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L.A. City Council gains union concessions to help close budget gap

The early retirement plan is resurrected and some employees are spared layoffs and furloughs in the agreement that erases nearly a third of this year's shortfall. Union members still must approve.

September 19, 2009|David Zahniser and Phil Willon

Ending days of tense negotiations and veto threats, Los Angeles' elected officials struck a deal with key labor leaders Friday, gaining enough financial concessions to erase nearly a third of this year's $405-million budget gap.

The City Council voted unanimously to resurrect a plan to give early retirement to 2,400 workers and spare six of the city's employee unions from layoffs or furloughs.

City negotiators also said they had persuaded the Coalition of L.A. City Unions to give up $78 million in "hard concessions." Meanwhile, coalition leaders agreed to ask their members to contribute an extra 0.37% of their paychecks toward the city's pension fund, covering more of the cost of early retirement.

"These concessions are real," said Mayor Antonio Villaraigosa, who embraced the agreement. "The people will feel these concessions in the pocketbook."

The council voted 12 to 0 for the agreement and will need to cast a second vote next month. Still, the pact only begins to address the city's financial woes.

Labor negotiators are seeking $142 million in salary concessions -- or service cuts -- from its public safety unions and have offered up police furloughs as one option. Meanwhile, the shortfall for the budget year that begins July 1, could also exceed $400 million.

City Administrative Officer Miguel Santana would not offer details on the union concessions, saying the plan would be divulged after the coalition's 22,000 members ratify the agreement. On a list of proposed concessions, a copy of which was obtained by The Times, the coalition hopes to save $34.6 million by having members reduce their overtime and receive half a day's pay on each of 10 holidays.

Other proposals would allow the city to delay certain payments to the coalition's members. For example, $24.6 million in departure bonuses offered to those who take early retirement would be postponed until next year.

Friday's accord brings an end to the behind-the-scenes struggle between the council, the mayor and the employee unions over plans to impose 26 furlough days and the elimination of 926 civilian jobs.

The budget fight frayed relationships to such a degree that earlier in the week, union members began yelling at the mayor's deputy chief of staff, Matt Szabo, as he explained Villaraigosa's views to reporters. The mayor, in turn, screamed at council President Eric Garcetti in one telephone call and hung up on him during a second, according to participants familiar with the talks.

"It was a highly charged situation for everybody," said Bob Schoonover, president of Service Employees International Union Local 721.

Two hours after the vote, Villaraigosa praised the council. Garcetti offered his own kind words, saying the mayor, the unions and the city's elected officials had worked in a "collaborative way."

"We are a family again," Garcetti declared.

Some city workers -- mainly those represented by the Engineers and Architects Assn. -- still will be forced to take layoffs, Santana said. Because employees in that group are not part of the coalition, they automatically received raises on July 1 and must take 26 furlough days this year.

The group threatened a lawsuit Friday, saying its members did not agree to pay more into the pension system to cover the cost of early retirement.

For weeks, the city's financial analysts warned that the council has been spending $1 million more per day than it is taking in. Yet the council, whose members are eyeing other political seats, was loathe to abandon the retirement plan favored by the union coalition.

Santana warned that the council would have to make deep cuts to public safety if it didn't renege on its promise to shield the coalition from layoffs and furloughs. And he urged the council to secure a 1.9% increase in retirement contributions from the coalition to cover that program's full cost.

Friday's agreement brings the total to 1.07% -- up from 0.75% -- the amount promised by the unions three months ago. One scenario provided by the city's actuary said 1.07% would allow 2,227 employees to retire up to five years early.

Santana acknowledged that there is a gap between what he requested and what was promised. He said workers who take early retirement also would contribute 1% of their pensions toward the plan. City officials do not yet know how much money such a provision would generate, he said.

Pension officials said that the added employee contribution from the coalition would generate an additional $141 million over the 15-year life of the retirement plan.

Friday's decision eliminates Santana's plan to lay off members of the coalition, which drew angry protests from labor leaders last week. After the council voted, however, union members walked up to Santana and shook his hand.

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david.zahniser@latimes.com

phil.willon@latimes.com

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