Union officials say L.A. is considering 400 immediate layoffs

Faced with annual budget shortfalls that could grow to nearly $1 billion by 2010, Los Angeles city officials are considering the immediate layoffs of 400 city workers and eliminating an additional 2,800 positions in the months ahead, according to union officials.

The city also is considering offering a voluntary early retirement package to employees that, because of the substantial financial liability added to the city’s ailing pension fund, would require higher contributions by workers to help cover the additional costs.

Details about the potential layoffs and an early retirement offer emerged from ongoing talks between the city’s financial experts and public employee unions. Service Employees International Union 721 described the city’s proposal in an e-mail to its membership Thursday night. A copy was obtained by The Times.

The memo states that the city “is talking about” immediately eliminating 1,600 city positions, of which 1,200 are vacant and 400 are filled. An additional 2,800 layoffs would be included in Mayor Antonio Villaraigosa’s 2009-10 budget, which he is scheduled to submit to the City Council on April 20. The city has approximately 36,000 employees.

The SEIU memo goes on to say that the unions are pushing for early retirement offers over layoffs. Specifically, the unions want the city to offer the package to employees who are within five years of retirement eligibility.

“We’re hopeful, because that’s a more positive way to go . . . than layoffs,” said Bob Schoonover, president of SEIU 721. “But it’s pretty hard to say what will happen until you get to the end.”

Barbara Maynard of the Coalition of L.A. City Unions, which represents 22,000 city workers including those who belong to SEIU 721, said she believes an early retirement package “will go a tremendous distance” to helping cover the budget shortfall in 2009-10.

Avoiding mass layoffs would allow the city to continue to provide critical services to residents, Maynard said. “Every city employee represented by unions in the coalition provide a valuable service to the city of Los Angeles,” she said. “We will do everything we can to maintain critical city services and keep Angelenos employed.”

The discussions were triggered by a grim financial forecast released by the city’s top budget analyst, interim City Administrative Officer Raymond P. Ciranna. He predicted a $427-million budget shortfall in 2009-10, driven primarily by declining tax revenues and increases in employee pay and benefits. The budget gap would more than double in the next year because of the city’s troubled pension systems, which, like pension systems across the country, have suffered enormous investment losses in the spiraling recession.

The city is legally obligated to keep the pension systems afloat, which could cost $458 million in 2010-11 and $663 million in 2011-12. That expense would be in addition to the city’s expected budget shortfall, forecast to be $525 million in 2010-11. (No updated forecast for the 2011-12 budget shortfall has been provided.)

The chief administrative officer is the city’s lead representative in the ongoing negotiations with the public employee unions, although the mayor’s office has been heavily involved in the talks.

Villaraigosa said earlier this week that no agreements have been reached, but that “everything must be on the table” to address L.A.’s financial woes, including layoffs and early retirements. The mayor also is exploring whether to privatize the Los Angeles Zoo and sell but lease back city parking garages and meters, which could raise hundreds of millions of dollars

Villaraigosa has said that layoffs should be a last resort because, in tough economic times, people in need are more likely to turn to city programs for assistance.

Last year, when the city faced a $406-million budget shortfall, Villaraigosa proposed eliminating 767 city jobs. Ultimately, close to 600 funded job positions were eliminated, saving the city millions of dollars. All but one of those slots, however, were vacant.

As he prepares his 2009-10 budget, Villaraigosa faces the task of balancing the city’s finances when city revenues are expected to decline by $211 million, in part due to a drop in property-related tax revenue. At the same time, expenses are expected to increase by $216 million.

Those costs are driven primarily by increases in employee pay and benefits approved by the mayor and council at the end of 2007. But city unions also agreed that in times of fiscal crisis, aspects of the compensation agreements could be revisited. On its website, SEIU 721 calls that labor agreement the “best contract in 40 years.” It also boasts that the union successfully “defended it when the city tried to declare a financial emergency last year.”

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phil.willon@latimes.com