June 15, 2012 / 12:40 AM / 7 years ago

LA mayor eyes possible referendum on pension reform

ORLANDO, Florida (Reuters) - Los Angeles Mayor Antonio Villaraigosa said on Thursday he was prepared to take public pension reform directly to voters next year after recent referendums approved cutting pensions in two of California’s biggest cities.

“We’re proposing it to the City Council. If they don’t pass it, we’re going to put it on the ballot,” Villaraigosa told Reuters in Orlando where he is presiding as president of the annual U.S. Conference of Mayors.

Villaraigosa, a Democrat, said he also wanted to raise the city’s retirement age to 67 from 55.

As part of his pension reform proposal, Villaraigosa also wants to cap maximum pensions at 75 percent of salary and reduce the cost-of-living adjustments on pensions.

Pension reform is among the leading challenges facing many mayors across the United States. On Thursday, Atlanta Mayor Kasim Reed said municipalities nationwide were grappling with a $200 billion aggregate unfunded pension liability.

Last week, voters in San Diego and San Jose, California’s second and third largest cities, voted overwhelmingly to cut city worker pensions.

In San Jose, the liberal capital of Silicon Valley, the measure will force employees, including police and firefighters, to pay sharply more for retirement or see a sharp drop in benefits.

More conservative San Diego passed a measure to put new employees on a 401(k)-style plan in which the city guarantees how much it will contribute to retirement plans, not how much retirees will get.

Several mayors interviewed during the conference in Orlando said they were in the process of reforming city pension plans.

John Marchand, mayor of Livermore, California, and a former county-employed water quality chemist, said his city and its unions expected to work out a deal without the need of a referendum.

“That’s a little heavy-handed. We prefer to work it out with our employees. We all understand something needs to be done,” Marchand said.

Frank Ortis, mayor of Pembroke Pines, Florida, is also president of Florida’s International Association of Machinists and Aerospace Workers.

Ortis said his city’s union decided on its own to shut down its unsustainable pension plan and the city was now trying to come up with a new retirement system to replace it.

In a survey of various cities’ plans to deal with pension shortfalls released by the conference, Binghamton, New York, reported that it dealt with pension financing through employee attrition.

The city came out in full support of defined benefit plans for public employees and decried those who would use public employees as scapegoats for an economic collapse that it attributed to Wall Street deregulation in the 1980s and ‘90s.

Editing by Kevin Gray and Peter Cooney

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