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The Hidden Empire

For nearly three months, talk of pay disparities among city workers electrified City Hall and pitted the well-connnected and well-paid Department of Water and Power against nearly everyone else.

Mayor Antonio Villaraigosa didn’t want to take responsibility for blessing the five-year deal calling for a 16 percent to 30 percent raise for 7,900 workers. We still don’t know whether he did or not.

The salary flap provided a window into the inner workings of City Hall, and the willingness of Villaraigosa and other elected officials and city managers to mislead the public with vague initiatives, accolades for the troubled utility and rhetoric-filled speeches that avoid issues of public concern.

Punctuated by a citywide power outage a week before, threats of a strike by the International Brotherhood of Electrical Workers Local 18, and a council session that at times resembled an IBEW pep rally, last week’s debate exposed a lack of leadership that stretches all the way from the mayor’s office to the council committee that oversees the DWP.

The city is in debt, the DWP’s infrastructure is in decline and a proposed 18 percent water rate increase over five years comes on the heels of an 11 percent raise last year. In this light, recent events showed who wears the pants at City Hall: IBEW Business Manager Brian D’Arcy. Problem is, while Villaraigosa, DWP General Manager Ron Deaton and Councilman Tony Cardenas, chairman of the Commerce Energy and Natural Resources Committee, are accountable to the public, D’Arcy is not.

When put on the spot, the city’s elected leaders and appointed managers first ducked responsibility then justified IBEW’s sweetheart deal by comparing it to its last one, while obscuring issues that make the DWP a wasteful cash cow that the city general fund relies upon to the tune of $180 million per year in ratepayer money. Instead of critical discussion of the health, stability and value of DWP’s work force, 96 percent of which is controlled by the IBEW, councilmembers exploited the recent power outage — apparently caused by a worker’s mistake — and reminded observers that water and power are cheaper in Los Angeles than elsewhere. They presented a case that the city can afford to pay DWP workers more than most others, and that it should, because it always has.

Missing, however, was any discussion of increased reliance on contractors to do the work of the utility, rising overtime costs that have raised eyebrows among city managers, persistent signs of a hostile work environment and questionable pools of public money that enrich the IBEW’s coffers.

Hours after the council session ended, in reaction to what he described as “flaws in the city’s outdated method of labor/management relations,” Villaraigosa issued a press release with City Controller Laura Chick pledging to bring transparency to collective bargaining practices throughout the city. For Villaraigosa, it was the third or fourth different public position he had taken in as many weeks. For Chick, who spent the first three years of Jim Hahn’s mayoral term exposing fraud and waste at the DWP and the last year using her findings to take Hahn down, it seemed in lieu of focusing on further targets for audits at the DWP that have been brought to her attention.

At the same time, Deaton said re-examining the bargaining process isn’t the answer: The city would have to “chip away” at the traditional pay gap between DWP and city workers by adjusting job classifications, of which there are hundreds. The DWP for years has tweaked job classes, according to department veterans, putting it increasingly out of step with the rest of the city.

Labor experts and City Hall insiders were perplexed. “How do you do that?” said a veteran council staff member who asked not to be named, in response to Deaton’s suggestion. “Seems like adjusting classes is how we got to where we are.” Said Doug Collins, veteran labor negotiator and former head of the Employee Relations Board, of Villaraigosa’s press release: “I have no idea what he is talking about. Collective bargaining is a process defined by law and driven by personalities. And in reality, the city and the DWP are separate employers connected by an umbilical cord. You can prescribe procedures, but you can’t change reality.”

A review of recent events reveals that after looking so hard for a way out of the whole mess, going so far as to ignore a city attorney opinion that cleared the way to renegotiate the controversial deal, then justifying it as a fair-and-square deal, they had to say something. Even if that meant demonstrating that their energy was focused all along not on rectifying inequities in the work force or examining issues of concern at the DWP, but on selling a deal that was blessed long ago.

The IBEW’s below-the-radar five-year contract extension was first reported in the Weekly on July 28. It will cost between $70 million and $130 million over five years. News of the proposed pact, negotiated secretly during the mayoral transition under bargaining instructions approved by the Executive Employee Relations Committee and the City Council, sparked a brief uprising among city workers who already earn between 25 percent and 61 percent less for doing similar work, and who settled for no raise last year. More striking than the labor community’s outrage — which fizzled — was the avoidance of responsibility by city officials for reaching the deal in the first place. No one would cop to doing the deed that councilmembers exhorted as “a fair contract” in voting 10-3 last week.

