To help balance the city’s budget, Mayor Antonio Villaraigosa made what appeared to be an irresistible offer to thousands of public employees: If they agreed to pay more of the cost of their retirement benefits and to delay a promised pay hike, the city would stop the furloughs that were shrinking their paychecks. Groups representing more than two-thirds of the workers covered by the proposed contract amendment accepted it, but four did not. Those rejections suggest that the naysayers weren’t given the right incentive to support the deal.
Eighteen bargaining units (none of them representing police officers, firefighters or utility employees) were asked to amend their contracts to lower the city’s costs. Some of the savings in the deal were merely temporary — it would postpone three previously negotiated pay increases until July 2013 and January 2014. But the proposal would also require workers to contribute 4% more of their wages to the city’s retirement fund, which would cover the current cost of retiree health benefits. That change would lower the city’s pension costs in a significant and lasting way.
In exchange, the city promised to impose no furloughs for three years, to minimize layoffs and to make the retiree health benefits “vested,” preventing the city from unilaterally reducing or canceling them for current workers. That’s an enormous concession, and considering how rapidly healthcare costs are increasing, a potentially costly one for city government. But it’s abstract, while the sacrifices the deal would impose are tangible.
The bargaining units representing clerical workers, deputy city attorneys, plant engineers and security personnel rejected the deal. In response, Villaraigosa announced Wednesday that, as threatened, many of these workers will be forced to spend more than two months on unpaid leave between now and the end of June 2012. That amounts to a pay cut of about 14%.
That’s “many,” not “all.” The units include a significant but as yet unspecified number of members who work for departments not financed by the city’s general fund. Those workers weren’t at risk of being furloughed because there’s no shortfall in the user fees and other special funds that pay for their departments’ operations.
It’s easy to speculate that those workers, who had little to lose from rejecting the deal, were the ones voting no. It’s also likely, though, that some of those who faced furloughs didn’t see a net gain either. Nor did they trust city officials to honor the commitments they were making.
All the same, it was shortsighted of city workers to oppose the deal. Rapid increases in labor costs, such as employee health benefits and workers’ compensation, are projected to cause large budget shortfalls for the next several years. So far, Villaraigosa has been balancing the budget by trimming costs but not cutting city services in any meaningful way. At some point, the city won’t be able to continue doing the same things for less money. Absent some unexpected savings or surge in revenue, it will have to scale back its reach, eliminating lower-priority services and terminating the positions associated with them. The more the city’s personnel costs grow, the faster it will reach that point.
Labor leaders should ask the dissenting units to vote again on the proposal in light of the long-term threats to their employment. Villaraigosa’s budget for the coming year would eliminate close to 700 vacant positions, and that’s just the low-hanging fruit. The next budget may lop off branches.