As all of us in the private sector know, there are no protected classes in this economic downturn. In L.A. County, we have lost 250,000 private sector jobs during the past year and our unemployment now totals 565,000. Every business and the families of their employees have felt the financial burden of this recession.
In contrast, there are more public sector jobs in L.A. County than one year ago, but the economic downturn is now staring them in the face as well. The loss of business in Los Angeles has resulted in decreased tax revenue for the City of Los Angeles and elected officials are now struggling with unavoidable budget cuts.
Mayor Villaraigosa and the L.A. City Council are finalizing a city budget that reflects this new municipal reality. However, the last holdouts appear to be the city employee unions who have yet to step up and join the rest of us in this time of "shared sacrifice."
Over the past few months, the Mayor and City Council have worked to bridge a $530 million deficit — asking their employee unions to share in the sacrifice by forgoing annual cost-of-living increases, increasing employee pension contributions and accepting one hour per week of voluntary furlough. As we compare these proposals to what is happening in the rest of the community, they are extremely reasonable and best of all, they will significantly reduce the number of layoffs of junior coworkers at city hall.
The negotiations continue and union leaders are taking the hard line so as not to give up the salary and benefits achieved during previous contract negotiations. The unions originally sought early retirement packages that they argued would save the city $200 million this year and avoid layoffs. That may sound good for one year, but early retirement packages would actually cost the city far more in the long-term by adding hundreds of early retirees to an already unsustainable pension program. The union proposal was not real savings or "shared sacrifice" and was certainly not fair to taxpayers who have sacrificed far more during this recession in salary cuts and 401(k) losses.
Eliminating this year’s cost-of-living adjustment would save an estimated $119 million. Adding two furlough days to each employee’s schedule would save an estimated $24 million. And if employees contributed an extra 2 percent to their pension plan, that would translate to approximately $60 million in savings. And most importantly, these proposals will maintain city services and keep thousands of city employees from being laid off.
While no one wants to have their pay reduced, most employee groups in Los Angeles are choosing "shared sacrifice" over mass layoffs when that choice is available. We have many difficult months ahead. I applaud the Mayor and City Council for their reasonable proposals, and I urge the city employee unions to embrace them quickly. City employees are not a protected class and there is no more time to waste. Our city’s future depends on it.