L.A. mayor abandons early-retirement budget plan

Los Angeles Mayor Antonio Villaraigosa on Monday abandoned an early retirement plan his administration had negotiated with labor leaders as a rapidly worsening budget gap moved the city and some of its most powerful employee unions toward open conflict.

City Council members offered to give union leaders until today to identify another $60 million in cuts needed to salvage the early retirement plan. If the unions fail to do so, council members may be forced to back layoffs for as many as 926 custodians, recreation workers, building inspectors and other city employees.

Union officials said they would go to court if the city backed away from the plan they had agreed on in June, which called for trimming the payroll by allowing 2,400 workers to retire up to five years ahead of schedule.

Villaraigosa and his budget advisors now say that the early retirement plan would cost too much in pension benefits and deliver too little in savings to get through the current budget year. The city is overspending at a rate that would cause it to run out of money one month before the end of the budget year.

Labor leaders responded in anger, saying that Villaraigosa met with them personally in June -- hours after the council voted behind closed doors to move ahead with early retirement -- and reassured them that he was a man of his word who would honor the agreement.

“He said that a deal’s a deal, and that he intended to stand by this deal,” said Victor Gordo, an attorney who is secretary-treasurer of the Laborers’ International Union of North America Local 777. “So I’m taken aback to hear . . . that he’s not intending to keep his word.”

Villaraigosa’s deputy chief of staff, Matt Szabo, said the agreement discussed in June was tentative and still requires a final council vote. And he argued that much has changed since June.

The city has seen a $75-million drop in projected tax revenue. And even if early retirement were approved, it would save only $12 million in this fiscal year, according to the city’s financial analysts. With officials still facing a $405-million budget shortfall three months into a new fiscal year, Szabo said, the city needs a financial “course correction.”

“The mayor has always preferred early retirements over layoffs, but the proposal falls nearly $100 million short of projections and is simply no longer financially viable,” he said.

As Villaraigosa made his announcement, the council’s Budget and Finance Committee found itself divided on the issue of early retirement, voting 3 to 2 on Monday against seeking concessions that would, in the eyes of the unions, doom early retirement. Three councilmen -- Paul Koretz, Bill Rosendahl and Jose Huizar -- said they weren’t yet ready to make a decision and wanted to give labor leaders 15 more hours to find $60 million in cost savings.

“Let me just say that I could change my vote tomorrow,” Huizar said.

For weeks, panicked financial analysts have been urging council members to take some action today that would begin to address the budget before they leave town for a conference in San Jose. City Controller Wendy Greuel issued one warning, saying that the city would run out of money in May if no action was taken.

Meanwhile, City Administrative Officer Miguel Santana, who became the city’s top financial advisor last month, called on the council to impose 26 days of furloughs over the next nine months for all civilian employees.

Santana raised the prospect of furloughs for police as a way to cover the cost of Villaraigosa’s five-year plan to add 1,000 officers to the Los Angeles Police Department. And he called for the council to shed 926 workers from the payroll, including 162 civilian employees at the LAPD and 70 workers in the city attorney’s office.

Early retirement cannot be approved without support from 10 of the 14 council members. (One seat is vacant.) On Monday City Atty. Carmen Trutanich said he too opposes the retirement proposal, saying that it would have worked only if it had been approved months earlier.

“If we would have done it early on, it would have been a good thing to do, and for next year it might be still a good thing to do,” Trutanich said. “But we’re not going to save the money that we need to save doing it now.”

Trutanich probably will have to defend the city from a lawsuit threatened by the Coalition of L.A. City Unions if early retirement is dropped. That coalition, which has 22,000 members, contends that the council’s decision to seek a union membership vote on early retirement earlier this summer is legally binding.

At one point during Monday’s budget committee meeting, Rosendahl suggested that his colleagues reject both early retirement and the layoff plan, at least temporarily. Councilman Bernard C. Parks suggested that such a move would require council members to “start printing money.”

“If we don’t do our job today and tomorrow, and we don’t do it through the rest of this fiscal year, we can close the door on the city of Los Angeles July 1 because we won’t survive next fiscal year,” Parks said.

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