DWP’s Frayed Deal

The Department of Water and Power’s recently exposed deal with the International Brotherhood of Electrical Workers Local 18 hit a major obstacle this week when the Hahn-appointed board of commissioners, meeting for one of the last times, refused to vote on the matter. At least one commissioner said a new board, appointed by Mayor Antonio Villaraigosa, should review the generous five-year pact that calls for 16 percent to 30 percent salary increases for the IBEW’s 8,000 workers.

Details of the sweetheart deal, which had all the makings of an intimidating relationship between a union boss and a compliant city leadership, were first reported in the Weekly on July 28, and drew criticism from some City Council members and leaders of other city unions.

It will now be impossible for Villaraigosa to punt responsibility for the union deal, despite what some City Hall observers say were well-laid plans to provide political cover for all involved if the deal had been approved by the lame-duck board on Tuesday.

Villaraigosa said on Wednesday that he expressed concerns about a proposed 30 percent spike in the DWP’s costs to the IBEW’s business manager, Brian D’Arcy, when the two met in private after the May 17 mayoral election. “I knew the process was well along by then and didn’t think the new board of commissioners would have to address it,” he said. “But I welcome the opportunity to do so. And not just in the Mayor’s Office. The City Council needs to be involved in the discussions as well.”

In addition to its lucrative salary increases, far more than the meager 6 percent increases over three years granted to other city unions, the contract would have remained in force for five years instead of the usual three. Not only could the deal have been blamed on the outgoing Hahn administration, and the former mayor’s DWP appointees, but the pact would not have come up for renewal until the first year of a possible Villaraigosa second term.

Earlier this week, Villaraigosa repeatedly said he had nothing to do with the deal, which would cost more than $68 million. In fact, he said he would have bargained it down. The proposal came together during the transitional period between mayors. For nearly two weeks, it has been orphaned by city leaders, who refuse to confirm who did the negotiating. City Council approval still is required once the DWP takes up the matter, likely under a new board of commissioners.

First, it may be necessary to see whether D’Arcy, whose union spent $307,000 on the Villaraigosa campaign, means what he says. D’Arcy called the decision by the Hahn commissioners “irresponsible,” according to City News Service. In condescending and threatening remarks, he dismissed the role of the DWP board in scrutinizing the pact, calling the approval process “administerial” and raising the specter of a walkout: “I’d hate to be on strike come October 1.”

The DWP went on strike for nine days in 1993, and since 1998, when the department reduced management to trim its budget, mere mention of another strike has caused DWP managers and elected officials to bend to D’Arcy’s demands. Since June of last year, the IBEW’s contract has been amended eight times, with near-unanimous consent by the City Council six of those times. Since 2000, the council has approved more than $12 million for two mysterious safety and training institutes, which meet in private with no city oversight, despite warnings from the City Attorney’s Office that it constitutes a gift of public funds. Recently the council approved retroactive pay increases for underground construction mechanics totaling more than $1 million.

“What usually happens,” says a former elected official who has served on the Executive Employee Relations Committee, “is DWP managers say, ‘We’ve got plenty of money,’ and committee members say, ‘We see this as a problem,’ and the DWP says, ‘What do you care? It doesn’t come out of the city’s budget.’ The DWP thinks it is being efficient. The water comes out of the faucet and the lights stay on cheaper than elsewhere. They just want everyone to be happy. Well, maybe it’s just about keeping Brian happy.”

Villaraigosa spokesman Joe Ramallo insisted things would be different under the new mayor, who prides himself on being able to say no to his friends. “We need to revamp our entire approach to labor negotiations and live within our means,” Ramallo said Tuesday morning — before the Hahn commissioners balked at a deal city officials have acknowledged would increase existing pay disparities. “We would have negotiated something less than what is being recommended by DWP. This deal was negotiated by the prior administration, and this mayor had no role in approving it.”

Ramallo pointed out that Villaraigosa was not part of the five-member Executive Employee Relations Committee that approved bargaining instructions on June 13. Now the mayor sits on that committee, as did his predecessor, Hahn. Nor was Villaraigosa present when the City Council reviewed those bargaining instructions on June 21, Ramallo said, though he still was a member. “He was in council on June 28, when the bargaining instructions were finally approved, but I’m not sure if he left early that day,” Ramallo said.

Ramallo also referred to a meeting on July 4 between Villaraigosa and DWP General Manager Ron Deaton and Los Angeles Chief Administrative Officer Bill Fujioka, in which the veteran officials advised the mayor that reworking the IBEW deal could lead to legal trouble or a strike. No lawyers for the city were present during the meeting, Ramallo said. Nor was Villaraigosa’s private counsel. In any event, the DWP board’s decision on Tuesday not to vote on the salary increase called into question that rationale.

