SACRAMENTO — Thousands of public transportation workers around the state would be exempt from new pension restrictions under a plan announced Wednesday by Gov. Jerry Brown.
The governor's proposal, in response to a federal threat to withhold transit money, would keep $4.3 billion in funds flowing while the state files legal action to determine whether the new public-pension law applies to the workers.
U.S. Labor Secretary Thomas E. Perez wrote to Brown this year saying the state could miss out on the federal money if it insisted on subjecting transportation workers to the tighter pension rules. The secretary urged the governor to come up with a solution before the Legislature adjourns Sept. 13.
Lawmakers are expected to pass legislation containing Brown's plan next week.
"Federal transit money creates jobs, and this legislation keeps those funds flowing while allowing the state to defend in court our landmark pension reforms," the governor said in a statement Wednesday.
Meanwhile, Brown will challenge a 50-year-old federal law that prohibits states from reducing pension benefits for local transit workers outside the collective bargaining process.
The lawsuit, expected to be filed this week in federal court in Sacramento, will give Brown an opportunity to publicly defend the changes made to public pensions at his urging last year. Those include a requirement that current workers contribute more to their retirement plans, limits on pension amounts for new hires and an increase in the retirement age to 67 from 55 for most workers to collect a full pension.
The new rules became law amid vocal opposition from many of Brown's allies in organized labor. The governor's continued support of the new restrictions can help broaden his political appeal as he gears up for reelection next year.
Under the new agreement, transportation workers would be exempt from the rules at least through the end of 2014, pending the outcome of the court case.
Administration officials dismissed concerns that other unionized workers may try to avoid the pension restrictions. But other parts of the new law are already being challenged in the courts.
One of those provisions bans the inclusion of unused vacation time, sick days or other types of leave to increase an employee's retirement payout. Cases in Marin, Alameda and Merced and Contra Costa counties are disputing the state's right to impose those anti-spiking provisions on people who were on the job before the changes became law.
Union leaders expressed confidence that the courts would force local transit agencies to bargain for changes in retirement benefits.
"We don't think that the governor's view has a very strong likelihood of prevailing," said Barry Broad, who represents Teamsters, machinists and the Amalgamated Transit Union, which all have members who would be affected.
Management welcomed Brown's announcement.
"We applaud the governor for working to protect our federal funding while fighting to retain the fiscal management tool we were given" with the new restrictions, said Joshua Shaw, executive director of the California Transit Assn.
The exemption legislation will be introduced by Assemblyman Richard Bloom (D-Santa Monica), who heads the budget subcommittee on transportation. A number of projects in the Los Angeles area, including money to complete a subway from downtown to the Westside, could have lost out on millions of federal dollars without a resolution.
"We're talking about hundreds of millions of dollars and 40,000 jobs" in the area, Bloom said.
Brown, for his part, is eager to affirm the state's right to change retirement benefits for transportation workers. After he pushed the restrictions through the Legislature last summer, unions representing about 20,000 transit workers in California objected.
They filed claims with the federal government, saying the new law would conflict with a federal requirement that retirement benefits for transit workers be agreed on in negotiations with their unions.
The governor argues that the state changes do not conflict with the federal statute. In May, Brown sent a letter to then–acting U.S. Labor Secretary Seth Harris that said the new rules do not diminish transit workers' bargaining rights.
The two-page letter included a handwritten note from Brown that said, "This is very important for the people of California, both for jobs and pension reform."
The Obama administration sided with the unions.
Last month, Secretary Perez responded, "We are concerned that [the state law] diminishes both the substantive rights of transit employees under current collective bargaining agreements and narrows the future scope of collective bargaining over pensions."
Perez urged that California "act immediately to develop a solution."