LA City Business Leaders Call for Pension Reform

BizFed leaders today joined with other business leaders to issue a strong call to LA City officials urging critical reforms to the public pension system. Citing exploding pension costs and the impact it will have on public safety and other city services, leaders from the Los Angeles Area Chamber of Commerce, accompanied by former Mayor Richard Riordan, told the City’s Executive Employee Relations Committee (EERC)* that the time to act on pension reform is now.  

Mayor Riordan joined Chamber Chair Karen Hathaway, Chamber Past Chair (and BizFed Founding Chair) David Fleming, 2013 Chamber Chair Alan Rothenberg, Chamber President & CEO Gary Toebben, Chamber member Alex Rubalcava, BizFed CEO Tracy Rafter and Chamber Vice President of Public Policy and Political Affairs Ruben Gonzalez.

“Our message today is not about blame, it is about all of us working together to find a solution to a pension system that if unchanged will spell disaster for the City of Los Angeles,” stated former Mayor Richard Riordan. “The time to act is now. If not now, when? If not us, who?”

The LA Area Chamber issued a release to the media that noted Chamber President & CEO Gary Toebben outlined three recommended actions to the committee:

1) Place a charter amendment on the ballot that would transfer the power over civilian pension plan design back to the voters as it was prior to 1972.

2) Control the increase in pension costs by controlling the increase in salaries.  As the growth in pension obligations are directly tied to employee salaries, simply holding salaries steady will also arrest pension increases.

3) Create a new pension tier for new city employees. The courts limit the changes the City can make to the benefits of current employees and retirees, but the City can make changes to the benefits for future employees.

“This is the most critical financial issue facing the City today. Every dollar diverted to increased pension obligations will mean fewer cops on the streets, fewer fire fighters on the trucks and severe cuts to important city services,” said L.A. Area Chamber President & CEO Gary Toebben. “Our city leaders must act and act soon to protect city services and maintain the safety and quality of life of our community."

The LA Daily News already has the story: Richard Riordan, L.A. business leaders threaten to put pension reform on the ballot

Warning that Los Angeles could face bankruptcy like other cities, former Mayor Richard Riordan and local business leaders told city officials Wednesday they are prepared to ask voters to reform the public pension system if the City Council fails to act.

Riordan and representatives of the business community met with Mayor Antonio Villaraigosa and City Council leaders behind closed doors early Wednesday to press the need for change.

"We simply can no longer afford to wait," said David Fleming, the former chair of the Los Angeles Area Chamber of Commerce and the county Business Federation. "We are here to tell the City Council that we are prepared to do whatever is necessary to get our pension system under control."  Read the full story here.

Today’s call for LA City public pension reform comes as BizFed earlier this year also took a strong position urging reform of California’s public pension system. Research from the Stanford Institute for Economic Policy Research indicates that the state of California faces nearly half a trillion dollars in unfunded pension liabilities and 24 local pension plans are an estimated $135 billion in debt.

Gov. Brown has proposed a 12-point pension reform proposal, strongly backed by Republicans; while Democrats continue to vow they will release their own package of reforms before the sesson ends Aug. 31.

Clearly, now is the time to urge all of local and state officials to ACT NOW on public pension reform – before it’s too late.

Gary Toebben, President & CEO of the Los Angeles Area Chamber of Commerce, said it well in a recent Business Perspective piece:

The Time for Pension Reform is Now!
The citizens of California are angry about public pension abuse and largesse. How else can you interpret the overwhelming votes for pension reform in San Diego and San Jose?  

In October of last year, Gov. Jerry Brown provided a roadmap for state pension reform that was fair for state employees and for California Taxpayers. The Chamber immediately endorsed the plan. But as the clock runs out on the 2012 legislative session in Sacramento, the State Senate and State Assembly have yet to respond.  (Click here to continue…)