Los Angeles Voters to Get Pension Cutback Referendum

May 17, 2010 (PLANSPONSOR.com) – Los Angeles Mayor Antonio Villaraigosa said he will schedule a public referendum to decide whether the deficit-ridden city should trim back the pension benefits for new police officers and firefighters.

A Bloomberg news report quoted Villaraigosa as saying the vote may take place as early as November, but could be held in March 2011.Villaraigosa said he wants to increase pension contributions and decrease benefits for both civilian and uniformed city employees, but changes for police officers and firefighters have to be approved by a ballot item.

The city’s cost to pay pensions will nearly triple in the coming year to $801 million from $277 million in 2000, according to a report from City Administrative Officer Miguel Santana.

“We can’t sustain the pensions or the medical benefits at the rate we are currently,” the mayor said in an interview, according to Bloomberg. “I’ve said let’s work together to make our pay structure, benefits and pensions more sustainable and put ourselves back on the path to a sound financial footing.”

If voters approve the pension changes, newly hired police and firefighters may see hikes in the amount they are required to contribute to the plan and cuts in their pension benefits, Assistant City Administrative Officer Tom Coultas told Bloomberg.

Los Angeles police and firefighters last got an increase in their pension benefits in 2002, Coultas said. Officers and firefighters can retire with annual pension payments equal to 90% of their last salary, up from 70% under the previous plan.

The city faces at least five years of budget deficits, including a $492 million gap for the fiscal year that begins July 1, Santana said.