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There are multiple issues here:
To directly answer the question - it's not really your job to negotiate with the City on their repair charges. It's your insurance company's job. If they feel the amount is unreasonable, they're the ones that will do the negotiation. After all, it's their money being spent, not yours. As for the actual amount itself, I think it's entirely reasonable considering we're talking about union employees employed by a municipality. You should be happy it's not more.
Next, the folks that change your oil aren't really the ones you want checking your tires for wear. That's your job or the job of someone who deals in tires. I know that some tire shops also do oil changes, so maybe that's what's going on here, but unless they gave you a piece of paper saying that the tires were fine, they're not on the hook at all.
There's a big difference between retread tires and new tires, and if you had them installed on the car yourself, you should have been told the difference. Retreads are made by taking older tires with sidewalls that are in excellent condition and then basically glueing new treads onto them. If you keep them inflated properly, there usually isn't any noticable performance difference, but if they are underinflated, they can blowout. By the way, new tires should never have the treads separate since they're usually cast as a single unit. There's no way for the tread to separate from the tire leaving an intact rubber surface beneath the separated tread.
And Shakran, the driver is liable for the travel time to the site for the repairs when it comes to physical damage. If, for instance, he'd hit a house, the insurance company would pay for the transit time for the construction crews to get to and from the job site since it's all a part of the scope of work. If the employee is on the clock on the way to the site, he's liable. The fact that the claimant is a governmental entity is irrelevant.
Finally, the $63 billing include the salary, workers compensation, benefits, etc. When I was a contractor, we billed our guys out at $75/hour, but they only made $40/hour. We made $15/hour profit, and the additional $20/hour came from WC (the lion's share), 401k, medical insurance, etc.
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