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Monday, August 5, 2013
Pension reform holds up $2.2 billion in federal transit grants to Metro
Union challenges to new pension law causes feds to freeze local grants for train projects and bus operations
federal government is withholding more than $2.2 billion in grants from
the Los Angeles County Metropolitan Transportation Authority due to
complaints filed by labor unions over the state Public Employee Pension
If funding remains frozen in the fall, Metro's board
will consider cuts to train and bus service and/or raising fares to make
up shortfalls from undelivered operating grants, according to a July
memo from Terry Matsumoto, Metro's chief financial services officer.
"The federal monies have been withheld since December.
There is only so long we can cover this delay in both business and in
capital," said Marc Littman, Metro spokesman.
Federal funding affects three areas: $244 million in
operation and maintenance of bus and rail service; $1.3 billion for the
Westside Subway Extension project through Beverly Hills to Westwood, and
$662 million for the Regional Connector, which will extend the tunnel
from the 7th Street/Metro Center station through downtown L.A. to
connect the Blue, Expo and Gold lines.
The delay is holding up contracts from being let go, he said. Both rail projects would create about 43,000 jobs, he said.
If the dispute between the state and federal agencies
is not resolved within the next few months, Metro fears the competitive
federal grants won by the agency will be awarded to transit agencies in other states.
"There is a lot of competition for these," Littman
said. "If this is delayed, they could either sit on these monies or they
can give them to New York or to Florida or wherever."
Although Metro is the largest transit agency affected,
the dispute over pension reform adopted by the Legislature and governor
in October and implemented Jan. 1 affects numerous transit agencies
across the state, Littman said.
For example, nearby Orange County Transportation
Authority is still waiting to hear about $115 million in promised
federal funds frozen as a result of the labor dispute. The dispute may
curtail new bus purchases, certain bus maintenance programs and delay
"Currently we are still awaiting a response from the
U.S. Department of Labor," said Laura Scheper, an OCTA spokeswoman,
Foothill Transit, the West Covina-based bus agency
serving the San Gabriel Valley, did not lose any federal grants, said
spokeswoman Felicia Friesema.
Shortly after the pension bill became law, various
labor unions representing mass transit workers filed complaints with the
U.S. Department of Labor, basically saying their collective bargaining
rights with regards to pension benefits were violated. The International
Brotherhood of Teamsters Local 952 in Orange County filed a complaint.
In Los Angeles County, the Teamsters and the Amalgamated Transit Union
as well as the United Transportation Union locals all filed complaints
over the new law with the Department of Labor, Littman explained. None
of the unions returned phone calls Monday.
While the state says it needed to rein in unfunded
state employee pensions, the unions say the law violates the Federal
Transit Act by taking away their rights to bargain for pension benefits.
Employees of transit agencies receiving federal funds can file claims
that can hold up federal dollars.
Matsumoto told the Metro board at its last meeting
that the Department of Labor has not certified Metro "as an eligible
recipient for federal grants." The decertification began in December.
Also, the Federal Transit Administration has stopped processing new
grant applications since that time.
"We are caught in the middle," Littman said. "We are desperately trying to work out a solution."
Staff members were visiting legislators in Sacramento
on Monday, he said. In the past, board members have traveled to
Washington to try to settle the issue with the federal agencies involved
but to no avail.
Daniel Pellissier, president of California Pension
Reform, a group that worked with the legislature and Gov. Jerry Brown
last fall, said the unions are trying to get the
Democratically-controlled Legislature to exempt mass transit employees
from rollbacks on pensions that extended the age of retirement, capped
retirement awards and required new workers to pay 50 percent of their
own pension costs.
Assemblyman Luis Alejo, D-Watsonville, authored
legislation that would exempt about 20,000 mass transit workers from the
pension reform act in order to free up federal transit funds. That bill
is still in committee. Metro has not taken a position on the bill.
Pellissier said federal case law specifically says the
workers must abide by state collective bargaining laws and that no
federal rights were created.
"The unions are making a frivolous claim to buy time and jam their own exemption through the Legislature," he wrote by email.
Littman said other states, such as New Jersey, Ohio
and Wisconsin, have passed pension reform laws. Some gave transit
"That is one option," he said.
On Monday, the California Supreme Court gave Metro
some good news. The high court cleared the way for the second and final
phase of the Expo Line extension from Culver City to Santa Monica. The
court rejected a petition from Neighbors For Smart Rail, an opposition
group that claimed the environmental review process was incomplete. That
project, separate from the others being considered, may be completed by
2015, according to county Supervisor Zev Yaroslavsky.
So far, Metro and OCTA have not reached a resolution with their unions or the Department of Labor on the frozen grants.