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Pension, healthcare deal reached with L.A.'s largest city union

Villaraigosa says the landmark tentative labor agreement would greatly increase employee contributions and put an end to some furloughs. Union rank and file still must ratify the pact.

March 25, 2011|By Patrick J. McDonnell, Los Angeles Times

Los Angeles officials Thursday unveiled what Mayor Antonio Villaraigosa termed a landmark tentative labor agreement that would greatly increase healthcare and pension contributions for thousands of municipal workers and put an end to some furloughs caused by the city's budget crisis.

"This is a watershed moment, make no mistake," Villaraigosa, flanked by union leaders and City Council President Eric Garcetti, told a City Hall news conference. "You're talking about a game-changer."

The three-year deal would save the fiscally strapped city more than $400 million, end furloughs for covered employees and avert more than 600 layoffs, officials said.

"This agreement puts L.A. back on track," said Garcetti, who added that the savings would reduce cuts in vital services such as fixing potholes and answering 911 calls.

Union rank and file still must ratify the pact, which union chiefs agreed to Thursday. Labor leaders expressed optimism that the deal would be approved, though many individuals are sure to balk at key points — hiking retiree healthcare contributions, restricting cash overtime, eliminating some automatic raises and imposing four new unpaid holidays.

Despite the fanfare, the deal is projected to save only about $69 million in the coming fiscal year — far short of the city's looming, $350-million debt. Layoffs, services cuts and furloughs for workers not covered by this contract are still possible means of closing the gap, officials said.

"This does not prohibit layoffs," said Miguel Santana, the city's administrative officer and chief budget planner.

Moreover, Santana said, it bars only furloughs of the 19,000 workers covered by the pact, roughly half of the municipal payroll. Not affected are police officers, firefighters, and sundry managers and other municipal employees.

The mayor voiced hope that other unions would sign similar pacts, though any such effort would probably meet vigorous opposition. Also not included in the deal are the 9,200 employees of the Los Angeles Department of Water and Power, the nation's largest municipally owned utility.

At the news conference, labor chiefs rejected the notion that the concessions represented givebacks — a pejorative word in the union lexicon — and instead called the agreement a recognition of reality in very difficult fiscal times.

The accord also protects retirement security and shields against disruptive furloughs, which, for some workers, have reached 26 days without pay.

"We are hopeful this will provide our members with some sense of stability in an era of economic uncertainty," said Cheryl Parisi, an official with the Coalition of L.A. City Unions, which negotiated the pact.

The deal, however, does not rule out new layoffs in a city that already has shed thousands of workers via pink slips, early retirement and other means while drastically slashing services.

The agreement culminates months of sometimes rancorous negotiations as city officials scrambled to close a crushing budget deficit. A key sticking point was how much workers would be willing to contribute to retiree healthcare costs.

Under the plan, affected employees — who now pay nothing for retirement healthcare coverage — would begin contributing 2% of their incomes for such coverage April 1. That percentage would double, to 4%, by July 1, the beginning of the new fiscal year. By paying more, workers would retain retiree healthcare benefits for spouses or domestic partners — a benefit that the city had threatened to eliminate.

Overall, total retirement contributions would rise by July 1 to 11% of salaries — almost doubling the current level of 6%.

Significantly, the changes would affect both newly hired employees and about 19,000 existing workers represented by the coalition, whose membership includes janitors, clerks, sanitation workers and other municipal staffers. A separate, mayoral-backed plan to increase police and firefighter contributions to their retirement would affect only new hires.

Villaraigosa, a former union organizer who has clashed with some of his past allies in the labor movement, contrasted the pact to the nasty debates in Wisconsin, Indiana and elsewhere, where local governments and public-sector unions have been at virtual war and unable to make new deals.

"I never characterized our employees as greedy," Villaraigosa said. "Unions are our partners, not our enemies."

patrick.mcdonnell@latimes.com

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