Villaraigosa budget could cover 5.5% raise for city workers

Los Angeles Mayor Antonio Villaraigosa came out swinging against the city’s labor unions last week, urging lawmakers — and the next mayor — to abandon or pare the 5.5% raise that comes due for many city employees on Jan. 1.

Villaraigosa set a defiant tone as he unveiled his latest budget, his last before he leaves office after eight years, saying city workers need to contribute more toward their healthcare costs.

Yet amid the tough talk, the mayor’s spending plan shows he already has the money to cover those costs if the unions are unwilling to deal.

The mayor’s financial blueprint for 2013-2014 puts $21 million into a special reserve for “economic uncertainties.” That is exactly the amount that would be needed to cover the cost of the raises and balance the budget if labor leaders give no ground on healthcare costs, according to a budget summary prepared by Villaraigosa’s office.

The fact that the raise money exists — and gets its own special fund — shows that Villaraigosa’s insistence on new concessions is “phony,” said Julie Butcher, spokeswoman for Service Employees International Union Local 721, which represents 10,000 city workers. “It’s clear that the city understands its obligation to the workers,” she said. “Because that obligation is included in the budget.”

The $21-million reserve for economic uncertainties, which appears on page 803 of the mayor’s budget, has been an open secret among policy-makers and union leaders since Villaraigosa submitted his budget to the City Council. Fliers have gone up in City Hall accusing Villaraigosa of “hiding” the money in a special account.

Asked to respond to Butcher’s remarks, the mayor’s office issued a one-sentence statement calling the budget “balanced and reasonable.” Villaraigosa “believes new revenue should be spent on restoring services to residents instead of giving employees raises,” said spokeswoman Vicki Curry.

Council members are set to vote on the budget later this month.

Labor leaders contend that city officials have been hyping the city’s financial woes for weeks to shore up their credibility in the wake of their campaign for Proposition A, the half-cent sales tax hike that voters defeated March 5. During that campaign, proponents of the tax increase said the city was in danger of having to lay off police officers, close jails and halt prosecutions of misdemeanor crimes unless the measure passed.

Weeks after the measure was rejected, Villaraigosa offered a budget that would preserve police hiring and expand key services, including sidewalk repairs, tree trimming and Fire Department staffing. The economic uncertainties fund is part of a larger $292-million cash reserve, well above the amount required under the city’s budget policy, according to the mayor’s analysis.

City Administrative Officer Miguel Santana is holding firm against the January pay increase, saying the financial effect of the raise goes well beyond the upcoming budget year. Without the sought-after concessions, he said, the budget shortfall will grow by $108 million in 2014-15.

Santana also warned that much of this year’s revenue comes from one-time sources, including nearly $43 million in transportation grants. “It would be irresponsible to use one-time reserve funds to address an ongoing cost such as a 5.5% raise,” he said.

Union officials responded by saying that their members have already made plenty of sacrifices, taking unpaid days off, contributing more toward their retirement and enduring a painful round of layoffs. “Everything that city workers have done since 2007 has put the city in a situation where the sky is not falling, and that’s good news,” Butcher said.

The 5.5% raise has become an issue in the ongoing mayoral campaign, which has focused heavily on public employee costs and the city’s financial woes. Candidates Eric Garcetti and Wendy Greuel have offered to sit down with labor leaders to try and renegotiate the increase.

City Councilman Paul Koretz, who typically sides with employee unions, said he supports the idea of asking unions to forfeit the January pay hike. But he also said city leaders should not rely on that concession as a budget-balancing strategy.

“It’s not guaranteed by any means,” he said.

david.zahniser@latimes.com