Gov. Jerry Brown blinked.
Told to choose between pension reform and federal transit dollars, the governor threw California taxpayers under the bus.
Brown agreed to at least temporarily exempt transit workers from the pension reforms enacted in 2012. His acquiescence must be ratified by the Legislature, but it appears that approval will be a formality.
The projected savings from pension reform are modest, and it will be several years before they're large enough to ease the pressure on state and local government to cut public services to cover the growing cost of retirement benefits.
If state officials start carving out exceptions, any savings will vanish.
With regard to the transit workers, Brown was presented with a false choice — and he gave in without much of a fight.
Transit unions complained to Labor Secretary Thomas Perez, one of the newest members of President Barack Obama's cabinet. The unions cited a 1964 federal law intended to preserve collective bargaining rights for employees of private sector transit companies that were being taken over by public agencies.
Under Section 13(c) of the Urban Mass Transit Act, the labor secretary is empowered to withhold federal grants from public transit agencies unless, among other things, they maintain employees' collective bargaining rights.
The unions claimed that California's pension reforms constitute a violation of Section 13(c). Perez concurred, and he threatened to withhold as much as $4.3 billion from state and local agencies.
In Wisconsin, when Gov. Scott Walker set out to eliminate bargaining rights for public employees (except police and firefighters), transit workers wrangled an exemption because of Section 13(c).
The circumstances are different in California. What the secretary ignored is this — the Golden State's pension reform law didn't eliminate collective bargaining rights for transit workers or any other public employees. It didn't change pension formulas for existing employees, either.
A reduced retirement benefit was created for public employees hired on or after Jan. 1, 2013 — the day the law took effect. Surely, Congress didn't intend to guarantee pension benefits for <i>future</i> employees when it adopted the 1964 law.
As for present employees, the pension law requires local government employees, which would include a large proportion of transit workers, to pay half the cost of their retirement benefits. But that provision doesn't take effect until 2018 — unless public employers secure an earlier date through, yes, collective bargaining.
Brown knows this. Administration officials made many of the same points themselves while promising to fight efforts by transit unions to undermine the pension reform law. On Wednesday, the governor abruptly reversed course.
Administration officials say they're still committed to the fight, that the 11th hour law exempting transit workers will secure federal transit dollars while the case is in court. Maybe. But waving the white flag also signals unions that, if the price is right, the state will sell out its pension reforms.