It's a crying shame, but Gov. Jerry Brown had no choice but to exempt transit workers from the state's pension reform law, at least temporarily. The U.S. Department of Labor was poised to cut off billions in federal grants to local transit districts if California did not back off. So the governor has made a strategic retreat.
But he cannot afford to surrender. Brown says he plans to pursue the issue in court. Sacramento Regional Transit is the test case. Because RT complied with state law and applied pension reform to its workers, the federal government withdrew $54 million in federal funding previously approved. Statewide, $1.6 billion was at risk this year alone.
Why is this travesty allowed? An obscure provision of federal law requires transit districts to collectively bargain with their unionized government work forces. When local transit officials applied state pension reform to their workers, various transit worker unions sued, claiming the pension law violated their collective bargaining rights. The state argued forcefully that it did not, that pension reform was necessary to protect the solvency of dangerously underfunded pension funds. U.S. Labor Secretary Thomas Perez sided with the unions and threatened to withhold federal transit funding if an exemption for transit workers was not enacted.
The governor had to retreat on this issue. Given California's still-fragile recovery, the state cannot afford the multibillion-dollar hit that the federal government's wrongheaded actions would cost. That said, pension reform is too important to allow federal blackmail to upset it. Lavish government pension giveaways have pushed local governments into bankruptcy in some cases and to the brink in others.
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California is rightly attempting to rein in such extravagance. Incredibly, the federal government, which contributes nothing to state government pensions, is standing in the way. That's outrageous.
The governor's legal challenge must not be some lackluster pro forma exercise. If transit workers keep this exemption, pension reform will unravel across the state. The governor needs to fight this battle all the way to the U.S. Supreme Court if need be. And if he fails there, he must take the battle to Congress to change the law.