Tangle of Causes Fueled Dispute

When it comes down to it, the differences between the Metropolitan Transportation Authority and its mechanics’ union don’t seem that deep. Both sides are willing to make sacrifices. There are no overriding issues of principle dividing them. The money gap -- about $10 million a year out of a $2.7- billion MTA budget -- hardly seems like a deal-breaker.

And yet, the differences are apparently deep enough that 400,000 or more people who rely on MTA buses, subways and trains spent a second day Wednesday trying to figure out how to get around without a functioning public transit system.

Los Angeles labor leader Miguel Contreras was tapped to try to settle the 2-day-old transit strike, and said he would bring the two sides to a hotel, “lock everyone in a room and go at it day and night.” MTA officials demurred, saying that the offer would have to come through a state mediator.

A reasonable question might be: How did it come to this?

There is no simple answer, but among the explanations offered by labor experts and officials on both sides of the dispute are:

* Economics: The negotiations come at a time when recessionary pressures are clashing with skyrocketing health-care costs. The result is that the Amalgamated Transit Union faces an unappetizing combination of small salary increases and ballooning medical insurance costs -- a potential net loss for union members. For the MTA, the economics of the strike are simple: Unlike, say, Vons supermarkets, the transit agency saves money by shutting down.

* History: The MTA is run by an ungainly board of political heavyweights, including members of the Los Angeles County Board of Supervisors, the Los Angeles City Council and Mayor James K. Hahn. That has sometimes led to clashing egos and disparate political pressures, which have been cited as a factor in the county’s history of 10 transit strikes since 1960.

* Personalities: The ATU’s Local 1277 is run by Neil Silver, a blunt-talking, hard-driving union boss in the classic mold. No union leader wants to preside over give-backs, which is what the health-care issue boils down to, and Silver is loath to lose control over an unusual arrangement whereby the union, not the MTA, runs the fund that purchases health insurance for the mechanics.

Silver agreed to return to talks after a meeting at City Hall on Wednesday with Hahn, Contreras and City Councilmen Antonio Villaraigosa and Martin Ludlow.

“To get back to the bargaining table and resolve the conflict is an important matter not just for our union members but for the public as well,” said Silver, who represents 2,200 active MTA mechanics and retirees. One day after saying that he saw no quick end to the strike, he added that “we look forward to a quick and speedy resolution to this issue.”

Not long after he made those comments, MTA Chief Executive Roger Snoble said he had turned down an appeal by Hahn to attend a meeting with Silver at the Biltmore Hotel today “That’s just not the way we go about doing things,” he said. Snoble added that if union leaders want to negotiate, they will have to notify a state-appointed mediator.

Silver and the MTA have been clashing for 17 months, and the union’s workers have been without a contract for a year.

Silver has turned down at least four offers during that time, claiming that the MTA was low-balling and insulting his members.

As each month went by, Silver became more agitated.

“The offers I’m getting are just not serious,” Silver said in February, one month after his union members had voted to give him the authorization to strike at any time.

Many MTA officials believed that Silver was posturing. “We didn’t think he was serious,” said one top-ranking MTA official recently, on condition of anonymity. “Not a lot of people will admit it, but this caught a lot of people by surprise. We still can’t figure this guy out.”

A court order this summer stopped a walkout. The order expired Sunday, but Silver still had to make what he said was a gut-wrenching decision: Strike or keep negotiating. He decided to have his workers walk.

Silver said Wednesday that he decided late Sunday to strike for two reasons.

First, the talks were, in his mind, making no progress. Second, he became incensed at an MTA demand to exert indefinite control over a six-member panel that oversees the union’s $17-million health insurance fund, which is funded almost entirely by the transit agency.

“That is what really did it,” Silver said. “Even though there was no agreement on a lot of our issues, we could have kept talking. But they overreached when they asked for control of our health plan. It was, one more time, a complete insult. It was a signal to me that they weren’t serious, and it pushed this over the edge.”

Health insurance is the driving issue in labor negotiations across the country. Health-care costs nationally rose 13.7% last year and are on a pace to rise 15.4% this year, according to the AFL-CIO.

Having the union control its health-care fund is unusual, said Daniel Mitchell, a professor at UCLA’s Anderson School of Management who specializes in labor relations. It is far more common for management to administer the benefits, or for union and management to jointly run such a fund.

The New York City Transit Authority and its primary mechanics’ union, the Transport Workers of America, jointly ran a health fund until last year, when the union agreed to give up all control to the transit authority. In return, union spokesman David Katzman said, management agreed to continue paying all health insurance costs.

In the case of the Los Angeles mechanics, Silver said Tuesday that he would be willing to give up partial, but not complete, control over the health insurance fund -- and that union members would pay up to 10% of the cost of insurance, or about $70 a month. Mechanics now pay no more than $6 a month.

The union’s proposed increase would not be enough to close the growing cost gap, in part, the MTA charges, because the fund has been mismanaged.

At a news conference Wednesday, an auditor hired by the MTA said the trust fund is losing about $400,000 each month and “will run out of money in the next few months.”

