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.