State Probe May Cost RTD Millions in Transit Funds

The state auditor general’s office is investigating allegations that the RTD violated state law when it applied for and received more than $90 million in transit funds in recent years.

The probe was approved recently by the Legislature’s Joint Audit Committee. Kurt Sjoberg, chief deputy auditor general, said Tuesday it is possible that if violations occurred his office will recommend that the Southern California Rapid Transit District return the money.

That could be devastating to the financially troubled transit district, which already is facing an $8-million shortfall this fiscal year and a $30-million projected deficit next year.

The probe, which will be completed in about three months, appears to be at least marginally related to the larger, continuing struggle at local, state and federal levels between conservative Republicans and liberal Democrats over how best to provide public transit in the future.

The Republicans, led by the Reagan Administration and supported by private business, argue that as tax dollars become more scarce, public transit can be best preserved by switching to lower-cost private bus operators. The Democrats, allied with strong public transit labor unions, have resisted so-called “privatization” efforts, arguing that they often lead to corporate profiteering and lower pay for workers.

The charge that the RTD obtained funds illegally was raised by Assemblyman William P. Duplissea of San Carlos, the ranking Republican on the Assembly Transportation Committee. A state law enacted several years ago bans transit districts from receiving certain state aid if they approve labor agreements that prevent use of private bus companies.

The RTD has regularly certified in applications that it is in compliance with all state requirements. But it has also argued to lawmakers, Duplissea said, that it is precluded by labor contracts from contracting for bus services with private firms.

From 1980 to 1985, the RTD received about $93 million in state funds governed by the regulation, Duplissea said.

“This is $93 million that in my estimation was taken under false pretenses,” Duplissea said. “They are saying we want the money. We took the money, but we are not going to do what the law says because it’s too hard.

“We have to get that money back. . . . The law has just been ignored.”

Denies Violation

Suzanne B. Gifford, the RTD’s acting general counsel, denied that the agency has violated the law. She acknowledged that the district has negotiated labor agreements that make it difficult to contract out. But the district is “primarily precluded” from using private bus companies by a separate state law that created the RTD in 1964, Gifford said. The 1964 law specifically authorizes the district to contract out service only to city and county governments. Although its interpretation has never been tested, the RTD has always “operated under the assumption” that is could not use private bus companies, Gifford said.

However, Earl Clark, general chairman of the 5,000-member RTD drivers union, said the RTD’s labor agreements do prevent RTD from contracting out service, but rightfully so. He charged that Duplissea’s “whole purpose is to destroy the RTD.”

Assemblyman Richard Katz (D-Sepulveda), chairman of the Assembly Transportation Committee and an ally of organized labor, said Duplissea’s allegations are a “legitimate question that the auditor general needs to resolve quickly.” But he also charged that Duplissea, who is currently pushing a bill that would require more public transit service to go to private firms, “all along has been fronting for private-sector interests.”

“The goal is to serve a special interest. . . . (He’s) not after the best bus service for the people of Los Angeles,” Katz said.

Duplissea said he is a “very big believer in the private sector” and has received political contributions from private bus companies, but denied that is influencing his actions.

The real issue, Duplissea said, is, “Are we going to let the death grip of the (transit) unions prevail, or are we going to give the public more service?”