Labor Department pension ruling stalls funding for SMART, other transit agencies, imperiling infrastructure projects

Even as Democrats in Washington D.C. celebrated President Joe Biden’s signing of a $1.2 trillion infrastructure bill Monday, officials at California transit agencies, Gov. Gavin Newsom and the state’s two U.S. senators were taking aim at a ruling by the Biden administration they said jeopardized critical funding in the package.

The U.S. Department of Labor ruled Oct. 28 that California’s 2012 Public Employees’ Pension Reform Act was in conflict with federal labor laws that protect the bargaining rights of transit worker unions, reversing a decision by the Trump administration three years ago.

As a result, the department was blocking $12 billion in federal transit funds that many agencies, including the North Bay’s passenger rail system, SMART, were looking toward as they emerge from a pandemic that has devastated ridership.

The blocked funds include $9.5 billion in money set aside for California public transit agencies in the infrastructure bill Congress approved last week. California also would forfeit about $2.5 billion in grants for public transit that were part of the most recent federal coronavirus relief legislation.

“Withholding billions of dollars in crucial funding on the basis of a nine year-old state law, while California wrestles with the COVID-19 pandemic, does great harm and injustice to the people of California,” Gov. Gavin Newsom wrote in a letter to Labor Secretary Marty Walsh.

Sens. Dianne Feinstein, D-San Francisco, and Alex Padilla, D-Los Angeles, cowrote their own letter to Washington decrying the ruling and asking for its reconsideration.

In the North Bay, the dispute threatens up to $12.8 million in federal funding for SMART, according to agency officials. Those funds included around $2.3 million in grants for building pathways, $7.5 million in stimulus spending from the American Rescue Plan Act which Congress passed in March and $3 million in maintenance funds.

Farhad Mansourian, SMART’s general manager, said the dispute had nothing to do with the passenger rail line’s own relations with its labor unions but risked the loss of service and even jobs.

“To force hundreds of transit agencies to cut service and lay off people just does not make sense,” Mansourian said.

The Labor Department determination stems from a yearslong dispute over California’s sweeping pension reform law, which established lower benefit tiers and higher employee contribution rates for new hires in state and local government starting in 2013. The nation’s largest transit workers’ union challenged that law, saying it infringed on workers’ collective bargaining rights and violated federal law.

The determination was made by the Labor Department’s Office of Labor Management Standards.

Amid considerable uncertainty around the ruling’s impacts, California officials worried the Labor Department ruling would block the state’s transit agencies from accessing funds in the infrastructure bill.

“They came out and said California cannot get any more funds,” Mansourian said. “This was pretty silly, and that’s the word I’m going to use being very kind.”

City transit authorities statewide including, Santa Rosa, face similar woes. Santa Rosa could see a freeze on as much as $5 million from the pandemic-response stimulus package, and if the issue is not resolved shortly, a potential delay in infrastructure bill funding to purchase electric buses.

“I’m still very enthusiastic about the infrastructure bill and looking forward to the resolution of this issue,” Deputy Director of Transportation and Public Works Rachel Ede said.

On a day when two Bay Area Democrats — House Speaker Nancy Pelosi and Vice President Kamala Harris — had flanked the president as he signed the infrastructure bill on the White House lawn, local officials hoped for a speedy resolution to the funding hold up.

“I’m hoping that the president and vice president, who knows this area very well, steps in and says this is not how you resolve a labor issue,” Mansourian said.

You can reach Staff Writer Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com. On Twitter @AndrewGraham88