Pension flap imperils transportation funding

(Ed’s Note: This story also appeared  in California City News, a content partner of Capitol Weekly.)

Local transportation officials across California are not happy: The feds, weighing in on a public pension dispute, are holding back billions of dollars. That means trains may not run on time, buses may not get bought or fixed and projects may not get built. And that could translate into a lot of unhappy passengers.

“We’re sort of stuck in the middle on this,” said Joel Zlotnik of the Orange County Transportation Authority, which has $114 million languishing in limbo. “Our goal is to have this resolved.”

Legislation to do just that was sent Wednesday to Gov. Brown by the Assembly. The measure was approved earlier by the Senate.

At L.A.’s Metropolitan Transportation Authority, third-largest transit district in the country, the total impact of the federal cut could be about $3.8 billion over time, as well as the equivalent of 15 percent of the district’s operating budget, or $244 million, said spokesman Marc Littman.

Estimates vary widely over the amount of dollars involved, but by any yardstick the numbers are substantial.

The crux of the issue is a dispute between the federal government and the state over workers’ public pensions.

A year ago, Gov. Brown signed into a law requiring workers to contribute more to their pensions, boosted their retirement age by two years and capped the salary levels that can be counted towards the pension. The law took effect Jan. 1

The law “will help prevent more municipal bankruptcies that are tied, at least in part, to pension obligations,” the governor wrote federal officials earlier this year. “Government bankruptcies often require public employee layoffs. Bargaining rights are a moot point if you do not have a job in which to exercise them.”

But the federal government said the Brown’s pension overhaul violated federal rules that had been in place for decades. U.S. Labor Secretary Thomas Perez said California would lose billions of dollars if public transportation workers were subject to the new pension requirements.

The new California law “narrows the scope of collective bargaining over pensions,” Perez wrote Brown last month, adding that the law will have a “devastating impact (of) a loss of federal transit dollars.” He also told Brown that other states had exempted transit workers from similar changes.

Some transit districts have told the federal government that “without federal funding they will face both service cuts and layoffs,” Perez added and California should “act immediately to develop a solution to this issue.”

Perez wasn’t kidding: The feds blocked $54 million destined for the Sacramento Regional Transit District, which immediately prepared a lawsuit to get money, which was intended to help fund the $270 million expansion of the light rail line from South Sacramento to Cosumnes River College. The project is about 60 percent completed.

Sacramento was the first transit district in the state to be directly harmed – lose money — under the federal rule, which is why it is taking a lead role in the potential lawsuit.

“They have only decertified one grant and that’s our grant in Sacramento,” said the district’s general manager Mike Wiley.

In Los Angeles, getting full funding from the federal government translates into about 43,000 new jobs for projects that include extending the subway to the West Side and a downtown light rail line. “We would really be hard-pressed to complete these jobs in a timely way without the federal money,” Bittman said. “Without the federal money, those jobs would be in serious jeopardy.” The L.A. district has some 2,000 buses and 87 miles of track, and about 7,000 unionized workers.

The federal government’s move against Sacramento prompted new legislation carrying a plan crafted by Democratic Assemblymen Roger Dickinson of Sacramento and Richard Bloom of Santa Monica. The bill, AB 1222, which was approved and sent to the governor, temporarily exempts California transit workers – about 20,000 of them — from the state rules until the legal issues are resolved. A total of about $4.14 billion in federal funding reportedly is at stake statewide over time.

Workers at about 83 of California’s 95 transit districts are affected by the pension changes that went into effect in January.

The Bloom-Dickinson plan is getting support from transit districts, who say a breathing space is needed.
The San Diego Metropolitan Transit System “has never believed (the state law) violates any federal regulations and we therefore look forward to a quick resolution in the courts,” Paul Jablonski, the MTS’ chief executive officer said in a written statement.

Dickinson said that about “$1.6 billion that would flow to transit agencies would be lost if we don’t have at least a temporary resolution.”

The bill, which has the governor’s support and likely to be approved before the end of the session, is two-pronged.

“The effect of the legislation is two-fold: It will allow the federal money to continue to come to the transit agencies in California, allowing the jobs it generates to go on and the transit service to go on without threat,” Dickinson said. “Secondly, it creates the opportunity through this delay to litigate it.”

That means that even if AB 1222 is approved by the Legislature and signed into law, the Sacramento district’s lawsuit will be filed.

“The parties have agreed to litigate the issue in federal court,” Dickinson said.

“In truth, this is an approach that has been hammered out between the governor’s office and the Secretary of Labor,” he added. “The bill really is the personification of the agreement that has been reached been the two parties.”

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Ed’s Note: Updates throughout with bill’s approval, sent to governor.