After declining to vote, Commissioner Annie Cho said she thought Villaraigosa’s commissioners, soon to be appointed, should vote on the proposed salary hike. Commissioner Silvia Saucedo said no one wants a strike, and DWP workers do a great job, but still, she has questions. Saucedo’s term expired on July 30, but Villaraigosa asked her to continue serving until he picks a new board. She told the Weekly she didn’t punt the decision so much as heed her duty to the public. She said she wants to know more about the financial well-being of the nation’s largest utility, pointing to concerns such as an Inyo County judge’s order that whacked the DWP with fines of $5,000 per day for violating a 30-year water agreement. “We’re going to spend at least $7 million on a water settlement in Owens Valley, we have security concerns, we have the transfer to the city’s general fund, we have unfunded liability, we’re exploring an investment in natural gas — how is this salary increase going to affect the DWP globally?” she asked.

Regarding the legality of reopening a contract that requires board and council approval, Councilman Tony Cardenas said, “We have an obligation to ratepayers and taxpayers to make sure none of the city’s departments are overextended. The City Charter says the council must ratify any agreements city departments enter. Providing oversight in the people’s best interest is the heart and soul of the city’s constitution.” Cardenas’ staff noted that just before the deferred vote on Tuesday, in response to his request that the board forestall a vote on the sale of $2 billion in bonds, the DWP’s chief administrative officer, Robert Rozanski, warned that such a delay could result in a “cash crunch.” “We could run out of cash by September,” added Chief Financial Officer Ronald Vasquez.

On Monday, Rozanski had defended proposed IBEW salary increases in the name of quality of service, as did Assistant General Manager Henry Martinez, who said the DWP must compete for skilled labor. Sources at the DWP say its workers already make more than their counterparts in private industry, and that private companies have been after the DWP for years to stop driving up salaries. DWP veterans also point to the department’s efforts to consolidate job classes, making comparisons to city job classes harder. One proposal to combine truck drivers and equipment operators into a class called “utility operator” was presented to the DWP’s Joint Labor Management Committee on May 24.

Skip Henke, president of the Los Angeles Building and Construction Trades Council, which includes city workers from IBEW Local 11 and Local 45, finds the different approaches — one for the DWP, another for the city — troubling. “No fault to Local 18, but it comes down to the taxpayer versus the [water and power] ratepayer, and the ratepayer isn’t being represented.” Henke says building-trades workers reached an impasse recently when the city refused to offer raises that would close the salary gap between DWP and city electricians, plumbers, carpenters, and sheet-metal and concrete workers. Now 400 of his members are threatening to break away.

Henke is a veteran labor leader who used to manage IBEW Local 11. He says even IBEW members of different locals are getting short shrift compared to IBEW members at DWP. “It’s not just driving by and seeing guys doing the same work for higher pay,” he says. “This lives with you forever. It affects your pension.”

Rising up against the pay disparity isn’t exactly easy for labor, however. “It’s unseemly to be perceived as betraying a peer,” a city labor adviser says. “It violates a central principle: the willingness to stick together.” Yet D’Arcy does not exactly embody the rising tide that lifts all boats, says the labor adviser. “When you achieve gains that seem excessive, you hurt the labor community, which is always having to justify its mission to the public and management. And when you make those gains through the threat of strike, which is meant as a last resort, it becomes difficult for others to be rationally effective.”

Professor Dan Cornfield of Vanderbilt University, a labor and sociology expert, says that elected officials run into trouble when they lose touch with middle-class consumers — or ratepayers — and with women and ethnic minorities in the service industries. Though the IBEW is a juggernaut whose workers may not be easily replaced, he says, questions about its legitimacy, in theory, should affect its ability to garner sympathy from the public should the DWP — or the mayor, or the City Council — stand down the threat of a strike. “Legitimacy matters. Politicians are tuned into the middle-class consumer who pays the bills, and minorities who are forming coalitions that affect elections,” he says.

That’s the theory, at least. In Los Angeles, IBEW Local 18 has called the shots for years with little resistance. Meanwhile, management’s vulnerability to a threat of strike has gone untested and has led to a stark pattern of concessions. Richard Grey, a former assistant city attorney who has served as an outside legal adviser to the DWP, recalls going to court to try to stop the DWP strike of 1993. He also recalls the management reduction of 1998. “I personally felt that after those events, no manager would ever put his name on the line in the face of a strike threat,” Grey says. “I’ve seen no signs of that changing.”

After his elaborate attempt to steer clear of the current IBEW contract, Villaraigosa could still assume a leadership role. The possibility might even exist that the council could have his back. On Wednesday, Councilwoman Janice Hahn, who serves with Cardenas on the Commerce, Energy and Natural Resources Committee, pledged not to rubber-stamp the IBEW contract. “I know the mayor has concerns, too,” she said.

Observers wonder if Villaraigosa and the City Council are up to the challenge of dealing with D’Arcy and the IBEW. “I’m not sure if the whole threat-of-strike thing at the DWP is the truth or something politicians tell themselves and the public,” says a former Hahn office member. “And there has been little evidence of anyone trying to figure that out.”

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