Federal officials cut off $54 million for Sacramento Regional Transit on Wednesday, prompting Gov. Jerry Brown to announce a pension-law compromise intended to keep the money flowing to transit agencies on the verge of losing grant funds.
With a series of similar U.S. Department of Labor rulings likely that would have disrupted $1.6 billion in grants statewide for this year alone, Brown's office said the governor supports Assembly Bill 1222, which would exempt mass-transit employees from the pension law while the matter is hashed out in federal court.
Labor officials stopped the Sacramento agency's money for light-rail construction to Elk Grove after ruling that the transit district implemented California's pension law in violation of a federal law that requires agencies to preserve employees' collective representation to receive mass-transit grants.
Unions representing some 20,000 mass-transit workers in agencies statewide have argued that the pension law championed by Brown last year mandated retirement downgrades that should have been bargained.
Sacramento Regional Transit Director Mike Wiley said the Labor Department's decision came after transit officials exhausted every administrative avenue. The legislation won't come soon enough to prevent the district from permanently losing $14 million of the denied funds in October.
Sacramento RT plans to file a lawsuit in federal court to test whether its compliance with pension law changes violates federal law.
Fares won't be affected by the district's legal moves, Wiley said.
Although the proposed legislation would temporarily exempt mass transit workers from pension rollbacks affecting nearly every other state government, local government or special district employee in California, union spokesman Barry Broad said the unions aren't claiming victory.
"This isn't something we see as a win or loss," Broad said. "It serves the purpose of allowing the federal grant money to flow, which we all support, while the matter is litigated in court."
Joshua Shaw, executive director of the California Transit Association, said his organization supports Brown's plan.
"We hope the litigation process goes favorably for Sacramento RT and the governor," Shaw said. "If it doesn't we'll have to see where we are at that point."
The Brown administration announced the plan, then referred calls to the bill's authors, Assemblymen Roger Dickinson, D-Sacramento, and Richard Bloom, D-Santa Monica.
"This does two things," Dickinson said of the legislation. "It preserves our ability to pursue projects and gives us a method to resolve this dispute."
The measure also sets up a $26 million state loan program for transit operators who, like Sacramento, lose federal funding. The money has to be repaid to the State Transportation Fund by Jan. 1, 2019.
Wednesday's news opened a new chapter in a story that started in 2012, shortly after Brown signed a sweeping law that required most state and local government employees to pay more into their pension accounts and required new pension fund members work longer for less-generous retirement benefits.
Several mass transit unions began filing complaints with federal labor officials, citing a 1964 law that requires the Labor Department to certify that agencies are preserving their employees' collective representation as a condition of receiving the federal grants.
When Congress enacted the law, governments around the country were taking over struggling privately held transit companies. Lawmakers and unions worried that private workers needed their representation rights and benefits protected when they became government employees. At the time, most state and local civil servants didn't belong to a union.
Last month, U.S. Labor Secretary Thomas Perez warned Brown that the department would begin decertifying transit agencies with grants in the pipeline because they had implemented the new pension law. He urged the administration and transit authorities to find common ground with the unions that bargain for some 20,000 mass transit employees. Those talks and negotiations failed to produce a resolution, leading to the Wednesday decertification for Sacramento's mass-transit district.