L.A. PAY-HIKE BILL TO REACH $150 MILLION.

Byline: Harrison Sheppard Staff Writer

Despite a weak economy and a state budget crisis, Los Angeles officials have approved salary increases for city employees that will cost taxpayers nearly $150 million over the next three years, a top administrator said Wednesday.

City officials argued that the increases are affordable in the context of a $4.8 billion city budget and are necessary to retain and attract good employees and prevent labor unrest.

``If we don't settle these contracts, then we'll have nothing but labor strife and people aren't going to get their services,'' said City Councilman Dennis Zine, chairman of the council's Personnel Committee.

He argued that most of the increases were approved before the full extent of the state's budget crisis was known, when financial projections for the city were fairly positive. Next year, he added, new contracts will be much tighter.

City Administrative Officer Bill Fujioka, who is responsible for negotiating employee contracts and managing the city budget, estimated the costs of newly approved wage deals at an average of about $46 million a year for the next three years.

Lewis Uhler, president of the National Tax Limitation Committee, based in the Sacramento area, said cities should be keeping a lid on salaries, given the economic problems across the state.

``Certainly during this time of deficits and austerity, one would think that the city government would have the common sense and empathy for the taxpayer - many of whom have lost jobs or suffered a reduction in salary during this economic downturn - to at least tread water for a while,'' Uhler said.

``At least they ought to exhibit some concern for the interests of the taxpayer.''

He added that if the city hopes to keep some of its money from the state, it should demonstrate it deserves it by keeping a tight lid on its own funds.

On Wednesday, Gov. Gray Davis announced that the state budget deficit is now projected at almost $35 billion over the next 18 months, up from the $21 billion to $30 billion estimated previously. City officials already have estimated that the governor's first $10 billion in cuts will cost the city at least $15 million and possibly up to $85 million.

Additionally, the city is facing its own potential budget problems of almost $90 million, although officials believe they can control the problems by the end of the fiscal year in June.

Contracts for most city employees expired in July 2001, but were renegotiated throughout 2002. The city has followed nearly the same policy with every union, usually granting pay raises that officials describe as cost-of-living adjustments of 2 percent every six months, and a 3 percent increase in the final six months of the contract, starting in January 2004. With inflation now running just over 2 percent a year, some unions did even better that that.

City officials argued that the 2 percent increases every six months only cost the city treasury 3 percent annually because the full increase is not implemented until halfway through the year.

On Tuesday, the City Council tentatively approved increases totaling $6 million a year for about 1,100 full-time and 7,950 part-time employees who are not represented by unions, giving them the same cost-of-living increases as most unions.

On Friday, the council will consider a similar contract proposal for the union representing executive secretaries, for raises that will cost about $875,000 over a three-year period.

Mayor James Hahn, who has not granted any merit raises since taking office, believes the city can afford the cost-of-living increases.

``Given the length of the contract, the mayor felt the cost-of-living adjustments were appropriate,'' said Hahn spokeswoman Julie Wong.

Fujioka said in an interview that all the increases passed this year will cost $46 million annually for those departments supported by the city's general fund - that is, funded by taxpayers. The other employees work for the city's proprietary departments - Airport, Harbor, and Water and Power - so their salaries are funded by the revenues of those departments.

DWP employees recently received increases that will cost from $80 million to $96 million over the next three years. Their annual pay hikes are slightly higher than those of the other employees, ranging from 4 percent to 6 percent a year. Figures for Airport and Harbor employees were not immediately available.

Fujioka said the city's budget can handle the increases adequately - for now.

``Right now it's affordable,'' Fujioka said.

In the future, however, he said the city could have some problems with its budget.

He said the increases are necessary to attract employees in certain hard-to-recruit positions. For example, he said, some sworn police officers are working as 911 dispatchers because of a shortage, when they should be out patrolling the streets and letting lower-paid civilians handle those duties. The city is also having trouble recruiting librarians to fill the new library facilities being built, he said.

Among the raises given to the city's bigger unions in the past year: Service Employees International Union, Local 347, increases for four bargaining units costing $41 million over three years; city attorneys and their managers, $8.3 million over three years; management employees union, $7 million over three years; and blue-collar supervisors, $6 million over three years.

The only union still at the bargaining table is the Engineers and Architects Association, which has 7,500 members.

New contracts for the police and fire unions will be negotiated next year because they are on different schedules from the civilian unions. The increases they received this year, based on the contracts negotiated several years ago, were included in the $46 million figure.