Public pension changes imperil transit money

SACRAMENTO, Calif. (AP) — Public pension reforms pushed by Gov. Jerry Brown could cost the state billions of dollars intended for transit projects, according to the federal government.

The U.S. Department of Labor sent a letter to the Democratic governor this month warning that California's efforts to limit state and local government pensions appear to violate a federal mass transit grant regulation, The Sacramento Bee reported Tuesday. The regulation requires that transportation agencies protect employees' collective bargaining rights.

Decisions by the labor department later this week could begin stalling $1.6 billion in federal money this year alone. Ultimately, more than 100 federal grants could be halted unless the problem is resolved.

California Labor Secretary Marty Morgenstern argued in a letter to the federal government in February that the pension reforms that took effect Jan. 1 do not affect collective bargaining agreements. He said the law simply modifies retirement plans that can be offered to government employees.

But the federal government and transportation labor unions disagree.

The new law increases local and state government employees' pension contributions and provides lower retirement benefits for workers who joined a public pension fund after Jan. 1.

Unions representing about 20,000 transportation workers filed objections with the federal government soon after the law took effect, the Bee reported. That halted federal funds while the U.S. Labor Department decides whether to decertify California transportation agencies for not following federal regulations.

A decision on $268 million in grants to the Los Angeles County Metropolitan Transportation Authority could come Friday. Decisions on funding for projects in Orange and Sacramento counties would soon follow.

The state's pension law "diminishes both the substantive rights of transit employees under current collective bargaining agreements and narrows the future scope of collective bargaining over pensions," the federal labor secretary said in his Aug. 1 letter to the Democratic governor.

The dispute does not affect federal funding for the California High-Speed Rail Authority to begin construction of a bullet train line between Los Angeles and San Francisco, authority spokeswoman Lisa Marie Alley told The Associated Press.

The state is working "to reconcile state and federal law on public pensions and transit grant dollars," Brown spokesman Jim Evans told the Bee in an emailed statement.

One option would be to pass legislation temporarily exempting transportation employees from the state's new pension law while the state challenges the federal interpretation in court, Mike Wiley, the Sacramento Regional Transit District's general manager and CEO, told the Bee.

A variation on that plan would be to pass legislation temporarily exempting only employees of agencies that have the greatest need for federal money, leaving other agencies to rely on local taxes and other funds as they challenge the federal agency's position in court.

An existing bill by Assemblyman Luis Alejo, D-Watsonville, and backed by labor unions would exempt all mass transit workers from the pension law, but the bill has stalled in an Assembly committee.