The city council voted unanimously to approve the new pension plan. Officials say it will save the city millions of dollars. But union officials say it will hurt current employees, and they vow to fight it.
Comparing it to the union fight in Wisconsin and wearing "cheesehead" hats, city employees came to city hall to say this is an attack on unions.
"The real problem here is the end run around collective bargaining," said Bob Schoonover, president of SEIU 721. "We are not Wisconsin."
City employees are angry over a budget proposal that would create a two-tiered employee system. Future city employees would have lower benefits from existing workers.
"Just looking at the next several years, it's about 25 percent of every single dollar that the city spends will be on pensions and health care costs," said L.A. City Councilman Mitchell Englander. "It's not sustainable."
The plan would increase the retirement age from 55 to 65. The maximum pension would be 75 percent of final compensation, versus the current 100 percent. Employee contributions would increase to 11 percent. Cost-of-living increases would be limited to 2 percent. The proposal would cover only newly hired civilian city workers.
"It's important to stress that it does not impact one single current employee," said Miguel Santana, the city administrative officer.
Some council members say since these are future employees, these changes can be put in place without union negotiations. Union leaders disagree.
"This is our contract. So now, going forward, we can expect that every time the city of Los Angeles adopts an ordinance, we send our contract to be reprinted?" said union attorney Victor Gordo.
Local business leaders and former L.A. Mayor Richard Riordan say if the city doesn't act now, they are ready to put pension reform on the ballot. Similar proposals were passed overwhelmingly by voters in San Jose and San Diego.
L.A. city council members talked about that as they reluctantly passed the pension reform, 14 to 0.
"I agree that we must reform our pension system going forward," said city councilman Richard Alarcon.
"Pension reform, health care reform: the city of L.A. is not unique, and we're not the only ones being challenged," said Englander.
The new pension changes won't go into effect until a final vote in 30 days. The city council is hoping the city and the union can come up with an agreement in that time and avoid going to court.