LOS ANGELES – California Gov. Jerry Brown proposed legislation Wednesday that he said would ensure that $1.6 billion in federal grants continue to flow to transit districts while he pursues litigation to defend California’s pension reforms.

Brown announced the legislation within hours after U.S. Department of Labor officials refused to certify millions of dollars in transit grants to the Sacramento Regional Transit District, according to a release from the governor’s office.

“Federal transit money creates jobs and this legislation keeps those funds flowing while allowing the state to defend in court our landmark pension reforms,” Brown said in a prepared statement.

The Labor Department wants the state to exempt transportation employees from the California Public Employee’s Pension Reform Act of 2013, saying it violates a 1964 federal law that protects the collective bargaining rights of public transportation employees.

State legislators had been working on legislation that would exempt transit workers. Federal labor officials told The Bond Buyer on Aug. 16 they would not take further action on federal grants for the state’s transit agencies while they awaited the outcome of state legislation to exempt transit workers.

On Wednesday morning, Labor Department officials notified the Sacramento Regional Transit District that it is refusing to certify millions of dollars in transit grants to the district, saying the 2013 pension act is incompatible with federal labor law. 

Mike Trupo, a Department of Labor spokesman, saidtheyare gratified that their work with the state will result in legislation being introduced. 

“While each grant application must be reviewed individually, if legislation along the lines of what we have discussed with the governor’s office is enacted, it will temporarily resolve the conflict between section 13c of the Mass Transit Act and PEPRA,” Trupo said in an emailed response. “This would allow the Department of Labor to certify federal transit grants so that funds can flow to local transit agencies as quickly as possible.”

The legislation Brown proposed will temporarily exempt local agencies’ transit workers from the act, but preserves the state’s ability to fight for the pension reform law in court, according to a release from the governor’s office.

The legislation also creates a $26 million state loan program to assist transit operators, like Sacramento Regional Transit, that are at risk of losing federal transit grants.

Assembly Bill 1222 will be authored by Assemblymembers Richard H. Bloom, D-Santa Monica, and Roger Dickinson, D-Sacramento. Assemblymember Ken Cooley, D-Rancho Cordova, will serve as a co-author.

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