St. Paul will keep three rescue squads staffed around the clock.
The deal appears to be a compromise after a week of tough talk from the union and the mayor's office.
Coleman's office said the union's lack of cooperation forced him and Chief Tim Butler to make a managerial decision and earlier this week it was announced that Rescue Squad 2 would be decommissioned.
The union, however, has since agreed in a memorandum of understanding to allow four rather than five firefighters on one of the rescue squads when daily staffing dips below 114. The union also agreed to allow the change through 2014. The memorandum is necessary because the lower staffing level violates the union's current contract.
Initially, the union said it would allow the four-person squads only through 2013. The union leaders accused Coleman of trying to destroy their collective bargaining rights.
But local president Mike Smith said Friday the mayor has given the firefighters "a seat at the table" in budget discussions for 2014. No firefighters will lose a job in the 2013 budget.
Smith said the deal is "for the best interests of everybody."
Coleman will outline his proposed 2013 budget in a speech Monday at the Lowertown Farmers Market. The local intended to picket his speech, but Smith said that won't happen now.
The dispute follows decades of tension between City Hall and firefighters, who packed City Council chambers during budget hearings last year because of a proposed $1 million cut to the department. Ultimately, the cut was scaled back.
After the 2012 budget was approved, the city convened a task force with union leaders, elected officials, managers and residents to study Fire Department staffing. The task force recommended the drop in staffing on Rescue Squad 3 to prevent other engines from being browned out on low-staffing days.
But the union and the mayor disagreed on the expiration date and the agreement fell apart in the past week, only to be salvaged Friday afternoon.
The three rescue squads perform specialized tasks such as search and rescue, forcible entries, ventilation and extrication. The city has kept three squads despite a 2007 independent study saying a single rescue squad would be sufficient.
Two of the squads average 150 calls a month. The third goes out about 130 times, according to city data.
"I appreciate the hard work that Chief Butler and Local 21 have dedicated to these negotiations," Coleman said in a statement.
"This reaffirms the good work that was done by those involved with the Deployment Task Force. The work of the Saint Paul Fire Department is second to none, and this agreement is in the best interest of both public and firefighter safety."
Rochelle Olson • 651-925-5035 Twitter: @rochelleolson