Stockton, Vallejo, San Bernardino and other California cities have gone bankrupt in major part because of the pension crisis.  These cities can no longer afford to pay for the pensions they gave in sweetheart deals to the unions.  So, towns like San Jose and San Diego try to save themselves by reforming the pension system—and the unions take them to court.

BART workers do not want to pay more in pension and health care costs.  So they strike.  Other transit authorities in the State are in the same boat.  Now the Obama Administration has told California agencies “either give the unions what they want or we will stop giving you money.”  That is blackmail, using tax dollars to steal tax dollars for the unions.091012_obama-vid-sm

“Two weeks ago, Mr. Perez sent the governor a letter warning that the pension reforms he signed into law last year violate the 1964 Urban Mass Transportation Act, which purportedly protects public transit workers’ pension benefits and collective bargaining rights. California’s pension legislation, Mr. Perez wrote, “diminishes both the substantive rights of transit employees under current collective bargaining agreements and narrows the future scope of collective bargaining over pensions.”

 

Perez’s Pension Power Play

By Vinny Sidhu, Pointoflaw.com,  8/15/13

Newly-confirmed Labor Secretary Thomas Perez seems to certainly have no problem with courting controversy. After his widely-publicized quid pro quo with the city of St. Paul, Minnesota, which was designed to subvert judicial review of his prized “disparate impact” discrimination theory by the High Court, he has immediately found a new target to try and manipulate into submission. Allysia Finley of the Wall Street Journal recently reported that Mr. Perez has sent a warning shot across the bow of California Governor Jerry Brown over the state’s recently-enacted pension reforms:

Two weeks ago, Mr. Perez sent the governor a letter warning that the pension reforms he signed into law last year violate the 1964 Urban Mass Transportation Act, which purportedly protects public transit workers’ pension benefits and collective bargaining rights. California’s pension legislation, Mr. Perez wrote, “diminishes both the substantive rights of transit employees under current collective bargaining agreements and narrows the future scope of collective bargaining over pensions.”

It seems a bit odd that Congress would enact a law that would limit the ability of a sovereign state legislature to negotiate contract renewals dealing with future benefits of its own public employees, which does in fact constitute the substantive aspect of the CA legislation. The apparent implications of Mr. Perez’s statement are that 1) any sort of pension reform enacted by a state is illegal, because pension reform done in the present restricts the bargaining position of unions in the future (regardless of the fact that the pension reform is duly-enacted state legislation), and 2) Congress may usurp the federal-state political structure when it is not happy with the results of pension reform done in the state context, under the pretext of a supposedly-preemptive piece of federal legislation.

This all seems odd because Congress did not in fact mention federal restrictions on contract bargaining in the context of future negotiations. Ms. Finley writes:

Thing is, the 1964 federal law merely protects employees’ existing benefits under collective bargaining agreements and says nothing about the “future scope” of collective bargaining. California’s pension reforms apply only to future benefits for new hires.

Mr. Perez’s real play here seems to be to restrict the ability of states to negotiate in good faith with their public unions, while making sure that the liberal power base stays happy. The biggest problem with this tactic is its potential budget-busting effects on the state:

Thus, Mr. Perez is threatening to cut off billions in federal grants for local transit agencies starting Friday if California doesn’t fix its reforms to comply with his interpretation of the 1964 federal law. The Los Angeles County Metropolitan Transportation Authority would stand to lose $268 million. Nearly $70 million in funding for Sacramento’s Regional Transit District could dry up, thus halting construction on a light-rail line. Santa Barbara’s Metropolitan Transit District has warned that it would have to reduce services by 30% and lay off 50 bus drivers.

Mr. Perez might want to make sure that the very public unions he is trying to keep happy do not revolt when the inevitable austerity measures arrive.

 

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