A dispute over whether California’s public employees pension reform legislation violates the bargaining rights of transit workers could mean that the Orange County Transportation Authority is disqualified from receiving tens of millions of federal dollars for projects like replacement buses and a massive transportation depot in Anaheim.

The standoff is over the California Public Employees’ Pension Reform Act, passed last September, which cuts retirement benefits for workers by reducing pension formulas and extending retirement ages.

Major unions like the Teamsters have objected to the legislation, saying that such curtailing of bargaining rights disqualifies transportation agencies in the state from receiving federal transit funds.

Federal grant funds held up by the objections include $7.5 million for the Anaheim Regional Transportation Intermodal Center or ARTIC, a massive transit hub in Anaheim that would connect with a future streetcar system and the planned high-speed rail line.

Fifty million dollars for the replacement of more than 100 buses, among other costs, is also affected, according to transit authority documents and  spokesman Joel Zlotnik.

The dispute threatens more than $1.6 billion for transit agencies across the state.

“In addition, a launch was expected in October of a new express route between Laguna Niguel and Costa Mesa on SR-73 and that is being delayed,” Zlotnik wrote in an email to Voice of OC. “What this boils down to is a fight between the governor and the federal Department of Labor. The unfortunate part is that OCTA [the county transit authority], transit agencies throughout California and the millions of people who utilize public transportation are caught in the middle.”

Gov. Jerry Brown wrote a letter May 29 urging federal officials to release grant funds, arguing that the reform act doesn’t cut bargaining rights because it assures that the state’s retirement system remains sustainable. “This is important to the people of California — both for jobs and pension reform!” Brown handwrote at the bottom of the letter.

The Department of Labor hasn’t budged so far. An Aug. 1 letter from Labor Secretary Thomas E. Perez urges state leaders to devise a resolution and pointed to Assembly Bill 160, pending in the state Legislature, that would remove transit workers from the reform act.

The letter states that a determination on the issue by the Department of Labor would be postponed until Aug. 16. The day before, the Department of Labor notified Brown that the date was flexible, according to Lance Larsen, OCTA’s executive director of government relations.

As things stand now, a resolution is not on the horizon. Brown won’t sign the bill exempting transit workers from the reform act, because Brown is strongly behind it, Larsen said. There is talk of a lawsuit to obtain the funds, but that could take one to two years, he said.

At Monday morning’s OCTA board meeting, directors were unhappy about the federal government’s interference in the state’s pension battles.

“It’s really an outrageous position for the Department of Labor to believe they can meddle in California’s pension reform issue,” said OCTA Director Todd Spitzer, who is also a county supervisor. “The systems are imploding as a result of the old ways of doing business.”

In the meantime, OCTA officials said they have funds to fill the gap left by the withheld grants. But, said Darrell Johnson, the authority’s chief executive, “It absolutely will impact the riders at some point.”

Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: twitter.com/adamelmahrek

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