L.A.'s budget woes call for sacrifice and leadership

There isn’t a time in living memory when relations between the mayor and the City Council were as bitterly acrimonious as they became this week during the controversy over the administration’s failed attempt to raise rates for water and power.

Putting aside the merits of Mayor Antonio Villaraigosa’s proposal and the council’s rejection of it, it has brought out the worst in the city leadership, as elected officials and staff members in both camps now openly accuse their counterparts of deceit and bad faith. It’s a dangerous situation, and one that shouldn’t be allowed to persist.

The sudden revelation late this week that this fiscal year’s city revenues will be substantially higher than anticipated reflects the fog of crisis and confusion now swirling through City Hall’s corridors -- but only in part, and that is what’s significant.

The crux of the city’s crisis is this: Los Angeles has suffered a catastrophic decline in tax and fee revenues because this area is among the hardest hit by the global economic downturn. At the same time, the city’s public employee pension funds underwent an equally devastating collapse in investment revenues because of the Wall Street implosion that contributed to the recession. In other words, the same forces have compelled City Hall to shell out dramatically more, while taking in dramatically less.

Everyone from the mayor to the council leadership now admits that city payrolls were allowed to grow heedlessly in recent years, but no one can see a future in which wages and benefits won’t remain L.A.'s biggest expense. Consider this: Between 60 and 70 cents of every dollar spent out of the general fund goes for public safety -- that is police, fire and, to a far smaller degree, animal regulation. Those departments spend roughly 80 cents or more of every buck they get on wages and benefits.

Clearly, any attempt to deal with the ongoing budget crisis that doesn’t deal with those realities simply leaves everybody scratching for solutions at the margins of city finance.

The truth is that everyone knows the way out of this crisis -- and that involves reopening and renegotiating all the city’s labor contracts, including those with unions representing police, firefighters and the Department of Water and Power’s workers.

As Villaraigosa told me in a conversation this week, “I’m a union man and always will be, but I’ve told everybody involved ... that the only way out of this mess that preserves essential city services for all our people and protects the legitimate interests of our city’s dedicated employees is a negotiated, across-the-board pay cut. I’ve taken one and so has my staff and so should every other elected official.”

City Council President Eric Garcetti agrees and this week told me, “Given the choice between brutal layoffs and hurtful reductions in city services and reducing our workers’ pay and benefits, the choice is clear. I’ve engaged our unions on this question, and they say, any negotiated reductions have to include police and fire. That’s obviously what needs to happen, because if it doesn’t, the kind of government you can envision for Los Angeles looks pretty scary.”

Two months ago, Villaraigosa was clear on the way forward when he told The Times that there’s “no scenario where the city survives without layoffs or some concessions by the city unions.” His chief of staff, Jeff Carr, was even more explicit: “A 10% across-the-board pay cut for everybody from the mayor down would save $300 million. If everybody took a 15% cut, we’d be done. The problem would be solved, and we’d have saved 4,000 jobs and vital city services.”

This week, however, Carr told me that the city administrative officer’s ongoing talks with the unions “haven’t gotten anywhere.” That’s why the mayor, who by the end of the week had reopened talks with the council leadership on the budget, needs to step in and exert his personal leadership in an initiative to reopen all the city’s labor contracts. He began his public career as a union organizer, was elected with organized labor’s unstinting support and -- before taking office -- did a masterful job helping to settle the hotel workers’ dispute. On the city’s side of the table, he has kindred spirits on the council, nearly all of whose members, including Garcetti, were elected with union support.

Many of the city’s unions already have accepted layoffs and work reductions that amount to pay cuts. They now need to join the mayor and council majority in bringing pressure on the fire and police unions to come to the table as well. Failure to grasp the root of the civic budget crisis will simply doom us to monthly repetitions of this week’s murky, destructive and -- ultimately -- pointless controversy over the DWP.