Prudent pension reform for L.A. city workers

Public employee pensions have made it more difficult for the city of Los Angeles to weather recessions. When the economy falters, so do the investment earnings that keep the pension payments coming to former police officers, sanitation workers and other government retirees. The shortfall is filled out of the city budget, which leaves less money to pay for other municipal services.

This year, city officials may ask voters to cut back on retiree benefits for newly hired city workers, creating a second tier of pensions. It’s a prudent idea. The City Council should resist objections from its allies in labor and act now to put the measure before voters in June.

Creditors are looking warily at Los Angeles’ finances and see the city as something like a car speeding down a highway that is partially blocked by an overturned semi. L.A. isn’t the downed truck; it’s simply the moving car, and it has time to change lanes or slow down or pull over. But it’s still hurtling headlong toward the accident. City leaders must demonstrate that they see the hazard ahead and that they are prepared to begin taking steps to avoid it. Asking for the pension change is one such step.

A second tier has its drawbacks for employee morale but is the best pension reform option. The city cannot legally or morally reduce benefits for current city employees and retirees. Voluntary across-the-board pension cuts for current employees could work, but officials would be foolish to bank on more labor concessions.

Union opposition is understandable. City workers have been unfairly branded as the cause of Los Angeles’ financial problems. In fact, in the absence of effective management, employees have helped steer the city toward workable budget solutions. As city management dawdled last year, the workers were the grown-ups who made proposals and asked hard questions. But that fact doesn’t make Los Angeles’ pension obligation any more sustainable.

If one or two state pension initiatives make it to the November ballot and pass, they will supersede the city measure, so some on the council would prefer to let others do their work for them. Furthermore, unions argue that pension reform does nothing for this year’s or next year’s budgets because savings won’t be realized until the first workers hired under the new plan retire two or three decades from now. But some savings would be immediate as new hires shoulder a greater share of their retirement burden. More important, putting city pension reform before voters would be an unmistakable -- and necessary -- statement that the council sees the wreck on the highway, and is determined not to become part of it.