The Los Angeles City Council on Thursday signed off on Mayor Antonio Villaraigosa’s final $7.7-billion budget, setting the stage, as several members acknowledged, for many city workers to get a 5.5% raise in eight months.
Council members did not vote to send city departments the money needed to cover the increase, leaving that decision for sometime between now and Jan. 1, when the raise is scheduled to go into effect. For now, money for the pay hike is sitting in a fund for “economic uncertainties.”
But Councilman Eric Garcetti, casting his first vote since he won the mayor’s race Tuesday, said the pay hike was “legally due” to the Coalition of L.A. City Unions, which represents about 18,000 non-public-safety employees. Other council members shared that view, saying the raise is part of a 2011 employee contract. “It’s a binding agreement. We need to respect that,” Councilman Joe Buscaino said.
Villaraigosa’s budget called for the restoration of key services, including the addition of 65 firefighters, 533 new vehicles at the Los Angeles Police Department and the trimming of an additional 35,000 trees. When he unveiled his financial plan last month, the mayor urged both mayoral candidates — Garcetti and City Controller Wendy Greuel — to renegotiate the 5.5% raise, which he and the council approved.
Since then, several council members said union leaders cannot be forced back to the table on their existing contract, which expires June 30, 2014 — six months after the raise goes into effect. “With no leverage, I don’t believe they’re going to give that [raise] up,” Councilman Bernard C. Parks said.
Labor leaders have shown no intention of giving ground. Ian Thompson, spokesman for Service Employees International Union, Local 721, said the city is “no longer teetering on the precipice of insolvency.”
“There is no pressing need to reopen our contract,” said Thompson, whose group represents 10,000 city employees. “We’ll be back at the table next summer. In the meantime, city workers will keep delivering quality public services.”
If the council fails to provide the money for the raise by the end of the year, city departments covered by the salary agreement could come up short and need to make up the difference by reducing services, said Miguel Santana, the city’s budget advisor. Santana warned that the city budget’s deficit for 2014-15 will grow by $108 million unless the city eliminates the 5.5% pay hike, addresses police overtime and secures new concessions from city workers on healthcare benefits.
Garcetti, who campaigned on the idea that he would show independence from special interests, said employee concessions will be needed to erase a budget shortfall the following year. He declined to give details on how that goal would be achieved, saying negotiations should remain confidential.
“We can either do salaries or pensions or healthcare,” said Garcetti, who takes office July 1. “Those are the three.”
Council President Herb Wesson said Garcetti, who won Tuesday’s election without the support of the city’s major employee groups, is in a position where he might succeed in wringing some savings out of the unions to offset the cost of the raise. “We do have a new mayor coming in that is positioned to negotiate,” Wesson said. “But with that said, these are agreements, contracts. So if we fail in negotiations, we would have to pay” the 5.5%.
One San Fernando Valley business leader expressed disappointment at that possibility.
“I don’t believe that the city’s house is in fiscal position to be able to afford that,” said Stuart Waldman, president of the Valley Industry and Commerce Assn. and a key Greuel supporter. “As with most companies, if you can’t afford to buy things or give raises, you don’t.”
Villaraigosa’s budget placed the money for the 5.5% raise into a special fund, sending a clear signal that awarding the pay increase would not affect other city services or the reserve fund for emergencies. That has made it a tempting plum for labor leaders and lawmakers alike.
Still, the mayor’s budget has a menu of other pay hikes. Police officers and firefighters are on track for raises of 1% on July 1, 1% on Nov. 1 and 2% on March 1. In addition to the 5.5% pay hike, most civilian city employees are set to receive a 1.75% increase in July.
Despite those added costs, this year’s budget vote was drama-free, with a recovering economy helping provide new revenue to build back services. The city enjoyed a $43-million windfall from transportation funds that were only recently discovered from the years 1995 to 2011.
As he unveiled his financial proposal last month, Villaraigosa said none of the city’s employees — including police officers and firefighters — should receive raises between July 2014 and June 2017. Garcetti did not go that far but said he doesn’t expect “raises any time in the future.”
“Our first obligation has to be restoring the services we cut” during the recession, he said.