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DWP’s Salary Shock

A hush-hush contract extension between the Department of Water and Power (DWP) and the International Brotherhood of Electrical Workers (IBEW), Local 18, went to a vote of the union’s 8,000 members Tuesday. The pact, which guarantees a minimum 16 percent and a maximum 30 percent in salary increases over the next five years, should pass easily, widening an existing salary gap between DWP workers and other city workers, many of whom recently settled for much lower increases.

The deference shown to the IBEW by the DWP, a bloated revenue-generating department plagued by allegations of mismanagement and waste, represents a major test of leadership for Mayor Antonio Villaraigosa, a friend of labor who has promised transparency and reform of city government while threatening to cut city budgets.

Approval by the Board of Water and Power Commissioners and the City Council is likely, and could provoke the labor community, which is wondering why it caved in and accepted less for other city workers at the bargaining table. A sign of trouble is the recent breakdown of contract negotiations with the Los Angeles County Building & Construction Trades Council. Communications electricians want what IBEW members are getting. Others are bracing for a fight.

“During 2004 contract negotiations, city management told [us] there was no money in the budget for raises, and [we] took them at their word,” Service Employees International Union (SEIU) Local 347’s general manager, Julie Butcher, wrote in an urgent bulletin to her service-industry members last Friday. Calling the IBEW’s proposed contract a “secret deal,” Butcher accused city leaders of pulling “the worst kind of switch the city can pull on the workers who make this city run.” Local 347 settled for no raise in the first six months of their renewed contract, and a series of 2 percent pay raises for a 6 percent total salary increase over three years.

“What should I say to a mechanic who fixes police cars for a living when he makes 20 percent less than a mechanic who works across the street?” Butcher said on Monday. “I don’t see how I can ever take the city at its word again.”

If it were not for the clout of the IBEW, the fiscal realities facing the rest of the city and the DWP’s persistent water-rate increases would most likely doom passage of the pay hike. But the DWP’s relationship with the IBEW, which has 98 percent department membership, made the atmosphere ripe for a sweet deal. For city managers, concerned DWP veterans, labor leaders, city workers, ratepayers and one or two City Council members who are willing to speak up, the IBEW’s power is, in the words of one elected official, “like the tail wagging the dog.” Says the official, “The political realities are such that the city is not in a position to exert its influence over the DWP.” Adds a senior council staff member, “The situation at DWP probably cannot change under the current governing structure.”

Villaraigosa has kept his distance from the DWP, at least publicly, during his campaign and since taking office. The IBEW spent $307,432 on his campaign. Villaraigosa has a long and close relationship with the IBEW’s business manager, Brian D’Arcy. And while respected former legislative analyst Ron Deaton was brought in to manage the DWP last year, his progress thus far is difficult to identify. To some, he has been a disappointment. “I suppose even a giant is no match for the politics of the department,” says a veteran employee at the DWP.

The recent IBEW contract negotiation, which guarantees 3.25 percent raises each year for five years, with a ceiling of 6 percent tied to the Consumer Price Index, is a sign that Deaton is powerless — or perhaps reluctant to lead. Sources familiar with the process say there was little negotiation involved: The IBEW was handed a five-year extension of an existing contract that was considered excessive when it was first negotiated in 2000. The brief, quiet bargaining period coincided with the mayoral transition; it was marked only by saber rattling by D’Arcy, who was overheard threatening an August strike in June.

Meanwhile, City Administrative Officer Bill Fujioka has provided the City Council with a report that, according to Councilman Greig Smith, underscores the pay disparities made worse by the proposed salary hike. Smith introduced a motion in 2003 to address the disparities, prompting the CAO’s study. Councilman Dennis Zine seconded the motion, yet it has languished in the Personnel Committee, which is chaired by Zine, who has voted in favor of recent salary adjustments for individual units within Local 18. Smith is a consistent “no” vote on the council on such measures.

Sitting in his office on Tuesday, Smith reviewed a copy of Local 18’s agreement, obtained by the Weekly, which went out to members on July 8. “This does not conform to the issues raised in my motion,” he said. “I will continue to oppose pay raises that go beyond what comparable employee classes receive.” Smith is among the few on the council who have called for a reduced salary gap, despite a letter to the council earlier this year by Karen Chappelle, president of the Board of Civil Service Commissioners. On February 18, 2005, Chappelle wrote, “Most city [job] classes that are used in both the DWP and other departments are paid considerably more in the DWP. Since all employees in a city class are performing similar duties, and since the DWP is a city department, we believe DWP salary scales should be substantially the same as for other departments.”

A frequent council ally of Smith’s on fiscal matters is Councilman Bernard Parks. During the mayoral primary, Parks the candidate took former Mayor Jim Hahn to task for allowing public salaries and benefits to get out of hand. He called for an audit of DWP expenditures. He supported an independent inspector general to oversee the DWP. Local 18’s manipulation of the DWP “is not the exception, it’s the rule,” Parks told the Weekly. “Public unions carry such clout only when the mayor gives up some of his power.”

Last Friday, Parks the councilman was less vocal on the DWP, having stood tall behind Villaraigosa during the election. Yet his central message seemed intact: “We cannot continue down the path of the last four years, with $700 million in salary and benefits to city employees while cutting back on city services.” But when asked if he had voiced any concerns about the proposed IBEW contract as a member of the city’s Executive Employee Relations Committee, Parks, who also chairs the Budget and Finance Committee, said he hadn’t seen any details since approving the bargaining instructions. The executive committee reviewed the matter in closed session on June 13. The council met in closed session on June 21 and June 28. On Tuesday, a copy of the IBEW’s memo to its members outlining terms of the proposed contract was shown to Parks on the council floor. “I’m not going to comment on specifics at this time,” he said.

