L.A. Police, Firefighters Win Pension Fight in High Court

The state Supreme Court on Wednesday rejected a challenge by Los Angeles officials to an appellate court decision they said could cost the city up to $43 million a year in increased police and fire pension benefits.

In a brief order, the justices refused to review a state Court of Appeal ruling in April striking down a voter-approved 1982 Charter amendment that placed a 3% limit on pension cost-of-living increases for thousands of current and former police officers and firefighters.

The appellate panel held that the amendment, by invalidating previously enacted cost-of-living increases, violated state and federal constitutional prohibitions against impairment of contract.

Attorneys for the city then appealed the ruling to the state high court, saying the issue was of “enormous public importance.” Unless overturned, they said, the decision could force substantial cutbacks in city services or tax increases to make up for the additional $43 million in annual pension costs.

Wednesday’s rejection of the city’s petition for review came in an order signed by Chief Justice Malcolm M. Lucas. None of the high court’s seven members voted to hear the case; four votes are required to grant review.

Siegfried O. Hillmer, a Los Angeles assistant city attorney, said the case now may be taken to the U.S. Supreme Court. “It seems to me our chances of review there are better than they were with the state Supreme Court, which now is not accepting much litigation for review and is heavily concentrating on death penalty cases,” Hillmer said.

In Los Angeles, Administrative Officer William C. Mercer said that, “assuming we don’t appeal, effective next July, we’re going to have to start funding the additional liability this creates. That cost is going to be approximately $43 million a year for almost 50 years.”

Steven Greenfeld, a Los Angeles attorney representing firefighters and police who successfully challenged the pension limit, welcomed Wednesday’s action and expressed doubt the federal high court would hear any appeal by the city.

“The city has tried to draw this thing out as long as it can, taking advantage of every possible recourse with every possible court,” said Greenfeld. “Pension rights of California employees are inviolate . . . and overturning this ruling would deprive police officers and firefighters of their rightful benefits.”

In Los Angeles, Don Forrest, president of the United Firefighters of Los Angeles, hailed the high court’s decision as a “tremendous victory” for about 2,800 active firefighters and about 5,600 retirees from the City Fire Department.

The pension system at issue applies to police and firefighters hired before December, 1980, and provides retirement benefits based on years of service. For example, a participant in the system who retires after 25 years’ service receives 55% of his or her final salary.

In 1971, at the union’s behest, the City Council placed a measure on the ballot that eliminated a 2% cap on cost-of-living increases and instead allowed such adjustments based on the full proportionate rise in the consumer price index. At the time, the projected cost to the city was $3.75 million annually, and the voters approved the measure by a 51% majority.

Ten years later, however, the uncapped increases were costing the city $178 million annually and a concerned council placed a new measure on the ballot, known as Charter Amendment H, that limited future cost-of-living increases to 3% annually. Benefits already earned were to remain unaffected.

In June, 1982, the Charter amendment was approved by 73% of the voters. Shortly after, the measure was challenged by fire and police groups as unconstitutional. In 1987, Los Angeles Superior Court Judge Bonnie Lee Martin ruled that the amendment was invalid as an impairment of a contract made between the city and pension participants--and that the city had failed to show there was a fiscal emergency sufficient to justify such a constitutional violation.

Last spring, the Court of Appeal upheld that ruling in a unanimous opinion by Appellate Justice Vaino Spencer.

Times staff writer John Kendall contributed to this article.