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L.A.'s top financial advisors oppose early retirement plan

The city's administrative officer and chief legislative analyst say the proposal would be devastating to the city unless labor unions offer more concessions. They suggest more layoffs and furloughs.

September 12, 2009|David Zahniser and Maeve Reston

The city's two top financial analysts advised Los Angeles Mayor Antonio Villaraigosa on Friday to reject an early retirement plan for employees and to instead lay off 926 city workers and force 22,000 others to take unpaid days off.

City Administrative Officer Miguel Santana and Chief Legislative Analyst Gerry Miller said the plan to trim staff by allowing 2,400 employees to retire up to five years ahead of schedule would "devastate city operations" unless labor unions offer more financial concessions.

Santana said the plan, which was designed to balance the budget, would save only $12 million during the current fiscal year. "The city must act quickly and must make some dramatic actions to reduce expenditures immediately through furloughs and through layoffs," he said.

The report sets up a showdown between the Coalition of L.A. City Unions and the City Council, which is slated to take a final vote on early retirement Tuesday. And it raises new questions about whether Villaraigosa can continue his hard-fought effort to expand the Police Department by 1,000 officers, a promise from his 2005 mayoral campaign.

Friday's report calls for the early retirement plan to be rejected unless the union coalition, which represents 22,000 civilian workers, frees up another $60 million and persuades its remaining members to contribute another 1.2% of their paychecks to keep the city's pension system solvent.

Budget analysts also voiced dismay that early retirement, if approved, would be accompanied by a guarantee of no layoffs or furloughs for coalition members -- severely restricting the council's ability to address a $405-million shortfall. That would result in disproportionately deeper cuts to other employee groups, they said.

Even if early retirement is rejected, budget advisors said, the council should shut down most city operations one day every other week until June 30 to weather the financial crisis.

Although the report did not offer staffing recommendations for the Los Angeles Police Department, it pointed out that the city could save $64 million if police officers were forced to take 18 furlough days over the next nine months.

Santana said he hoped that talks with the Los Angeles Police Protective League will result in solutions that avoid such cuts.

Union President Paul Weber said Friday that it was "counterintuitive and insane" for the city to even be considering furloughs while it is hiring new officers.

The department had 9,995 police officers as of last month and would need to reach 10,181 to fulfill Villaraigosa's promise of adding 1,000 officers over a five-year period, city officials said. As recently as Tuesday, the mayor warned that any effort to scale back police hiring would be "absolutely unacceptable."

Meanwhile, budget officials have begun warning that, under its current pace of spending, the city is at risk of exhausting its reserves -- a key criterion used to determine financial health. In April, Fitch Ratings downgraded the city's rating outlook from stable to negative because of higher unemployment and declining tax revenue.

Villaraigosa issued a statement Friday saying that he wants city negotiators to meet over the weekend with the union coalition, which sought early retirement months ago as part of a larger five-year agreement.

"Though I continue to believe that early retirement is preferable to layoffs," Villaraigosa said, the concerns raised within the report "must be addressed to maintain critical services for the people of Los Angeles."

Coalition spokeswoman Barbara Maynard said union leaders would meet over the weekend if asked. The coalition already has warned the city that it will go to court if early retirement is rejected.

"The Coalition of L.A. City Unions has a binding agreement with the city of Los Angeles that was approved unanimously by the City Council on June 26 and was ratified by members three weeks later," Maynard said.

Early retirement is part of a larger agreement touted by Villaraigosa and the council three months ago. Under that pact, coalition members agreed to forgo pay increases for two years and then would receive six raises totaling 18.8% between July 2011 and January 2014.

The city's precarious financial position is due in part to lower-than-expected tax revenues. Budget analysts said the city would receive $75 million less than previously expected.


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