The Impact of New Labor Agreements on the Budget Needs to Be Transparent

LA WATCHDOG - The City recently entered into a new labor agreement with the Los Angeles Police Protective League, the union that represents almost 9,000 rank-and-file police officers.  The contract was designed to recruit the hiring of new police officers, to retain existing officers, and to “incentivize critical public safety functions.”

This new arrangement calls for a 12.5% bump over the next four years, including $123 million this fiscal year topping out at $384 million in the fourth year (2026-27). But what has not been disclosed is the impact on the City’s budget over this year and the next three years.   

For the current fiscal year, the $123 million of additional compensation will create a deficit.  While the City has alternative sources of cash to cover this shortfall, the details need to be disclosed in the name of transparency.

Next year (2024-25), however, is a different story.  According to the City Administrative Officer’s General Fund Budget Outlook, the City is anticipating a shortfall of $68 million.  But this deficit increases to an estimated $265 million when the cumulative raises for the police of almost $200 million are considered. 

By the end of the fourth year (2026-27) when the full $384 million kicks in, the Budget Outlook is basically breakeven, wiping out the projected $381 million surplus.  

The CAO’s Budget Outlook also does not include the impact of new labor agreements with the City’s restless civilian unions.

According to some insiders, the impact of the new civilian labor agreements will be in the range of $50 million for the last six months of this year, an additional $100 million in each of the next three years, topping out at $350 million in the fourth year (2026-27).  

The net: the CAO’s projected surplus of $381 million for 2026-27 turns into a deficit of an estimated $350 million when new labor agreements are included in the Budget Outlook.  

For the sake of transparency, the CAO would be doing a great service for Angelenos and City Hall’s reputation by updating its Budget Outlook to reflect the impact of the new police and civilian labor agreements.  

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Note: The increases for the new police labor agreement over the next four years are $123 million in 2023-24, $75 million in 2024-25, $91 million in 2025-25, and $95 million in 2026-27). The four-year cumulative increase is $384 million.

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate.  He can be reached at:  [email protected].)