Villaraigosa was the first to proclaim his hands were clean. His aides said the proposed contract was “unsustainable,” and that he would not have negotiated such a deal, prompting threats of strike from the IBEW, which spent more than $300,000 to get him elected. Villaraigosa said he had concerns the city could be sued if it insisted on renegotiating. He blamed the deal on the previous administration. He said he wasn’t present when the council voted to approve bargaining instructions. When the pay disparity issue heated up, he accepted the challenge. “I welcome the opportunity to address it,” he told the Weekly. “And not just in the mayor’s office. The council needs to be involved.”

Then he sought a private legal opinion that suggested the city could be sued for unfair labor practices if the council did not ratify the agreement. But after the City Attorney’s Office produced an opinion that said the council was fully within its legal rights to renegotiate the contract, Villaraigosa faded from the scene until the vote was final. Yet the perception that he informally blessed the deal, then failed to assert himself in scrutinizing the deal lingers.

Meanwhile, City Administrative Officer Bill Fujioka, who negotiates all other city contracts, would not confirm negotiating the IBEW deal — which in fact he did negotiate — despite statements to the Weekly by Assistant City Administrative Officer Royce Menkus, in charge of employee relations, that the CAO’s office was not involved. Likewise, Deaton would not confirm negotiating the contract, as has been the custom for the DWP’s general manager in recent years. The DWP would not give a straight answer on who was involved. The DWB Board of Commissioners appointed by Jim Hahn first balked at the contract then voted in favor of it, after receiving advice from the City Attorney’s Office that they had no authority over salary matters. Days later, Villaraigosa named his new board.

Warned by the Civil Service Commission in February that pay disparity should be addressed citywide, and armed with a written report from Fujioka’s office that confirmed the sizable salary gap between the DWP and some city workers, Cardenas stepped up to the plate. Cardenas’ role as the chair of the Commerce Committee, which oversees the DWP, is intriguing. An engineer and a former state assemblyman, he is uniquely situated to confront IBEW dominance in the context of DWP issues, which are frequently brought to his attention. And, despite his 11th-hour endorsement, he is a political rival to Villaraigosa, which gives him perverse incentive to root out fraud and waste under the current administration. A moderate Democrat from the Valley who relies mostly on business support, Cardenas has received $75,000 of his $1.5 million in campaign contributions from labor in city elections since 2001 — most of it from service employees and municipal employees other than the IBEW.

First he called for a city attorney’s opinion. The opinion stated the council could renegotiate in good faith for economic reasons or because of fairness issues, conflicting with what Villaraigosa’s lawyer had said. Then, when Councilman Dennis Zine refused to back the IBEW raise in the Personnel Committee, the matter moved to Cardenas’ Commerce Committee, where the outcome of last week’s council session was foreordained.

Sources close to Cardenas say he is sensitive to behind-the-scenes taunts by D’Arcy that he is “no friend of labor.” Those same sources use the words “political extortion” to describe the kid-glove treatment the IBEW receives from the city on a routine basis. The Commerce hearing of September 13 was no departure. Cardenas methodically questioned Deaton, Fujioka and Budget Director Jeffrey Peltola about the economics of the IBEW salary raise, which will cost between $70 million and $130 million over five years, depending on inflation, resulting in a half-percent increase per year toward a proposed 18 percent water rate increase. Cardenas made a careful record that showed just how the IBEW’s current raises, with a floor of 3.25 percent and a ceiling of 6 percent, are not really excessive when compared to their last ones, with a floor of 4 percent and a ceiling of 6 percent, ignoring that the IBEW’s last raises were considered excessive at the time.

Cardenas never mentioned pay disparity or its economic effects on the city, the issue that sparked controversy over the IBEW pact in the first place. He never explored the stability of a labor force that has resulted in more than 1,000 complaints of discrimination, harassment and retaliation since 1994. He never asked why, according to DWP insiders, the DWP has practically doubled its use of outside contractors in recent years.

Instead, he pointed to a brief power outage, apologetically chided Deaton for lack of a written strike plan, and approved the deal, sending it to the council, where he continued to avoid the disparity issue and proclaimed the deal “fair to the ratepayers and the workers.” (Councilwoman Janice Hahn, a member of the Commerce Committee who had said there would be “no rubber stamp” on the salary deal, did not attend that meeting. She remained silent at last Tuesday’s council session as she voted in favor of the deal. Freshman Councilman Bill Rosendahl, the third Commerce Committee member, voted yes on September 13, then gave a rousing speech in favor of the IBEW raise on the council floor last week. He derided the salary flap as the result of “media spin.”)

