The federal government has withheld more than $500 million in funding to local California transportation agencies since January and could withhold $1.6 billion for the year as the result of a complaint filed by transit union members, losses that could cost the state tens of thousands of jobs.
The U.S. Labor Department has forced the state to sit down with transit unions several times since California Gov. Jerry Brown passed modest retirement reforms in October 2012 to address a dire pension shortfall.
California has less than half the money needed to cover the $520 billion retirement costs, according to some estimates. The $290 billion pension deficit is triple the $96 billion general fund budget passed this year.
The governor’s office said that neither labor groups, nor the federal government has budged on the issue.
“Thus far, California’s efforts to resolve this issue with the federal government have proved fruitless,” Brown spokesman Jim Evans said in a statement. “We are actively working on solutions to ensure the state’s economy isn’t damaged by this dispute.”
Transit unions led by the Teamsters filed complaints with the Labor Department in November alleging that Brown’s pension reforms “impeded” collective bargaining rights guaranteed by the Urban Mass Transit Act, an obscure federal law passed nearly 50 years ago to maintain union agreements when private companies sold transit services to governments.
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