L.A. budget deal threatens to unravel

Phil Willon and David Zahniser
LA Times
Aug 16, 2009

Nearly three months after he signed off on a plan to eliminate a $530-million shortfall, Los Angeles Mayor Antonio Villaraigosa still has not won enough concessions from city workers to avert deep cutbacks that could hit L.A.'s police hardest.

The City Council left last week for a summer recess even though solutions to the budget crisis threaten to unravel.

Contract talks with public safety employees have grown acrimonious, with Villaraigosa denouncing a publicity campaign by the firefighters' union against more cuts. A proposal to give early retirement to 2,400 civilian workers -- slashing $200 million each year from the payroll -- has run into problems over how the city would pay for it.

Pat McOsker, head of the firefighters union, protests budget cuts before the City Council this month. (Allen J. Schaben / Los Angeles Times)

And city financial advisors privately have begun warning that even if the council signs off on early retirement and wins new agreements with public safety employees, the city will still fall short by an estimated $40 million.

In the meantime, the Planning Department has been hit by furloughs. The Fire Department has begun shutting down rescue units and ambulances on a rotating basis. And Police Department commanders have begun developing a contingency plan to furlough officers at least two days a month starting in October.

If negotiations with police and fire unions reach an impasse, the city has the authority to unilaterally slash paychecks for officers and firefighters -- as well as the number of hours they are on duty.

"We are moving toward impasse and that's a shame because . . . there is a way out," Villaraigosa said last week. "I certainly understand that it's tough to make those sacrifices. But what's the alternative, to go into bankruptcy? No, we can't do that."

Villaraigosa and council leaders have asked police to accept a 14% cut in overall compensation -- salaries, bonuses, overtime and benefits. At the same time, the mayor has vowed to continue his campaign pledge to expand the department by 1,000 officers, saying it is essential to holding down violent crime.

The president of the police union, Paul M. Weber, countered that it makes no sense to continue hiring when the LAPD still needs to cut $130 million.

"I call it my Octomom theory," Weber said "You can't keep adding to the family if you can't support the kids you've already got."

Union leaders at the Los Angeles Police Protective League and United Firefighters of Los Angeles City said they have already offered substantial cost-saving concessions, only to be rebuffed.

Negotiations with the firefighters have started to resemble a schoolyard brawl. The union last week sent a mailer to voters with images of last year's Metrolink train disaster in Chatsworth, contending that if it happened again fewer rescuers could respond.

Villaraigosa called the mailer "shameful" and said the union has "absolutely refused" to consider any salary or benefit concessions, which has forced the service cuts. Firefighters, like police, are being asked to accept salary and benefit cuts that average 14%.

The troubled talks have added to a larger sense of uncertainty over the city's financial future more than two months after the council and mayor pieced together a $7-billion spending plan that reduced services at nearly every agency.

As city officials search for ways to close the budget gap, local economists expect property-related tax revenue to continue to decline at least through the end of the year.

"We've seen people debate about departments, people and programs, but this problem is far greater than that," said Councilman Bernard C. Parks, chairman of the budget and finance committee. "Really, the debate has to change to the financial solvency of the city of L.A."

For months, the unions have been locked in talks with the city's negotiating committee, which includes the mayor, four council leaders and the city administrative officer. Because of the budget gap, Villaraigosa not only refused to set aside money for police and firefighter raises his year, he asked the Police and Fire departments to reduce salary accounts by $182 million as part of his call for "shared responsibility and sacrifice" by all city agencies.

LAPD Chief William J. Bratton said cuts to salaries and other benefits are unavoidable because personnel costs account for at least 96% of his department's $1.17-billion budget.

Firefighter union President Pat McOsker said it was unfair to ask firefighters and police to take pay cuts when most civilian city workers are not being asked to do the same. Yet in recent weeks, the city's effort to cut civilian salary costs also has been thrown into disarray.

The Coalition of L.A. City Unions, which represents 22,000 of the city's 36,000 civilian workers, agreed to a deal in June to forgo pay raises in exchange for an early retirement package. Villaraigosa and the council promised, in turn, not to lay off or furlough coalition members unless tax revenue dropped by $100 million in a single year.

The agreement ran into trouble earlier this month, when a city-sponsored study concluded that even if remaining employees increase their pension payments, they will not contribute enough to fully cover the cost of early retirement.

Council President Eric Garcetti said it was possible that the current early retirement proposal could collapse as a result.

"We've said that it has to pay for itself. It looks like it's not paying for itself," Garcetti said. "What we're not prepared to [approve] is an irresponsible early retirement program that further boosts our deficit."

On Friday, pension board members met behind closed doors to discuss two unions that have threatened to sue over the early retirement plan. Meanwhile, a new financial analysis found that even with the payroll savings gained from early retirements, the city would probably be short $40 million this year.

If the early retirement deal is abandoned, thousands of city workers would probably receive pink slips, city analysts warn. Union officials said they have no intention of seeing the city renege on the retirement plan and argued that city leaders have failed to take into account all of its cost savings.

"Hey, we have the numbers to back it up. A deal is a deal," said sanitation department worker Simboa Wright, a union representative with the Service Employees International Union Local 721.

With so many unanswered questions, a final vote on early retirement isn't expected until October. Villaraigosa spokesman Matt Szabo said the mayor still backs early retirement but acknowledged that the initiative probably would generate just five months of savings this year.

"Every day that goes by diminishes the amount of money that this proposal would save," Szabo said.