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They aren't quite the rabbits that city officials said they needed to pull out of their hats to stave off financial calamity.

But a new trash-collection contract and hard negotiations with the region's biggest Blue Cross/Blue Shield provider have apparently saved the city hundreds of thousands of dollars.

At last night's meeting, council approved a new garbage hauling contract that will save city taxpayers more than $1 million over the next three years.

In addition, city officials said that a nearly 84 percent increase in health insurance premiums for about 80 city employees has been knocked down to 38 percent.

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Residential trash collection was being done for nearly 10,000 city households by Greenridge Waste Services of Scottdale, Westmoreland County, a subsidiary of Arizona-based Allied Waste Industries, at a cost of about $1.2 million annually.

The contract was set to automatically renew on Sept. 30.

Four companies bid on the collection agreement: Allied, Big's Trucking of Belle Vernon, Texas-based Waste Management Inc., and Nickolich Sanitation of Clairton. County Hauling of Belle Vernon was asked to bid but declined, according to city documents.

The city of Pittsburgh, which in June offered to provide services to McKeesport and other municipalities, also declined to bid.

"So much for inter-governmental cooperation," City Councilman Dale McCall quipped last night.

The $2.8 million, three-year deal offered by Nickolich is $321,000 less than was offered by the next lowest bidder, Big's. The contract was approved by a 6-0 vote; Councilman Paul Shelly was absent.

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Renegotiating the health care agreement was less straightforward, Pittman said. The employees covered are members of Teamsters Local 205, and the city was bound by its collective-bargaining agreement to maintain the same level of coverage, he said.

In the end, only two carriers --- UPMC Health Plan and Highmark, which provides most Blue Cross/Blue Shield services in the Pittsburgh area --- bid on the contract, Pittman said.

Highmark was the pre-existing carrier for 205 members and had proposed increasing the city's premiums 83.6 percent.

The rate hike was sharply criticized by Local 205 business agent Carl Bailey and by Brewster, who went on Marty Griffin's KDKA (1020) radio talk show to blast Highmark and at one point threatened to launch a class-action lawsuit.

City officials carried out negotiations directly with Deborah Rice, Highmark senior vice president of regional accounts.

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The deal was questioned by City Controller Ray Malinchak, who asked why the process was not opened to competitive bidding in the form of legal advertising in local newspapers.

City Solicitor J. Jason Elash said McKeesport's home-rule charter exempts insurance from being advertised for bids, because different plans aren't directly comparable.

"We went with all of the carriers that offered the products that the contract specifies," he said. "Only two companies were acceptable to the union. No one's hiding anything. It was completely transparent."

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According to Brewster, the city is forming a committee to study ways to lower the cost of health insurance for all of its employees. Malinchak and representatives of city labor unions, including Local 205 and Firefighters Local 10, will be asked to participate, the mayor said.

"We want to add anyone we can who's knowledgeable about the issues," Brewster said.

Four city labor contracts are coming up for negotiation in the next 18 months.

"We want to work with council and the unions to find the best opportunities, and get some process in place so that we can stop the bleeding," Brewster said.

City officials have said they may try to roll all employees onto a single health plan, seek joint coverage with neighboring municipalities, or self-insure to lower the cost of premiums.