Michael deCastro, a principal with the accounting firm Thompson, Cobb, Bazilio & Associates, said the audit found no evidence of illegality. But deCastro and Snoble suggested that lavish benefits and inefficient management had tipped the fund into the red.

DeCastro cited a number of inefficiencies and lapses in the fund management. He said the union had paid benefits that were not authorized by its contract and paid a consultant $120,000 over three years to automate the fund’s accounting, when an off-the-shelf accounting program could have done the job. The fund continues to be managed without computers, he added.

Silver issued a statement charging that the audit was “full of errors,” and represented “a smoke-screen ... to avoid bargaining in good faith.”

Setting aside the issue of who should run the fund, the larger question facing the union is whether to accept a contract that provides little, if any, progress for its members.

Peter Cappelli, a labor expert at the Wharton School of Management, said this is a common dilemma facing labor unions at a time when the overall inflation rate is negligible and health insurance costs are skyrocketing. In inflationary periods, workers might happily settle for an 8% raise, although inflation is 10%, and perhaps agree to pay a higher share of health costs. Their overall buying power would drop, but the raise would assuage the feeling of slipping behind.

“Whereas,” he said, “if inflation is 2% or 3%, as it is now, there’s just not as much room to fool people.”

In such a climate, he said, labor leaders sometimes feel forced into a strike to avoid being blamed for concessions. “Often it’s not because the union leaders and the management team are in disagreement,” Cappelli said. “It’s because the employees have to revise their expectations in a big way, and it’s in some ways just too hard to swallow.”

It is not clear precisely how far apart the two sides stand.

Snoble said Wednesday that the MTA and union are $30 million to $50 million apart. In an interview with The Times, the MTA’s chief financial officer said the figure was closer to $30 million, about half of which could be attributed to the union’s demand for increases in benefits for retirees.

Another issue in the strike is Silver himself. The union chief’s tactics have, on occasion, annoyed even some of his own members, and have infuriated the MTA’s 13-member board.

On Wednesday, the board lambasted Silver for sending $200 campaign contributions to many of them. MTA rules prevent board members from negotiating with parties from whom they have received $10 or more in campaign contributions in the past year. Board members said Silver was apparently trying to knock them out of the negotiations.

“This is not even a strategy, it’s not even crooked politics,” said Los Angeles County Supervisor Yvonne Brathwaite Burke, who is an MTA board member. “It’s just immoral.”

Burke said she received one of the $200 checks Wednesday. She said she told her staff to send the check back. Four board members -- Villaraigosa, Ludlow, Hahn and County Supervisor Gloria Molina -- have already been prohibited from participating in negotiations because of union donations.

A union official said Wednesday that the checks were part of a regular round of campaign contributions, and were not intended to hamstring the board during negotiations.

MTA officials said no good will come from the strike.

The agency has struggled to right a public image marred by construction mishaps, cost overruns and mismanagement during the 1990s.

Despite recent fiscal woes brought about largely by the state and federal budget crunch, the agency had begun to feel good about itself. Its management team is highly regarded. This summer, amid great fanfare, the MTA opened a new railway, the 14-mile Gold Line connecting downtown Los Angeles to Pasadena.

The transit agency had hoped it could use the momentum from the Gold Line to launch a campaign with voters for a half-cent sales tax increase that could pay for new light rail lines, buses and other improvements. The strike could set back those plans.

But some wonder if the MTA isn’t benefiting at least partially by the strike. Like all public transportation, its bus and train service is a money loser. Every time the agency stops service, it does not have to pay wages, or power and maintenance costs. MTA officials downplay the savings. But such longtime observers as Tom Rubin, a former finance officer at the transit agency, said the agency could come out of an extended strike with a windfall of as much as $20 million a month.

“I am not saying they are thrilled with the strike,” Rubin said. “This is a painful process for everyone. But look at all that they are not paying for ... salaries, buses, diesel fuel and benefits. It all adds up.”

Times staff writers Jennifer Oldham, Joel Rubin and Doug Smith contributed to this report.

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MTA strike at a glance

The union that represents about 2,200 active and retired MTA mechanics has been on strike since Tuesday. More than 5,000 MTA drivers, supervisors and clerks honored the walkout, which shut down all subway and light-rail lines and the vast majority of bus lines.

* On Wednesday, workers for a private company that operates some bus lines for the MTA also went on strike, shutting down 18 bus routes that were running Tuesday. Five MTA routes run by private companies remain in operation.

* The mechanics union is demanding that the MTA contribute more money to its health fund to cover rising costs. Workers also want a raise.

* The MTA has offered to provide more money for the health fund but wants more control over how the fund is managed.

MTA officials said they would agree to a roughly 5% raise paid over four years.

* The two sides have not met since Sunday. Los Angeles officials met with a top labor leader Wednesday in hopes of starting a new round of talks, perhaps as early as today. The drivers union, which was negotiating a new contract when the strike began, has scheduled a meeting today with MTA officials in Pomona.

* Metrolink trains, as well as buses from smaller transit agencies, including Santa Monica, Long Beach, Culver City and Torrance, continue to operate.

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From a Times Staff Writer

Los Angeles Times