Former Los Angeles Mayor Richard Riordan says his plan would save hundreds… (Lawrence K. Ho / Los Angeles…)
Richard Riordan, Los Angeles' millionaire former mayor, plunged deeper into the fray over public pensions Friday, announcing he is finalizing language for a ballot initiative that would move newly hired workers into 401(k)-style plans and freeze retirement benefits for existing workers.
Riordan and his advisers said the proposal would save hundreds of millions of dollars a year by 2017, in part by phasing out government pensions as new employees come into the city workforce.
The announcement set the stage for a ground war between Riordan, who has warned that retirement costs would push the city into bankruptcy, and an array of employee unions influential in city decision making. Riordan would need nearly 255,000 signatures to get the measure onto the May municipal election ballot, according to the city clerk's office. Labor leaders want to keep that from happening.
Mayor Antonio Villaraigosa and the City Council are already moving forward with their own plan to roll back pension benefits for future civilian employees, such as librarians, clerks, groundskeepers and mechanics.
But Riordan and his allies say that does too little and are countering with a more expansive plan that targets benefits given to police officers, firefighters and employees of the Department of Water and Power — whose unions are known for their heavy involvement in city elections.
Riordan contends that city retirement costs are growing at a rate that will leave money for public safety and pensions and little else. The former mayor initially said he would file ballot language for his proposal Friday. But backers of the measure postponed the submission until next week so they would have more time to go over the wording, said Jonathan Wilcox, Riordan's spokesman.
Union organizers promised to stand outside supermarkets in coming weeks to try to discourage voters from signing petitions to put Riordan's plan, dubbed the Fair Share Pension Reform Act of 2013, on the ballot.
"The plan is wrong-headed, based on made-up numbers and just plain mean," said Bob Schoonover, president of Service Employees International Union Local 721, which organized an emergency meeting Saturday to discuss the proposal.
"There's nothing fair about it," he said. "Riordan's plan would destroy retirement security for tens of thousands of middle-class L.A. city workers by gambling their futures on risky 401(k)s."
Attorney and San Fernando Valley civic leader David Fleming, who is working with Riordan on the measure, said he was not worried about a union push back against signature gathering. "That was done in San Diego. It was done in San Jose," said Fleming, referring to two cities where voters approved rollbacks in city employee pension benefits earlier this year.
Backers of Riordan's proposal say it will stop double-dipping, the practice of giving an employee a pension from one city job and a salary from another. The measure would also require that existing employees contribute more toward their retirement, but with the rate of increase capped at 3% a year, said Alex Rubalcava, an advisor to Riordan on pension matters.
The City Council voted two weeks ago to raise the retirement age for newly hired civilian workers who are not employed by the DWP from 55 to 65. That plan, backed by Villaraigosa, seeks to keep employees in the workforce longer and would dramatically reduce pensions for those who seek to retire at age 55 after 30 years of city employment.
Villaraigosa said he shares Riordan's concern about rising pension costs, but he questioned whether any plan that cuts pension benefits for existing employees would withstand a legal challenge.
"The reason why we haven't done that in the past," the mayor said, "is because our lawyers have made it absolutely clear that you can't change current employee pension benefits without giving them something of like value."
Councilman Paul Koretz, a close ally of the city's civilian unions, said the Riordan measure could cost the city money if approved. Once new employees are moved into a 401(k) plan, they would no longer contribute revenue needed to cover benefits of existing workers, he said.
"I think the idea is absolute idiocy," he said. "Because then we have no way to fund our current pensions. It actually winds up costing us more and is very counterproductive."
Villaraigosa's plan is awaiting a final City Council vote. City Administrative Officer Miguel Santana said that plan would save $30 million to $70 million over a five-year period.
Rubalcava challenged that estimate, saying it would save nothing during that period.
Time staff writer Kate Linthicum contributed to this report.