Oddly, not a single city worker or union leader showed up at the Commerce Committee meeting. Nor did D’Arcy. But then, Deaton, Fujioka, Peltola and legislative analyst Joe Avila were doing his talking for him. Avila, sources say, is uniquely situated to advocate for the IBEW raise, given his weekly breakfast meeting with D’Arcy at the Pacific Dining Car. Those same sources say they suspect Avila of being the source of leaks to the DWP of proposed council actions — before the proposals have been vetted by the legislative analyst’s office.

None of this is news to Julie Butcher, president of SEIU Local 347, who at first urged her members to “go to war” to reduce the salary inequity, but ended up the embattled labor leader who settled for 6 percent raises over three years for her people. Reached at her office before the Commerce Committee meeting, Butcher glumly stated that she was too swamped with work to attend. That, after requesting that Fujioka meet with her bargaining team in private to discuss equal treatment of workers, announcing educational forums in October on the history of water, power, politics and municipal control of the city, and staging a rally at City Hall to emphasize unity among all workers, regardless of union membership or department.

After the council voted for the IBEW raise, Butcher suddenly regained some of the fight for which she is known. “I wish I had lapdogs going into committee advocating for my members’ raises,” Butcher said, referring primarily to Deaton and Fujioka. She declined to elaborate on the next step for her members, but confirmed that SEIU’s contract allows both the union and the city to renegotiate if the city hits tough fiscal times or its unallocated cash reserves exceed $250 million.

By the time the matter reached the council floor last week, 200 burly, mostly white male members of the IBEW packed City Hall, donning their strike shirts. Council members — Rosendahl leading the way — made speeches about scary but unexplained power outages, affordable water and power rates, and the legacy of DWP workers’ superiority over other city workers — at least where pay is concerned.

Forgotten was the fact that former mayor Hahn was notified in writing last September by a DWP manager that not only did the DWP not have a strike plan, but D’Arcy allegedly had intimidated its managers from developing one. “They blur the line between bargaining and criminal extortion,” wrote Assistant General Manager Mahmud Chaudhry, who sources say is being encouraged to retire. In this context, Deaton, according to Hahn administration officials, was hired to provide “adult supervision.”

As he made his way out of City Hall last week, relieved and upbeat, Deaton was at a loss to explain why, for instance, the DWP gives $5 million a year in ratepayer money to a pair of joint safety-training institutes controlled by the IBEW that meet in secret with no city oversight. Cardenas had broached the subject at his recent committee meeting, but seemed satisfied when Deaton told him everything was hunky-dory. DWP manager Henry Martinez had told Cardenas that as a trustee he personally oversees the institutes. Yet Martinez signed a letter in Deaton’s absence on August 25 telling the Weekly that the DWP has no written records of budgets, bylaws, expenditures or minutes to show what the institutes actually do. The City Attorney’s Office has characterized the $5 million per year transfers as a “gift of public funds.” The state Attorney General, at the behest of the IBEW, gave an opinion stating the institutes are exempt from open meeting laws.

“Smile, Marcus,” said Deaton cheerily as Villaraigosa’s deputy chief of staff Marcus Allen rushed by, perhaps scrambling to put together the joint press release approved by his new boss and his old boss, Laura Chick. There was no time to press Deaton for answers about troubling signs such as an audit by the State Department of Industrial Relations, completed in May, documenting more than 100 pages of failures in DWP’s workers compensation program.

Likewise, saved for another day were questions about persistent claims of retaliation against workers who have fallen out of IBEW favor and had their careers threatened – just this week the proposed termination of one truck driver who did not get union representation was overturned by a Superior Court judge as “arbitrary and capricious.”

Beyond reach in this recent round of DWP drama were questions about the concerns of officials at the city’s Personnel Department pointing to systematic abuse of overtime pay by IBEW workers – an ironic charge given D’Arcy’s public rebuke of city officials during the recent power outage for being too cheap to pay overtime to workers who cut through major power lines in the middle of the day.

But when Deaton got back to his office in the John Ferraro Building on Hope Street, high on the hill overlooking City Hall, no doubt his lights turned on and the water came from the tap in the executive washroom, just as it always does in everyday Los Angeles.


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