Despite his hands-on style and track record of influencing key labor agreements, Villaraigosa, through his spokeswoman, claims to have had nothing to do with the contract negotiation. By most accounts, the process was a departure from other city labor agreements. Ordinarily, Fujioka, the CAO, negotiates such agreements. In recent years, the DWP has handled its own negotiations. This year, the identity of the city officials who actually negotiated the deal remains somewhat a mystery: Parks says he was under the impression that Fujioka brokered the deal, and that Deaton declined to get involved. Neither Deaton nor Fujioka returned calls for comment.

As for Villaraigosa, he was serving as a councilman while setting up his transition as mayor-elect. He also met privately with D’Arcy, according to news reports, right around the time the council was approving bargaining instructions and a deal was getting done. “Given the face-to-face meeting Villaraigosa had with Brian D’Arcy during the negotiating period, it stretches one’s belief to think they did not discuss IBEW salaries,” says a former member of Hahn’s office. D’Arcy did not return calls for comment.


Refusal by city leaders to confirm basic facts about a major labor negotiation is unusual. “No one wants the credit, or should I say the blame,” says a neighborhood-council president who requested anonymity. According to Local 18 members, assistant business manager Gus Corona told them that former Mayor Jim Hahn approved the deal so that Villaraigosa would not suffer from any fallout. After the election, Hahn had continued to sit on the Executive Employee Relations Committee. A former member of Hahn’s office calls such an assertion laughable. “Do I believe Local 18 told their members that? Yes. But I can tell you for a fact that is not true. I don’t think Hahn even thought an agreement was imminent. He urged the council to think, and to ask questions.”

As mayor, Hahn had ample warning that the IBEW had grown omnipotent. Last September he received a “for your eyes only” memo, obtained by the Weekly through a public-records request, from DWP Assistant General Manager Mahmud Chaudhry, which portrayed management caving in to Local 18. “They blur the line between bargaining and criminal extortion,” Chaudhry wrote to Hahn. In the letter, dated September 16, 2004, Chaudhry outlined the “outlandish” concessions allowed by the DWP at the mere mention of a possible strike, concluding that those who would be inclined to resist were powerless to act. “The union now runs the Department,” he wrote. “The DWP has become a fox-run henhouse of epic proportion.” Even some Local 18 members, while defending their salaries, concur with such a characterization. “It’s collusion, plain and simple, and everyone knows it,” says one member.

Hahn responded by tapping Deaton to lead the department, which had been the subject of scathing audits by City Controller Laura Chick. The DWP was caught up in a criminal probe stemming from the Fleishman Hillard public-relations scandal. A separate probe has resulted in federal subpoenas for DWP contracts dating back 10 years. Meanwhile, a Personnel Department report to the council found that the DWP received more than 1,000 internal and external complaints of discrimination, harassment and retaliation from 1994 to 2004 — 17 percent of the citywide total and the cause of dozens, if not hundreds, of lawsuits. Deaton’s hiring was meant as a “change of corporate culture,” Hahn said at the time.

Villaraigosa, whose campaign featured the frequent, enthusiastic presence of former DWP General Manager David Freeman, and whose fund-raising operation received support from former DWP Assistant General Manager Raman Raj, fired in 2001 before being offered a separation agreement, need not be educated on the state of the DWP. Villaraigosa now inherits the legacy of his friends, which includes an expansion of Local 18’s power under the joint labor-management process and the hiring of Assistant General Managers Hal Lindsey and Henry Martinez. “Antonio was in council sessions earlier this year when we discussed the DWP,” says one council member. “He understands the situation. Whether he exerts his influence or not we’ll have to see.”

The labor agreement with the IBEW could have repercussions for the city, according to observers, especially in light of existing pay differentials. For instance, salaries for warehouse and tool-room workers at the DWP start around $40,000, Butcher says, which is where SEIU Local 347 members top out. Maintenance workers at the DWP earn salaries 20 percent higher than other city employees. DWP mechanics earn 19 percent more. Tree surgeons earn 31 percent more than other workers, according to figures released by the Personnel Department. Some city workers have left their jobs for lower classifications at the DWP, where the pay is still higher. Such vacancies cost the city to replace workers, says Butcher, not to mention the experience and work history that is lost. “It falls to everyone to force the DWP to act like it’s part of the city,” she says.

Adds a former member of Hahn’s office, “I’m not suggesting taking away from Local 18, but this issue has been building. Other unions feel at a disadvantage. It results in a loss of morale in key work groups. And it creates a leapfrog effect, which means other city workers are going to want to leap to the DWP’s pay level, whether they work there or not. Ron Deaton understands this, and has expressed concern in the past.”

Asked why Fujioka would report to the city about pay disparities at the DWP while advocating for further salary increases for DWP workers, the former member of Hahn’s office says, “Fujioka serves the politicians. He is not the moral compass of the city. He does what he thinks is acceptable. It remains to be seen who is telling him what to do.”

Which is the question looming over Mayor Villaraigosa, as he leads the city and prepares to appoint a new set of DWP commissioners. As Parks said during the mayoral primary in praising the selection of Deaton as the DWP’s general manager, “He cannot do it by himself. He needs the support of the mayor and an independent board of commissioners, otherwise it is business as usual with a happy face on it.”