Mayor Tom Murphy said yesterday that he is fully cooperating with a federal grand jury investigation of the firefighters union contract his administration awarded in 2001, and is comfortable the probe will determine there was no impropriety.

"We're comfortable that when anybody, any reasonable person, looks at all the information, they'll know there was no deal done." -- Mayor Tom Murphy Related coverage Federal probe of Mayor Murphy goes on (1/10/05) Mayor, firefighters union focus of inquiry (4/21/04) Zappala eyes fire union's charges (4/15/04) Fire union chief talks of votes-for-jobs deal with Murphy (4/14/04)

"We're fully cooperating in providing all the information they need to understand the arcane [contract] arbitration process that we go through," Murphy told reporters yesterday. "We're comfortable that when anybody, any reasonable person, looks at all the information, they'll know there was no deal done."

A grand jury is gathering evidence to determine whether Murphy violated the law when he awarded a generous contract to firefighters and subsequently got the union's endorsement on the eve of the Democratic mayoral primary.

Federal investigators have subpoenaed city offices for information on the contract, with city officials delivering some of the documents Dec. 20, one day before Murphy announced he would not seek a fourth term in office.

Investigators took notice of the 2001 contract talks in April, when fire union President Joe King wrote a letter saying Murphy had given the union $10 million to $12 million in contract enhancements, including no-layoff protections, in exchange for the union's political support.

Murphy won the primary by just 699 votes.

FBI agents have made several trips to the City-County Building since then to interview witnesses and gather information, including a visit on Tuesday to the city Finance Department and to King's office.

Murphy said his Dec. 21 retirement announcement was unrelated to the federal investigation but tied instead to the approval of the city's new tax package. He said the investigation would not affect his final year in office.

"I'm going to have a lot of fun in my last year in office. I'm looking forward to being the most unusual lame duck that we've seen in a long time," he said.

By "unusual," mayoral spokesman Craig Kwiecinski said later, Murphy meant he would be working hard on issues he identified at this retirement announcement, rather than coasting through his last year. They include revitalizing the Downtown retail corridor, building riverfront trails and implementing the city's new tax and spending cut package.

Murphy said yesterday that he likely would veto proposed City Council changes to collection of the new 0.55 percent employer payroll tax. The first payment of the tax is supposed to be based on payrolls from October through December 2004, which some businesses oppose. Council is set to take a final vote Tuesday on plans to base the payment on the first quarter of 2004 instead.

"I would hope that council at some point would realize that they'd be best served by leaving something alone. The idea of continuing to fiddle with the tax structure is not helpful," Murphy said.

"We've worked very hard through the course of three years to reform the city's tax structure. Let's not start trying to give away the receipts we're going to get ... Instead of trying to slow down, let's try to make it work. [City Council would] be best served by just trying to relax for a while."