A Message to the City of Los Angeles: Pension and Health Benefit Reform Now or Bust

Gary Toebben

February 15, 2011
Last week, the City of Los Angeles received $50 million in bad news. No bidders are interested in leasing and operating nine city-owned parking garages. That lost revenue is in addition to an already $350-plus million dollar deficit in next year's budget. Despite two years of budget wrangling (with good progress in some areas) the fiscal elephant in the room remains — the unsustainable pension and health care benefits for municipal workers. 

Most residents and business taxpayers are surprised to find out that the City of Los Angeles offers 100 percent paid basic health care premiums for nearly all municipal workers, dependents, retirees and spouses or partners. For retirees alone, the cost to provide free, lifetime health insurance is $292 million a year and rising. 

The issue is about employee benefits versus basic municipal services. It's also about fairness. Many city residents struggle to fund their own retirements and pay their own family's health care costs, yet they are providing city employees and retirees with a nearly 100 percent paid health insurance package. These benefits are fiscally unsustainable and blatantly unfair to millions of Angelenos. 

Enacting reasonable reforms is not about punishing city workers nor is it union bashing. Far from it. It's about maintaining basic city services and bringing fiscal responsibility and equity to the entire city family — municipal workers, residents and businesses. 

Greater cost-sharing for health care and pensions will save a large number of city jobs. While city employees will have to pay more for health care and retirement, this cost saving move will help bring an end to uncertainty around layoffs and furlough days. It's better to have a job with access to affordable health care than no job with zero health care coverage. 

What's clear is that these reforms must take place at the bargaining table. Mayor Antonio Villaraigosa and City Council must collaborate on a strong push in negotiations with the Coalition of LA City Unions.  This push is necessary to save city services and the employees we currently have. Without it, the mayor and City Council will have no choice but to lay off more employees, enact more furloughs and cut the basic services that the taxpayers of Los Angeles expect and are paying for. Everyone in our city of 4 million residents loses under that scenario.

And that's The Business Perspective. 

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Comments

universal health care led by a federal government that doesnt spend one half of its revenue chasing camels and building "smart bombs".... or...lets give them a choice. Nationalize oil and pay off our debts and rebuild our infrastructure without having to owe ourselves or the "federal reserve" nothing. Suddenly were all fiscal conservatives......free from the chinese and the facsist capitalism that is unsustainable and destroying the enviroment while creating a situation where there will be no labor. Labor will have no rights because after a little while longer widgets will be the only thing left on our manufacturers tables... Were are a nation of inventors, workers, and innovators, a healthy nation that works together stays together.....
Posted by: dermot begley @ 8:20:00 am
I have some familiarity with construction unions which have great benefits packages but they don't offer 100% health insurance coverage. Given the state of the economy, it's reasonable to ask employees to contribute on the cost of their health care. There are very few employers willing to offer 100% health care insurance.
Posted by: Teddy Booker @ 11:38:00 am
Let's be serious - the unions are not going to conceded anything significant to the city and taxpayers. The real answer is bankruptcy, where the city can be freed from all of these untenable agreements. The problem is that Villaraigosa is hardly the one to get anything done here. You can count on him to just kick the can down the road like any other politician. Villaragosa will just raise taxes and force more businesses out. We need a hard-nosed Republican major to get this fixed, which is not going to happen. I don't see a way out of this. The best solution for us businesses is to just move somewhere else. - Joe
Posted by: Joe Kennedy @ 9:21:00 am
I cannot fathom how these pensions and health benefits came to be in the first place. And... how is this entire statement not 100% obvious and necessary in the first place? Why are these pensions and benefits so sacrosanct? My husband and I have owned a business in the Long Beach area for 25 years. This business was to be our retirement. Well... guess what? Times got rough and we lost our business late in 2010. Who do you think is going to step in and take care of our retirement now? NO ONE... and we don't expect anyone to. We are both very strong and healthy, and we will get busy and do what we can over the next ten - fifteen years to correct this situation. I don't understand at ALL the "entitlement" attached to these programs.
Posted by: Carole Maclean @ 2:59:00 pm
 

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