Village to Village by Paul Hatfield, March 8, 2010

Councilman Bernard Parks, chair of the Budget and Finance Committee, spoke at a meeting of the Los Angeles Coalition of Neighborhood Councils this past Saturday, March 6th.

As the person in City Hall with the most power to deal with the almost $700 million deficit we face over the next eighteen months,  you would think he’d embrace an aggressive strategy to deal with the core of the problem – compensation and benefits.

Instead, he said there is no way to renegotiate for higher pension contributions by the city’s union employees.  He suggested it was legally impossible.

I asked him about last year’s Federal Court decision involving union contributions. A synopsis of the case explained the Court’s ruling:

The court distinguished an employee’s vested contractual right to earn a certain level of pension benefit upon the acceptance of public employment from a term of employment subject to modification in the bargaining process.  In this regard, it recognized an employee’s compensation to be a condition of employment which can be modified without violating any vested rights.  The court concluded that the City’s subsidy of the employee contributions was simply a component of compensation.  The same was true of a reduction in compensation for the non-subsidized employees.

In other words, employee contributions are not treated as a protected vested right. You can read the entire opinion here.

Parks said his position was based on internal legal advice. My guess is he didn’t press very hard for an unbiased, independent opinion.

Bernie must not be talking to his peers.  Even his colleague Bill Rosendahl wants employees to kick in more.

All of the Gubernatorial candidates, including Jerry Brown, are talking about pension reform – and you can’t talk reform without considering pension costs and who is going to pay for them.

An  article in the Daily News covers this issue very well.

When asked by KRLA’s Kevin James why bankruptcy was not being used as leverage to get the unions to the table, Parks responded by saying the strategy would be viewed as a harmless ploy because the city has no intention of filing.

Parks took James’ question way too literally, perhaps so he could tap dance around the answer.  James was not suggesting bankruptcy as an overt threat, but wants the city to keep the option open, as it should.

The City does not have to wave the bankruptcy option around like a sword, but it does need to study the process and ramifications in the event all else fails. The unions need to see that the City Council would resort to bankruptcy, if necessary.

There have been occasions where Parks has spoken somewhat boldly, even stating that bankruptcy is a possibility if a solution cannot be found.  So why did he take a meek position that suggested renegotiation of contributions was impossible, that somehow we would be able to resolve the deficit without winning concessions?  Well, probably because Julie Butcher, a regional director with the SEIU, was sitting in the front row.  Bernie would not want to upset her.

I am not saying negotiations of employee contributions will be a walk in the park (or Parks).  It will probably amount to a bare knuckle fight, but the longer we put the process off, the less time we will have to close the budget gap.  Remember, it is not just the current deficit either.  According to the Daily News article, the city’s contribution to pension plans is expected to double from $635 million to $1.3 billion in four years.  That means even if we did resolve the current $700 million shortfall, we would be facing another $700 million right on its heels.

How are we going to cover that?