L.A. to Appeal Police, Fire Pension Ruling

Los Angeles city officials said Monday that they will appeal a court decision that could force the city to increase pension benefits for thousands of police officers and firefighters by as much as $43 million a year.

The city’s decision came in response to a ruling issued last week by the state Court of Appeal for the 2nd Appellate District. The court affirmed a 1987 Superior Court ruling that overturned a voter-approved measure limiting pension cost-of-living increases for about 7,500 current and former police officers and firefighters.

Tax Increase a Possibility

Administrative Officer Bill Mercer said that if the court decision is not reversed, the city will be forced to raise taxes or cut services.

“We’ll have to find $43 million in the city’s budget,” Mercer said. “You can’t find $43 million in the city’s budget without it severely impacting city services. It will wreak havoc with us.”

But police and fire representatives hailed the ruling as long-delayed justice.

“It is a decision that we expected, and it is righting a wrong that was done seven years ago,” said George Aliano, president of the Police Protective League. “The council put before the voters what we thought was something that was illegal and something that broke a contract.”

In 1982, voters overwhelmingly approved a City Charter amendment to cap annual cost-of-living increases at 3%. Police and firefighter pension benefits had been linked to the consumer price index by voters in 1971. The cap applied only to future increases, not benefits already earned.

City officials, including Mayor Tom Bradley, had warned that the pension plan was jeopardized by large annual jumps in inflation, making fiscal planning difficult. In one year, the cost of living adjustment was more than 17%.

“The pension costs were out of control,” Mercer said. “They were consuming more and more of the budget every year.”

At the time, Police Chief Daryl F. Gates called the amendment a “charade” that was almost certain to be rejected by the courts. Police and firefighter unions quickly filed suit against the city, arguing that the amendment was unconstitutional.

In overturning the voter-approved measure in 1987, Superior Court Judge Bonnie Lee Martin held that the city failed to show any evidence of a “grave fiscal crisis” that would make it impossible to meet its obligation. The city appealed.

Attorneys’ Argument

Attorneys for the police and fire unions argued before Martin and later on appeal that pension benefits could not be taken away and that the city had to be on the verge of bankruptcy before it was legally entitled to forgo pension obligations.

In last week’s decision, the appellate court agreed that unlike other aspects of terms of public employment such as salary, pension rights are protected by the Constitution’s contract clause. It also said the cost-of-living cap could not be a cure for the pension system because of poor management by the city.