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Council backs pension cuts for new workers

September 26, 2012|Kate Linthicum and David Zahniser
  • SEIU Local 721 President Bob Schoonover, center, says that a ban on double dipping by council members would help reduce the city's pension expenses.
SEIU Local 721 President Bob Schoonover, center, says that a ban on double… (Anne Cusack / Los Angeles…)

Despite raucous protests and threats of a lawsuit from labor unions, the Los Angeles City Council voted Tuesday to roll back pension benefits and boost the retirement age to 65 for new civilian employees.

The 14-0 vote represented a major victory for Mayor Antonio Villaraigosa, who has been pushing pension reform for months in the face of criticism from labor leaders who have compared him to Scott Walker, the Wisconsin governor who has battled unions for much of his first term.

Passage of the plan was shepherded by council President Herb Wesson, who told the rowdy crowd of union members that the pension changes were unavoidable. In a rare, lengthy speech, he noted that after his father died in 1974, members of his father's union gave him $870 so he could move to Los Angeles.

"If I slit my wrist, I would bleed union blood," Wesson said. "Do you think I want to do this? No. We have to do this."

For The Record
Los Angeles Times Friday, September 28, 2012 Home Edition Main News Part A Page 4 News Desk 1 inches; 58 words Type of Material: Correction
Los Angeles pensions: An article in the Sept. 25 LATExtra section about a new pension plan approved by the Los Angeles City Council said that Councilman Eric Garcetti didn't expect substantive changes to the plan to come from a new round of talks with city labor leaders. Garcetti says he was not predicting the outcome of the talks.

Under the new plan, spouses of retired workers will no longer be eligible for city-funded healthcare. City employees will see their take-home pay reduced in years when their retirement fund takes a hit in the stock market. And workers who retire at the age of 55 after 30 years of city employment will receive pensions that are roughly one-third the amount provided to existing employees.

The changes will only apply to newly hired civilian workers and will not affect the retirement benefits of police officers, firefighters and employees at the Department of Water and Power. It will need a second vote within 30 days to go into effect. In the meantime, the council instructed city negotiators to meet with union leaders to try to find common ground and to avert a lawsuit.

Labor leaders contend that city officials lack the legal authority to impose pension changes without first going to the bargaining table with unions. Victor Gordo, an attorney with the Coalition of L.A. City Unions, said a lawsuit may be unavoidable because council members have already cast one vote on the changes.

"As far as we're concerned, they've moved forward with unilateral action," Gordo said.

Councilman Eric Garcetti, who is seeking union support as he campaigns for mayor, said he doesn't expect any substantive changes to the pension plan to come from the talks with city labor leaders.

Villaraigosa commended the council "for tackling the tough but essential issue of pension reform." The mayor has been pushing the changes since April, when he laid out plans for an even more aggressive change: moving the retirement age to 67.

At a rally outside City Hall on Tuesday, union members donned the "cheese-head" hats favored by Green Bay Packers fans and held up signs that featured photographs of Villaraigosa next to Walker, suggesting the Democratic mayor and the Republican governor were "separated at birth." Later, union members interrupted the council meeting with shouts of "We are not Wisconsin!"

Bob Schoonover, president of Service Employees International Union, Local 721, said the council will save little money in the next few years because the city lacks money to hire new workers. Other labor leaders contend that the changes will make it more difficult for the city to cover the pension burden of existing employees.

Schoonover argued that there are better ways to cut employee costs, citing council members who engage in so-called double-dipping -- collecting retirement benefits from one city job while receiving a salary from another.

Councilman Bernard C. Parks, a former LAPD chief, receives a yearly pension of $290,607, according to city pension officials. Councilman Dennis Zine, a former traffic officer, receives an annual pension of $102,269.

Zine and Parks each earn salaries of $178,789, although Zine voluntarily took an 11% pay cut on that salary last year.

Although most of the testimony from the public was critical of the plan, representatives from two business groups -- the Los Angeles Area Chamber of Commerce and the Valley Industry and Commerce Assn. -- spoke in favor of it. Doug Arseneault, legislative affairs manager for the Valley industry group, said council members were trying to preserve city services and keep from "completely falling off the fiscal cliff."

"It is simply unjust that residents and businesses must pay some of the highest tax rates in the country and yet city departments are unable to fulfill their responsibilities," he said, drawing boos from the audience.

Business leaders, working with former Mayor Richard Riordan, have threatened to put a measure on the ballot that would freeze the pay of city workers if pensions rise above a certain threshold. Riordan said the plan approved by the council does not go far enough. Nevertheless, he has not yet decided whether to pursue a referendum.


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