Wendy Greuel seeks $175 million in savings in L.A. budget

Los Angeles mayoral candidate Wendy Greuel said Monday that she would seek an extra $175 million in savings from the city’s budget by using such strategies as cutting the City Council’s discretionary funds and changing the investment practices of its employee retirement systems.

Appearing with several business leaders, Greuel said her budget plan would generate $60 million in savings per year by reducing the size of public employee health benefits and workers’ compensation outlays by 10%. Another $40 million could be found, she said, by modifying the way the city’s pension boards invest and cutting the amount they spend on consultants.

“We believe that $40 million is a conservative number,” Greuel told the group. “It’s been a long time since anyone has looked at those investment practices.”

The proposal was unveiled after months of complaints from civic leaders that Greuel, the city controller, and her opponent, Councilman Eric Garcetti, have offered too few ideas for closing the budget shortfall. That gap has been described by the city’s top budget official as being somewhere between $150 million and $165 million, although some say it is considerably lower.

Mayor Antonio Villaraigosa, who leaves office June 30, plans to unveil his final budget Monday. A 12-member commission on the city’s economic woes, set up by Council President Herb Wesson and co-chaired by former U.S. Commerce Secretary Mickey Kantor, held its first meeting Monday. That session was not open to the public, and Kantor would not say where or when it occurred.

Monday’s proposal offered Greuel a chance to reposition herself on the budget after taking heat over the public employee unions that have put more than $2 million into the effort to elect her. As she sought that union support over the last few months, she went after Garcetti over his backing of layoffs, furloughs and an ordinance that hiked the retirement age for future city workers.

Greuel said the city did not properly negotiate that ordinance with its civilian employee unions.

Greuel’s budget strategy was laid out at an event where she picked up the endorsement of the Central City Assn., a downtown organization focused heavily on real estate development. The group’s top executive, Carol Schatz, said it was significant that Greuel has support from both labor leaders and business groups.

Appearing with Schatz, Greuel repeated her promise to sit with union leaders and discuss a hike in the retirement age for existing city workers. She said city leaders have not done enough to cut retirement costs, which have been consuming a greater share of the budget for basic services.

Garcetti spokesman Jeff Millman said Greuel’s plan includes two key ideas that Garcetti has discussed for several weeks: securing greater healthcare contributions from city employees and collecting unpaid taxes from parking lot operators. And he argued that Greuel’s idea of hiking the retirement age of current employees would save nothing.

State law prohibits city leaders from cutting the retirement benefits of existing workers unless they provide other benefits of equal financial value, Millman said. Greuel’s own budget presentation has numbers showing that retirement cost projections for the current fiscal year are $263 million lower than had been expected in 2010, he said.

“It’s pretty clear that she’s acknowledging some of the pension reforms that Eric Garcetti negotiated,” Millman said.

Greuel’s remarks drew praise from Stuart Waldman, president of the Valley Industry and Commerce Assn., who said she had offered a comprehensive budget strategy. A more skeptical reception came from George Aliano, who serves on the board that administers retirement benefits for retired police officers and firefighters.

If the candidates want to secure pension savings, they should look at the raises they have awarded, said Aliano, a retired police officer. “The more they do that, the larger the bill becomes,” he said.

Garcetti and Greuel voted in 2007 for a five-year package of raises totaling 25% for civilian employees. That deal now covers seven years.

In a separate interview, Greuel accused Garcetti of spinning out big ideas without saying how he would pay for them. She cited his statements about rejuvenating 20 “great streets” in Los Angeles, offering summer jobs to teens around the city and capping a portion of the 101 Freeway in Hollywood and covering it with a park.

“You have to be able to say how you are going to pay for it, so the public knows,” she said.

Garcetti’s team said the freeway park was mentioned in response to a question at last week’s debate about big dreams for the city. The park, Millman said, is a “shoot-the-moon idea” that community groups have only begun to study, not a project that would burden the city treasury in the near term.

Millman also said federal tax credits could help pay for the street improvements envisioned by Garcetti.

Greuel said a summer job for every L.A. teen would cost $325 million. Garcetti’s camp said the councilman was referring to the 10,000 underprivileged kids who were turned away after applying for summer jobs.

Millman pegged the cost of helping them at $20 million, saying half the money could come from federal block grants and the rest from private sources.

david.zahniser@latimes.com

Times staff writer James Rainey contributed to this report.