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Riordan's talk of fiscal doom rankles L.A. leaders

The former mayor has been saying the city is near bankruptcy. But current leaders contend that some of today's fiscal problems stem from Riordan's expansion of employee retirement benefits.

May 07, 2010|By David Zahniser, Los Angeles Times

A decade has passed since lawyer, philanthropist and business executive Richard Riordan held the title of mayor.

Yet just days after he turned 80, the Brentwood resident has transformed himself into the No. 1 doomsayer of city government, telling politicians, business leaders and even the Wall Street Journal that the city he once led is on the verge of bankruptcy.

That message has begun to grate on city leaders, who contend that some budget problems now being faced were created under Riordan's watch.

"We're having to clean up after the lack of reform in our pension system from that administration," said City Administrative Officer Miguel Santana, the top budget analyst working to close a projected $485-million shortfall next year.

Riordan has been discussing the bankruptcy option for weeks, urging city officials to roll back an array of public employee benefits. He has called for new employees to receive a 401(k) investment account, not a public pension, and said city workers should not be eligible for retirement until 65.

During those comments, Riordan has offered an increasingly acid assessment of the city's leadership. He criticized the City Council's effort to avoid layoffs by moving workers to the Department of Water and Power, which is not financed by the city's strained general fund. And he blasted the decision to slash payroll by allowing 2,400 employees to retire early with full benefits up to five years early.

"As a result of his delays in responding to the city's fiscal emergency, Mr. Villaraigosa has squandered not just his career, but his relevancy," Riordan wrote in a Wall Street Journal commentary co-authored by former city animal services Commissioner Alex Rubalcava, president of an investment advisory firm.

The message has piqued the city's leaders enough to put the B-word — and Riordan's Op-Ed — on Friday's council agenda. Villaraigosa, who has largely ducked the debate, said in a statement that he is "making the tough choices to restore the fiscal stability and long-term financial health of the city."

Santana, on the other hand, issued his own rebuttal memo, pointing out that Villaraigosa's budget, if approved, would reduce the workforce to a size not seen since 1997. In an interview, he also discussed Riordan's hand in expanding the city's employee benefits.

Weeks before he left office in 2001, Riordan campaigned for Charter Amendment A, a ballot measure that allowed police officers and firefighters to retire with up to 90% of their salaries, up from the 70% that had been in place previously.

That beefed-up pension benefit allowed police and firefighters to retire at 50. And it played a key role in expanding the city's retirement costs, said Santana, who has spent the last few months trying to persuade elected officials to roll back the benefits pushed by Riordan.

Riordan said Thursday that he could not remember the details of Charter Amendment A, even though his name was first on the ballot argument sent to voters. He argued that the ongoing budget crisis, not his own track record, is what's relevant.

"To me, it's child's play to look at every sin I've done in my life, because you could spend 100 years doing that," he said.

Since Charter Amendment A went into effect, the city's contribution to the retirement plans of public safety workers has increased from $98 million in 2002 to $394 million this year. That increase was driven not just by expanded retirement benefits, but also by recent investment losses in the public safety pension fund and the cost of Villaraigosa's effort to hire 1,000 new police officers.

Employee benefits were enhanced in other ways during Riordan's watch. In 1998, the city decided to allow retired public safety employees to receive health subsidies at age 55 – down from 60. And some union leaders still praise the pay package negotiated by his administration during those boom years.

In his memo, Santana questioned many of the figures offered by Riordan. For example, Riordan said retirement benefits would grow by $2.5 billion over four years. Santana put that estimate at $556 million.

Riordan questioned the accuracy of Santana's number, saying it did not include retiree health costs and the pension burden of the DWP.

"He had to do this under a lot of pressure, so I can't blame him for being wrong on some small things," Riordan said.

david.zahniser@latimes.com

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