts and restaurants and provide another downtown attraction.

"We need to generate the type of economic development that will employ local people," Rendell told Financial Times. "If we don't do that, with all the successes that we have achieved in Philadelphia, we're not going to make it."

MR. POPULARITY

Ed Rendell likes being popular. His gregarious nature and penchant for off-the-wall publicity stunts--one of his funniest moments in the national limelight came when a photo of him scrubbing a city hall bathroom floor hit the wires--have helped him earn well deserved national acclaim.

"He loves the limelight, and he loves politics, and he's very good at it," says Richard Jaffe, a partner with the Philadelphia law firm of Mesirov, Gelman, Jaffe, Cramer & Jamieson and a college pal of Rendell's at the University of Pennsylvania. "He was well-known in college. If there was a party, he was there."

Indeed, Rendell has described himself as the "ultimate fraternity guy."

His on-campus reputation was such that, on a visit to Philadelphia, Candace Bergen, a year behind Jaffe and Rendell at Penn, happened to notice a photograph of Rendell--identified as the district attorney--on television and asked a room full of Philadelphians in an astonished voice, "That animal is your district attorney7"

Indeed, Rendell has a flare for stealing the spotlight without antagonizing the stealee.

Two years ago, Al Gore and Rendell made an appearance together and happened to notice a sign that said, "Gore/Rendell 2000." Rendell went over and flipped the sign, and Gore had no choice but to grin.

Still, he's not afraid to do what he perceives as the right thing at the risk of harming a friendship. In June, he signed an executive order extending municipal benefits to the domestic partners of city workers, prompting a denunciation from Philadelphia's immensely popular Roman Catholic Cardinal, Anthony Bevilacqua, a close friend.

And his outgoing personality masks a shrewd political mind that observers believe will take him far. He has said, however, that he intends to fulfill his obligation to the city, despite rumors of national beckoning.

And he still has work to do. Philadelphia's fiscal turnaround was only the beginning. Business is still fleeing the city, although Rendell's efforts have stemmed the tide somewhat. And the city suffers mightily from the same ills--poverty, AIDS, police scandals--that beset much of America's urban areas.

Still, cities in general and Philadelphia in particular have a powerful claim on Rendell's heart, and he is determined to leave a legacy greater than a budget surplus.

To that end, he has been a one-man lobbying machine in Washing' ton, attempting to sell the Clinton administration on ideas that range from the necessity for "urban impact statements," which would make the federal government responsible for negative impacts on cities resulting from federal legislation, to an entire New Urban Agenda that would require setasides in the federal procurement process for businesses that located in empowerment zones and a presumption in favor of distressed urban areas in the siting of federal facilities, among other things.

"The mayor has been known to say that, done right, there's nothing like a city," Cohen says.

"I can show you study after study that says that if cities slide down the tubes, suburban areas go right down with them," Rendell told the New York Times.

As mayor of Philadelphia, Rendell has made it his crusade to make sure that does not happen there. It's one of the things he is most serious about.