Carrying signs that read, “We’re Bargaining to Fix LA,” 1,000 Los Angeles city workers and their community supporters demonstrated July 1 at City Hall.
The demonstration was organized by Fix LA, a labor-community coalition demanding that Los Angeles officials renegotiate expensive and in some cases predatory bond deals and use the savings to repair the city’s crumbling infrastructure and clean up neighborhoods.
The Coalition of LA City Unions (CLACU), a bargaining coalition of six union representing 20,000 workers providing a wide array of city services, has been bargaining with the city on a new collective bargaining agreement.
Its proposals for a new agreement mirror those of Fix LA, itself a coalition of the six CLACU members and a long list of community and religious groups.
“(Our bargaining proposals include) provisions that would bring immediate benefits back into the communities in the form of restored services and improved public and child safety. (They also) . . .protect middle-class jobs and create career opportunities, such as local hire and public works programs for LA’s neediest neighborhoods,” reads the coalition’s statement on its bargaining position on the CLACU website.”
On its website, CLACU notes that when the Great Recession reduced city revenue, CLACU members accepted a wage freeze, health care cuts, and higher pension contributions to help the city preserve essential services.
Residents of Los Angeles also made sacrifices as the city cutback on street and sidewalk repairs, sewage maintenance and repairs, flood control maintenance, and debris clearing.
The financial services companies that lend the city money for capital improvements, however, have not made sacrifices. They continue to collect hundreds of millions of dollars in interest and fees for questionable bond deals.
“There’s a lot in LA that needs to be fixed, and getting our money back from Wall Street is a good start,” said Richard Guzman, a garbage truck driver and member of SEIU Local 721, one of the unions belonging to CLACU. “These banks are making huge profits off of taxpayers and the only thing we’re getting in return is cuts. Our communities need neighborhood services restored and more good, public sector jobs.”
One bond deal that has come under close scrutiny is a credit swap deal arranged by the Bank of New York Mellon and Dexia, a financial services company based in Belgium.
Credit swaps are supposed to be insurance against increases in interest payments on bonds with variable interest rates.
But because of the Great Recession and because the US government has kept interest rates low to alleviate the effects of the Great Recession, interest rates on bonds have fallen. As a result, cities such as Los Angeles that purchased credit swaps must pay more.
The credit swap deal with Mellon and Dexia has cost Los Angeles an additional $46.8 million in interest payments, and without some kind of relief, the city will pay an additional $69 million by the time the swaps contract expires in 2028.
In addition, Los Angeles has spent billions on bank fees.
“We estimate the City of Los Angeles spent more than $300 million on fees to its banks and other financial firms, not counting payments for principal and interest on borrowed funds,” said Cheryl Parisi, CLACU chair, at city budget hearings last spring.
Fix LA wants the city to use its $106 billion in city controlled assets to leverage a better deal on bond fees.
“The bottom line is, our leaders in City Hall have a choice: LA can keep getting ripped off by Wall Street or you can change course and reinvest in our streets. I think the choice is pretty simple. That’s how we’re going to Fix LA,” said Bob Schoonover, president of SEIU Local 721.
In addition to making better deals with banks, Fix LA wants the city to make its property tax structure more equitable so that large corporations pay their fair share to keep Los Angeles in good repair, close tax loopholes that deprive the city of much needed revenue, and enforce its rules on foreclosed property, which would not only improve neighborhoods but provide more revenue for the city.
The current contract between the city and CLACU expired on June 30, but the two sides continue to bargain.
CLACU says that it is bargaining for more than the city workers who it represents.
“We are bargaining to fix Los Angeles,” Parisi said.