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The vote came after a marathon closed-door negotiating session that stretched over two days, with city officials and labor leaders trying to forge an agreement that would help close the city's $405 million budget deficit while minimizing layoffs and furloughs.
Meetings that began at 11:40 a.m. Tuesday continued until midnight, then resumed at 9 a.m. Participants included members of the City Council, representatives from the mayor's office, budget analysts and leaders of the coalition.
Late Tuesday night, Council President Eric Garcetti said he hoped to salvage an early retirement incentive program -- if the coalition was willing to make further concessions.
"We'll be talking directly with the city unions in trying to come up with a solution. We're optimistic that we can break through with something there, but it's been very clear that the mayor would veto the program as is, and many council members share the same view," Garcetti said.
But Barbara Maynard, spokeswoman for the coalition, said Wednesday the coalition was "not willing to walk away from our agreement."
The council had previously backed a deal with the coalition, with coalition members agreeing to postpone collecting two years' worth of salary increases until 2011 in exchange for protection from layoffs and furloughs.
An early retirement incentive program required the city to offer at least $15,000 in cash bonuses to about 2,400 employees to persuade them to retire up to five years early and be removed from the payroll. Employees who choose to keep working were supposed to pick up the tab by increasing their pension contributions by 0.75 percent.
But after computing that the labor deal would save only $12 million instead of $111 million as intended, City Administrative Officer Miguel Santana and Chief Legislative Analyst Gerry Miller urged the council to reduce the city's $405 million deficit by shutting down city services every other Friday, eliminating 926 positions and forcing 21,000 employees to take 26 unpaid days off, starting Sept. 28.
It was unclear exactly how many employees might actually be laid off and how many already-vacant positions might not be filled.
Santana and Miller said the only way to salvage the deal with the coalition is if the coalition "agrees to generate an additional $50 million to $60 million and increase pension contributions by 1.9 percent."
Coalition spokesman Victor Gordo has said the group would sue the city before the end of the week if the previous deal is not enforced.
Maynard, meanwhile, insisted that the coalition's "agreements are binding and the council needs to implement those now."
"Separately, our agreement establishes a process for us to make concessions that help solve the city's crisis. Separately. We are absolutely willing to continue to talk, to do what it takes to keep the services running and people employed," Maynard said.
Documents filed with the City Clerk's office show that the City Council only "conceptually approved" the early retirement incentive program.
City Controller Wendy Greuel has said unless the City Council "stops the hemorrhaging" in payroll costs, the city will be broke by May.
"There is no question that we realize the severity of this," Garcetti said. "If we can't do the ERIP (early retirement incentive program) then we have to go forward with the furloughs and layoffs. To not do that means even greater pain for city employees later. It is the best thing for workers to have resolution one way or another, and it certainly is the best thing for the residents of L.A."
Mayor Antonio Villaraigosa and a few members of the City Council have rejected the labor deal as it stands, but Garcetti said he hopes to persuade union leaders to help address the shortfall in savings.
"There is close to unanimous belief (among the City Council) that there is an early retirement incentive program out there that will pay for itself," Garcetti said.
Coalition leaders on Tuesday offered concessions that they claimed added up to $62.9 million. But a third of that money was to come from transferring workers to the Department of Water and Power and Los Angeles World Airports, which may not be feasible.
"We are not interested in aspirational savings or soft ideas," Garcetti said. "There are other things that are involved: (having the city guarantee) no layoffs and no furloughs, those things are not part of the early retirement setup program -- those were just tradeoffs which can be untraded."
Meanwhile, Garcetti said talks with the Los Angeles Police Protective League were going well, adding, "I'm confident we can get resolution on the sworn (personnel) side."
Assistant Police Chief Earl Paysinger has said the city administrative officer and chief legislative officer's proposal to cut $126 million in payroll costs by forcing 10,000 police officers to go on 18 unpaid days off, freezing hiring and laying off 300 cadets could take as many as 2,000 police officers off the streets.
"We can't suffer a loss of officers without there being some kind of consequence and I would just hate to see us get back to the staffing numbers of the late 1990s," Paysinger said. "It's just not a good formula."
The city is continuing to negotiate with the 3,500-member United Firefighters of Los Angeles City. Talks broke down with the Engineers and Architects Association in July. Since then, its 6,400 members have been required to take 26 unpaid days off during the fiscal year.